Insurance Law by Macgillivary

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"
INSURANCE LAW
RELATING TO
ALL RISKS
OTHER THAN MARINE
AND INCLUDING
LIFE, PIEE, GUARANTEE, BUEGLARY,

ACCIDENT,
THIRD PARTY RISKS, AND EMPLOYERS'
LIABILITY
E. J. MACGILLIVRAY, LL.B.
Of the Inner Temple, Barristcr-at-Law
Jlember of the Faculty of Advocates in Scotland
Author qf"A Treatise upon the Law of Copyright
and " The Copyright Act, 1911"
LONDON
SWEET AND MAXWELL, LIMITED
3, CHANCERY LANE
1912
H?C.csS-o.
PREFACE.
As I go to press the Money-lenders (No. 2) Bill, 1911, stands

for third reading in the House of Lords, and will doubtless have
received the Eoyal Assent before the end of the year. The
principal object of the Bill is to amend the law as decided in
Bohinson, In re, [1910], 2 Ch. 571, to the effect that where an

agreement with a money-lender is void ah initio under the Money-
lenders Act, 1900, the agreement is equally void against third
parties deriving title from the money-lender in good faith and for
value. Under Clause 1 of the Bill any agreement with or

security taken by a money-lender shall be and shall be deemed
always to have been valid in favour of any bond fide assignee
or holder for value taking without notice of any defect due to the
operation of Section 2 of the Money-lenders Act, 1900. This

will come as a very welcome relief from the anxiety which the
Money-lenders Act created as to the validity of countless securities
which might unknown to the holder have been acquired from or

through an unregistered money-lender.
The scheme of compulsory insurance under the National
Insurance Bill, 1911, the contributions and benefits payable
thereunder and the conditions under which insurance societies
may become approved societies with power to do business under
the Act, have been so much discussed that it would be out of
place to refer to them here in detail. The Bill grants special
facilities to societies desirous of doing such business to enable

them to extend their powers and to make agreements for
amalgamation or transfer of business. Special provisions are
made for the transfer of members, the keeping and auditing of

accounts, the valuation of assets and liabilities, and the making
of such returns as the Insurance Commissioners may require.
iv PEEPACE.
Another Bill affecting the subject-matter of this book and

likely to become law is the Agricultural Credit and Insurance
Societies Bill, 1911. The object of the Bill is to promote the
formation or extension of industrial and friendly societies
specially adapted to the development of the agricultural industry.

Such under the Industrial and
societies will be registered either
Provident Societies Acts, 1893 to 1895, or under the Friendly
Societies Acts, 1896 to 1908, and will be approved by the Board

of Agriculture and Fisheries. Provision is made for grants
towards the cost of the formation of such societies or the payment

of the expenses of management of any such society recently
formed. The accounts of the societies will be audited by an
auditor appointed by the Board, and an inspector or inspectors
may be appointed to examine into and report on the affairs of
the Society.For the purposes of the Act a society for carrying

on the work of insurance agency shall be deemed to be an
insurance society.
A Bill which is not likely to become law this session is
the Married Women's Property Bill, 1911 [127]. The object of
the Bill is to remedy a defect in Section 1 of the Married

Women's Property Act, 1907. It was decided in Harhness and
Allsopp, In re, [1896] 2 Ch. 358, that, notwithstanding the
Married Women's Property Act, 1882, a disposition of trust
property to a married woman operates to pass an interest to the
husband. The Act of 1907 only enables a married woman to
dispose of trust property held by her, and therefore it is still
necessary in some cases to join the husband in dealing with trust

property which has been conveyed or assigned to the wife
during coverture. The Bill, if passed into law, would enable the
married woman to hold and dispose of such property without the
intervention of her husband.
My warmest thanks are due to Mr. J. E. Faulks, F.I.A., late
actuary of the Law Life Assurance Society,
Mr. A. B. Langridge,
of the Middle Temple, Mr. G. J, Lidstone, V.P.I.A., actuary
and secretary of the Equitable Life Assurance Society, and Mr.
B. E. Warren, for giving me the benefit of their wide experience
and learning, andfor reading all or some of the proof sheets.
Mr. 0. Morgan Owen, joint secretary of the Alliance Assurance

Company, Limited, Mr. W. E. Osborn, of Messrs. Selfe & Co.,
PREFACE. V
Fire Loss Assessors, and Dr. A. E. Sprague, F.I.A., secretary

and actuary of the Edinburgh Life Assurance Company, have
also been very kind in giving me their assistance in some
matters of detaiL Mr. E. E, Formoy, of the Inner Temple, has
kindly assisted me in the arduous task of revising the references.
E. J. MACGILLIVRAY.
3, Temple Gardens,
December, 1911.
I.L.
Cornell University
Library
The original of this bool< is in
the Cornell University Library.
There are no known copyright restrictions in

the United States on the use of the text.
http://www.archive.org/details/cu31924022383958
CONTENTS.
CHAPTER I.
INSURANCE COMPANIES.
tUCTIOS PAGK
I. How CONSTITUTED 1
II. Deposit and Accounts . 24

III. Amalgamation ok Teansfek 46
IV. Novation 62
V. Winding-up 70
VI. CONTBIBUTORIES . . 86
VII. Proof in Winding-up . . 92
VIII. Compromise and Arrangement 98
IX. Proceedings by or against a Company 100
CHAPTER II.
INSURABLE INTEREST AND ILLEGALITY.

I.
II.
Statutes relating to Insurable Interest ....
Nature and Extent of Insurable Interest required . .
103
117
III. Insurable Interest in Property 129
IV. Insurable Interest rs Lives 152
V. Illegal Insurances 169
CHAPTER III.
FORMATION OP THE CONTRACT.

I. Doctrine of Ultra Vibes 180
II. Authority of Directors 185
III. Authority of Agents 188
IV. Warranty of Authority 193
V. Form of the Contract 194
VI. Interim Receipt . 199
VII. Proposal and Acceptance 206
VIII. Increase of Risk before Policy Issued 214
IX. Execution and Delivery of Policy. 218
VIH CONTENTS.
CHAPTER IV.
DURATION OF THE RISK.

PAGE
SECTION
I. Computation of the Period of Risk 225
II. No Ixsukance until E'irst Pkemium is Paid 228
What constitutes Payment of Pkbmium 234
III.
IV.
V.
The Renewal Pkemium
The Days of Gbace
.... .
244
248
VI. to Premium
Waiver of Conditions Relating 255
VII. Authority of Agents to waive Conditions Relating to
Premium , . . 264
CHAPTEE V.
VOIDABLE POLICIES.
I. Generally 268
11. Fraud and Misrepresentation 275
IIL Non-disclosure 300
IV. Warranties 322
V. Fraud, Misrepresentation, and Non-Disclosure by Thied
Parties 347
VI. Representations and Warranties in Fire Policies . . 360
VII. Representations and Warranties in Lijb Policies . . 375
CHAPTER VI.
LIFE INSURANCE; CLAIMS AND TITLE TO POLICY.
I. Proof of Death and Age 393

IL Interest upon Policy Moneys 406
III. Claimant's Title 407
IV. Payment into Court 416
V. Assignment 425
VI. Voidable Assignments 454
VII. Mortgages 476
VIII. Trustees and Settled Policies
IX.
X.
Married Women and Settlement Policies
Infants
.... 514
535
568
XL Lunatics 577
XII. Bankruptcy 580
XIII. Succession on Death 619
XIV. Renewable Leaseholds for Lives 631
XV. Policy on Life of Debtor
XVI. Friendly Societies and Benevolent Funds .... 638
641
CONTENTS. IX
CHAPTER VII.
FIRE INSURANCE CLAIMS.

SKCTION
I.
II.
Loss OB Damage by Fire
Amount of Loss Payable
....
....
PACK
650
671
III. Reinstatement . . 686
IV. Double Insurance 705
V. Contribution without Average 720
VI. Contribution under the Average Clause 729
VII. Subrogation 733
VIII. Third Party Claims 764
CHAPTER VIII.
CLAIMS FOR PREMIUMS.

I. Insurer's Claim for Premium 784
IL Return of Premium . . 78G
TIL Salvage Premiums 799
CHAPTER IX.
STAMP DUTIES.
I. Stamps on Policies 806
II. Stamps on Receipts . 816
irr. Stamps on Assignments 818
IV. Stamps on Other Documents . 839
V. General Exemptions from Stamp Duty 844
VI. General Regulations for Stamping Instruments 845
CHAPTER X.
CLAUSES AND CONDITIONS.

General Rules of Construction
I.
II.
III.
Life Policies
Fire Policies
....
....
851
861
878
IV.' Accident Policies 918
V. Burglary Policies 963
VI. Employers' Liability Policies . 966
VII. Third Party Risk Polictes 969
X CONTENTS.
SEGTFON PAGE
VII [. Fidelity Policies 971
IX.
X.
Guarantee Policies
Live Stock Policies
. . ... •
977
983
XI. Plate Glass Policies 985
Xn. Policies covering Risk of Explosion 985
XIII. Policies coveking Risk op Storm and Tempest . . •
986
APPENDIX.
Assurance Companies Act, 1909 987

Assurance Companies Statutoey Rules, 1910 1032
Index ... 1051

TABLE OF STATUTES.
—
Note.- Where an Act of Parliament or any section or sections thereof is reprinted
verbatim either in the text or the Appendix, this is indicated hy the use of heavy
type.
PAGE
13 Eliz. u. 5. (Fraudulent Conveyances Act, 1570) 552, 598
S. 1 . 603
s. 2 . . 603
s. 6 . 603
1 Jao. 1, u. 11. (Bigamous Marriages Act, 1604) . 399
21 Jac. 1, c. Ifi. (The Limitation Act, 1623) 121, 798
10 Car. 2, u. 7. (Gambling and Betting Act, 1664) 106
19 Car. 2, c. G. (Estates for Lives, Presumption of Death Act 1C67) 399
22 & 23 Car. 2, o. 10. (Statute of Distribution, 1670) . 623
29 Car. 2, c. 3. (Statute of Frauds, 1677)—
s. 4 120, 978
s. 24 . 623, 624
6 Anne, c. 31. (Prevention of Fires Act, 1707), s, 6 761
.
9 Anne, c. 19. (Gaming Act, 1710) . 106

.
1 Geo. 1, 0. 22. (Eiot Act, 1714), s. 7. 762

.
14 Geo. 3, c. 48. (Life Assurance Act, 1774) . 109, 110-116, 747

14 Geo. 3, c. 78. (Fires Prevention (Metropolis) Act, 1774)
s. 83 . . 680, 695, 696-705, 770, 776, 781-783
s. 84 . 696
a. 86 696, 750, 761
19 Geo. 2, c. 37. (Marine Insurance Act, 1745) 106, 110
33 Geo. 3, c. 54. (Friendly Societies Act, 1793) 10
38 Geo. 3, c. 87. (Administration of Estates Act, 1798) 028
39 & 40 Geo. 3, c. 98, (Accumulations Act, 1800), s. 1 . 535
41 Geo. 3, c. 24. (Riot Act, 1801) 762
52 Geo. 3, c. 130. (Malicious Damage Act, 1812) 762
c. 146. (Parochial Registers Act, J812) . 396
56 Geo. 3, c. 125. (Malicious Damage (Scotland) Act, 1816) 762
e. 73. (Customs Annuity and Benevolent Funds Act,
1816 (Private and Personal)) 642
57 Geo. 3, l-. 19. (Seditious Meetings Act, 1817), s. 38 . 762
3 Geo. 4, 0. 33. (Riotous Assemblies (Scotland) Act, 1822) 764
6 Geo. 4, c. 91. (Chartered Companies Act, 1825), s. 2 4
7 & 8 Geo. 4, c. 31. (Riot Act, 1827) 762
2 & 3 Will. 4, c. 72. (Riot Act, 1832) 762
3 & 4 Will. 4, c. 27. (Real Property Limitation Act, 1833) 12]
c. 43. (Civil Procedure Act, 1833)—
s. 3-7 . . . . . 121
s. 29 406
6 & 7 Will. 4, c. 86. (Births and Deaths Registration Act, 1836) —
3. 32
ss. 35-37
s. 38
.... 394
395
395
c. 116. (Grand Jury (Ireland) Act, 1836), a. 135 704
7 Will. 4 & 1 Vict. c. 26. (WiUs Act, 1837)—
s. 1 . 530
s. 7 576, 620
s. 8 . .
. 620
s. 9 . 620
s. 10 . 630
—
xu TABLE OF STATUTES.
FAQE
7 WUl. 4 & 1 Vict. c. 26. (WiUs Aot, 1837)
676, 622
s. 11
622
8.15
622
8.18
622
B. 20
623
8.21
623
8.22
8.24 623
623
s. 33 -
(SmaU Debt (Scotland) Act, 1837), s. 22 764

0. 41.
c. 73. (Chartered Companies Act, 1837)—
B. 2 4
s. 3
100
s. 4 5
B. 6 5
s. 7 5
s. 21 6
». 26 6
s. 29
5
1 & 2 Vict. 0. 110. (judgments Aot, 1838) 605
3 & 4 Vict. e. 92. (Non-Paroohial Registers Aot, 1840) 396
8. 11
397
7 & 8 Vict. c. 110. (Joint Stock Companies Aot, 1844) 5, 182, 185
». 26 6
s. 30
6
8.44 6
8.68 6
s. 69 7
8.66 7
8. 67 7
c. 111. (Joint Stock Companies (Winding up) Act, 1844 7
8 & 9 Vict. 0. 16. (Companies Clauses (Consolidation) Act, 1846)
s. 10 40
ss. 101-108 38
8. 136 47
c. 18. (Lands Clauses (Consolidation) Act, 1845) 761
10 &
u.
c.
11 Viet.
109.
113.
c. 78.
(Gaming Act, 1845)
(Evidence Act, 1845) ....
(Joint Stock Companies Act, 1847)
116, 795
396
5
11' & 12 Vict. 0. 69. (Malicious Injuries (Ireland) Act, 1848) 764
12
1-t
15
&
&
&
13 Vict.
15 Vict.
16 Vict.
c.
c.
c.
106.
99.
24.
(Bankruptcy Act, 1849)
(Evidence Act, 1851)
(WiUs Act, 1852), s. 1
....
...
616
397
620
16 & 17 Vict. u. 38. (Malicious Injuries (Ireland) Act, 1853) 764
c. 45. (Government Annuities Act, 1853), s. 29 845
17 & 18 Vict, c! 8o! (Registtation of Births, Deaths and Marriages
(Scotland) Act, 1854) . 398
s. 68 399
c. 125. (Common Law Procedure Act, 1854) 605
18 & 19 Vict. c. 43. (Infants' Settlements Act, 1855) . 569
c. 120. (Metropolis Management Act, 1855), s. 250 695
c. 133. (Joint Stock Companies Act, 1855) 7
19 & 20 Vict. c. 47. (Joint Stock Companies Aot, 1856) 7
B. 2 7
s. 4 . . . . 8
8. 107 7
0. 79. (Bankruptcy (Scotland) Act, 1856) 597
20 & 21 Vict. u. 14. (Joint Stock Companies Act, 1857) 7
s. 23 7
20 & 21 Vict. c. 57. (Married Women's Reversionary Interests Act, 1857 538
c. 60. (Bankruptcy and Insolvency (Ireland) Aot, 1857 597
0. 77. (Court of Probate Act, 1857), s. 73 628
0. 79. (Court of Probate (Ireland) Act, 1867), s. 96 630
c. 80. (Joint Stock Companies Aot (Insurance Companies),
1887) 8
TABLE OP STATUTES. Xlll
20 & 21 Vict. 0. 85. (Matrimonial Causes Act, 1857)—

——
XIV TABLE OP STATUTES.
37 & 38 Vict. e. 62. (Infants Relief Act, 1874) .... .

PAOB
570
c. 88.
ss.
s. 37
1-16 ....
(Births and Deaths Registration Act, 1874)
.
. 394
396
38 & 39 Viot. 0. 60. (Friendly Societies Act, 1876) 16
0. 77. (Judicature Act, 1875), s. 10 . 619
39 & 40 Viot. 0. 22. (Trade Union Act, 1876) .
20
s. 2 . 22
s. 4 . 646
H. 6
s. 7
s. 8
.
. .
... . .
.
21
26
22
s. 10 22, 646
s. 13 . 22
41 & 42 Vict. 0. 19. (Matrimonial Causes Act, 1878), s. 3 . 568
0. 31. (BiUs of Sale Act, 1878) . . 473
43 & 44 Vict. 0. 13. (Births and Deaths Registration (Ireland) Act,
1880), s. 28 398
43 & 44 Vict. c.
c.
26.
42.
Act, 1880) ........
(Married Women's Policies of Assurance (Scotland)
(Employer's Liability Act, 1880)

. . 554
967
44 Vict. c. 12. (Customs and Inland Revenue Act, 1881), s. 38 523
44 & 45 Vict. u. 41. (Conveyancing and Law of Property Act, 1881)
s. 2 (vi.) 498
s. 3 (4) . 768
(5) . 768
s. 14 . 768, 783
s.17 . 488
s. 19 499, 773
3.20 . 499
s. 21 . 499
s. 21 (7) . 448
s. 22 . 505
s. 23 702, 773-776
s. 24 . 776
s. 25 . 497
H. 36 . 505
s. 39 565, 566
s. 40 . 566
». 42 701, 781
a. 54 . 233
s.
S.
S.
55
56
61
... .
.
233
413
507
c. 21. (Married Women's Property (Scotland) Act, 1881) 92
u. 58. (Army Act, 1881)—
s. 163(1), (g) 398
(h) 398
45 & 46 Viot. c. 38. (Settled Land Act, 1882)—
s.28 777'
S.40 782
0. 43. (Bills of Sale (1878) Amendment Act, 1882) . 473
45 & 46 Vict, c' 75. (Married Women's Property Act, 1882) 92, 542, 620
s. 11 175, 562-565, 813
B. 18 628
s. 19 561, 665
40 & 47 Vict. 0. 47. (Provident Nominations and Small Intestacies Act,
1883), B. 3 646
u. 62. (Bankruptcy Act, 1883) 552
s. 4 . .
597
s. 6 680
s. 9 • 580 .
s. 20 580
".21(4) . 581
B. 30 616
TABLE OP STATUTES. XV
PAQB
46 & 47 Vict. c. 52 s. 35 . 587
s. 37 . 616
a. 43 . 592
s. 44 . 581, 583
s. 45 . 592
s. 47 . -598
s. 48 598, 604, 612
s. 49 . 592
s. 50 (5) . 581
s. 64 . 580
S.54 . 581
s. 56 (1) . 590, 591
(2) 590, 591
s,57 . 591
a. 57 (2) . 590
(5) . 590
(6) . 590
s. 121 . 618
s. 122 . 619
s. 125 619
s. 138 . 581
.s. 140 . .581
s. 144 845
s. 160 . 587
47 & 48 Viot. i;. 68. (Matrimonial Causes Act, 1884), s, . 567
49 & 50 Viet. c. 38. (Riot Damages Act, 1886) . 762
s. 2 . 763
s. 3 . . . 763
H. 4 . 763
s. 6 . 763
50 & 51 Viot. 0. 57. (Deed of Arrangements Act, 1887)-
S.2 . 474
S. 4 474
S.S 475
s. 6 475
S.7 475
S.8 476
s. 17 476
51 Vict. c. 8. (Customs and Inland Revenue Act, 1888) 19 818
51 & 52 Vict. c. 43. (County Courts Act, 1888), s. 67 . 521
c. 59. (Trustee Act, 1882), s. 2 . 516
c. 59. (Trustee Act, 1888), s. 7 . 781
52 Viot. c. 7. (Customs and Inland Revenue Act, 1889), s. 11 523
52 & 53 Viot. c. 30. (Board of Agriculture Act, 1889) 777
c. 49. (Arbitration Act, 1899) 909
53 & 54 Vict. 0. 5. (Lunacy Act, 1890)—
s. 90 . 578
s. 108 578
s. 116 579
s. 120 580
c. 29. (Intestates Estates Act, 1890) 623
c. 39. (Partnership Act, 1890), s. 2 (2) . 4
c. 71. (Bankruptcy Act, 1890)—
s. 1 597
s. 3 617, 618
64 & 55 Vict. c. 29. (Presumption of Life Limitation (Scotland) Act, 1891) 404
u. 39. (Stamp Act, 1891)—
S. 2
s. 3
. . .... 806,845
845
s. 3 (2) 811, 820
s. 4 819, 845
S.6 . 846
S.6 846
S.10 847
S.11 . 847
XVI TABLE OP STATUTES.
PAGE
54 & 55 Viot. c. 39.
TABLE OF STATUTES. XVU
65 Vict. 0. 6.
—— —
XVIU TABLE OF Statutes.

PAGE
43
59 & 60 Vict. c. 25 8. 28 ,
(E'riendly Societies Act, 1896)

B. 28 44
(6)
s. 29 44
s. 30
44
s. 31
18
8.33 19
s. 38
18
s. 39
44
s. 40
44
s. 41
17,18
s. 45
19
s. 46
19
s. 56
18
s. 58
18
s. 59
18
s. 60
18
s. 61 18
s. 62 18
8. 63 18
s. 64 18
s. 67 18
B. 68 19, 646
19
3.70 19
s. 71 19
B. 73 19
B. 76 44
s. 77 19
ss. 78—83 71
s. 84 (f) 18
s. 94 . 101
Scliediile I, 17.18
.26. (Collecting Societies and Industrial Assurance
Companies Act, 1896)
B. 1 22
s. 2 (1) 23
(2) 23
s. 3 23
s. 4 (1) 23
(2) 23
s. 6 (1) 44
(2) 45
=. 7 23, 796
23
s. 10 23
B. 11 23
s. 12 46,71
s. 13 (1) 24
(2) 24
u. 28. (Finance Act, 1896),s. 13 807, 809
60 & 61 Viot. 0. 37. (Workmen's Compensation Act, 1897) 919-921
c. 65. (Land Transfer Act, 1897), s. 1 . 766
61 & 62 Viot. u. 10. (Knance Act, 1898), s. 6 . . 826
c. 37. (Local GoTernment (Ireland) Act, 1898)
s. 5 . 764
s. 56 .
. 764
62 & 63 Viot. 0. 9. (Finance Act, 1S99), s. 11 . 806, 807, 809
63 & 64 Viot. 0. 48. (Companies Act, 1900), s. 31 9
u. 51. (Moneylenders Act, 1900)
s. 1 . 469
s. 2 . . . 470
s. 6 . . 470
3 Bdw. 7, c. 46. (Revenue Act, 1903), s. 7 . . 831
5 Edw. 7, c. 11. (Railway Fires Act, 1905) . 760
—
TABLE OP STATUTES. XIX
PAGE
6 Edw. 7, c. 20. (Revenue Act, 1006), 9 s. . . . .840
0.41. (Marine Insurance Act, 1906)
s.
s.
4
5
. . .... . . . 107
108
108
s. 6 109
B. 16 766
s. 23 109
B. 50 766
B. 61 .766
1 . 58. (Workmen's Compensation Act, 1906) . . 967
7 Edw. 7, c. 13. (Finance Act, 1907)—
s. 6 . 839
S.8 806, 807, 809
7 Edw. 7, c. 18. (Married Women's Property Act, 1907) . 549, 552
s. 1 . 628
7 Edw. 7, c. 46. (Employer's Liability Insurance Companies Act,
1907) 26
0. 50. (Companies Act, 1907), 28 s. 74
u. 51. (Sheriff Courts (Scotland) Act, 1907), s. 42 . 764
8 Edw. 7, e. 27.
c.
0. 67.
32.
(Married Women's Property Aet, 1908)
(Friendly Societies Act, 1908)
(Children's Act, 1908)—
.... 550
16
s. 1 164
s.7 .164
8 Edw. 7, 0. 69. (Companies (Consolidation) Act, 1908)
B. 1 9
B. 2 11
s. 3 11
s. 4 11
s. 6 11
s. 10 11
s. 11 11
s. 13 187
s. 14 12
8. 15 12
8. 16 12
s. 18 40
6. 20 13
8. 22 12
8. 24 12
B. 25 12, 40
s. 26 (1) 35
(2) 35
(3) 35
(4) 35
s. 40 12
s. 41 12
B. 45 12
s. 46 13
s. 48 13
s. 49 13
s. 60 13
s. 57 13
s. 59 12
H. 62 13
s. 63 13
s. 69 187
s. 93 14
s. 94 14
s. 100 13
s. 101 14
8. 108 (1) 35
(2) 36
(6) 36
8. 109 36
XX TABLE OF STATUTES.
PAOE
8 Edw 7 c 69. (Companies (Consolidation) Act, 1908)
30
s. 110 .
36
s. 112(1)
36
(2)
36
(3)
113
37
s. (1)
37
(2)
s. 120 .
49, 54, 79,99
122 71
s. .
s. 129 .
72
s. 130 (i.)
73
(ii.)
73
(iii.)
73
(iv.)
74
s. 131 (1) 72
(2)
72
(3)
72
(5)
72
s. 137 (1)
74
(1), (a)
74
(1). (b)
72
(1), (0)
75
s. 139 .
77
s. 140 .
80
s. 141 .
77
s. 142 .
80
s. 147 .
80
s. 148 .
80
s. 149 .
80
(2)
81
B. 150 (1) 81
(2) 81,82
6. 152 (1)
80
(2) 80
(3)
80
s. 155 .
E. 156 .
B. 158 (1) 82
(2) 82
(3)
82
(4) 82
(5) 82
s. 160 .
80
s. 163 .
82
=. 165 . 83,92
s. 166 . 83
s. 169 . 83
B. 170 . 83
ri. 171 . 83
B. 172 . 83
s. 173 . 83
B. 182 . 84
s. 183 . 84
B. 185 . 84
B. 186 (ii.) 84
s. 186 (v.) 85
(viii.) 85
(ix.) 85
s. 187 . 84
B. 188 (1) 84
(2) 85
(3) 85
(4) 85
(5) 85
s. 191 . 99
TABLE OP STATUTES. XXI
PAGE
8 Edw. 7, c. 69.
? (Companies (Consolidation) Act, 1908)
s. 192 .
49, 50, 54
65
(3)
65
(4)
(5)
55
s. 193 .
85
s. 194 .
85
s. 195 .
86
o. 199 .
86
s. 203 .
86
s. 205(1) 91
(2) 91
e. 243 (6) 40
8. 245 . 9
s. 249 . 14,71
(2), (d) 14
(2), (e) 15
B. 263 (i.) 15
(ii.) 15
(iii.) 15,88
(V.) 15
s. 267 .
71
B. 268 .
73
(1) (i-) 71, 72
(I) (iy-h (b) 73
(1), (iv.), (c), (d) 73
(1). (iv.). (e) 74
s. 270 . 80
6. 271 . 80
s. 272 . 81
B. 274 . 45
(3) 46
(4) 46
9 Edw. 7, c. 49. (Assurance Companies Act, 1909) 987
s. 1 26
s. 1 (a) . 27
(b) . 28
(0) . 28
(d) .
28
(e) . 29
s. 2 26
s. 2 (1) .
29
(4) •
30, 97
(3) . 30
(6) . 30
s. 3 30, 37,97
8.4 37
8. 6 (1) . 38
(2) . 38
s. 6 39
B. 7 (1) .
41
(2) .
41
(3) .
41
35
(4) .
8.8 41
8. 9
38
40
B. 10 .
40
8. 11 .
37
B. 12 .
47,56
B. 13 (1) 47
(3), (a) 47
(b)
47, 48
(0) 49
s. 14 .
71,74
B. 15 .
I.L.
—
XX TABLE OF STATUTES.
TAan
8 Edw. 7, c. 69. (Companies (Consolidation) Act, 1908)
s. 110 .
30
s. 112 (1)
36
(2)
36
(3)
36
s. 113 (1)
37
(2)
37
s. 120 . 49, 54, 79,99
s. 122 .
71
s. 129 .
72
s. 130 (i.) 73
(ii.) 73
(iii.) 73
(iv.) 74
s. 131 (1) 72
(2) 72
(3) 72
(5) 72
s. 137 (1) 74
(1). (a) 74
(1), (b) 72
(1)> (0) 75
s. 139 . 77
s. 140 . 80
s. 141 . 77
s. 142 . 80
s. 147 . 80
s. 148 . 80
s. 149 . 80
(2) 81
s. 150 (1) 81
(2) 81,82
s. 152 (1) SO
(2) 80
(3) 80
s. 155 .
s. 166 .
B. 158 (1)
(2) 82
(3) 82
(4) 82
(5) 82
a. 160 . 80
s. 163 . 82
s. 165 . 83,92
s. 166 . 83
e. 169 . 83
B. 170 . 83
s. 171 . 83
e. 172 . 83
s. 173 . 83
e. 182 . 84
B. 183 . 84
B. 185 . 84
6. 186 (ii.) 84
B. 186 (v.) 85
(viii.) 85
(ix.) 85
B. 187 . 84
8. 188 (1) 84
(2) 85
(3) 86
(4) 85
(5) 85
6. 191 . 99
TABLE OP STATUTES. XXI
^
xxn TABLE OF STATUTES.
RULES AND ORDERS.
Rules of the Supreme Court, Order LIV., B. 4
TABLE OF CASES.
Note. — Where cases are cited in the text in detail with a summary of the facts,
arguments and judgments, this is indicated hy the use of heavy type.
PAGE
Aetna v. People's Bank, [1894] . 904
Life «;. Brodie (1879) . . 859 .
PAGE V. Davey (1887) . . 867, 874

Aarons' Reefs v. Twiss, [1896] . 282 V. Dunn, [1905] ...949
A. B. V. Northern Accident, [1896] V. Prance (1876), (1875) 166, 322,
931 932 331, 871, 873
Abbott V. Howard (1832) . 298,' 304, V. Preerson, [1902] 859, 916,
.
313, 852, 860 917, 926, 927, 948, 949

V. Shawmut Mutual (1861) . 282, V. Green (1876)
V. Hicks, [1900]
....
.... 265
331, 345 953
Abell V. Penn Mutual (1881) 795 .
•
V. Smith, [1898] . . 255, 266
Aberaman Iron Works v. Wickens V. Vandeoar, [1898] . 925, 927
(1868) 278 V. Tyler( 1836) . .121, 122,
Abraham v. North German In- 133, 749
surance (1889) 859 A.-G. V. Abdy (1862) .... 644
Abrahams v. Agricultural (1876) . 347, V. Adelaide Life (1888) 338, 974
368 V. Cleobury (1849) ... 806
Accident Insurance v. Bennett, (N.S.W.) V. Curator of In-
[1891] . 923, 924, 942, 943
. testate Estates, [1907] 555
...
.
V. Crandal (1886) 859, Dobree, [1900]

V. 524
.
940, 941, 950, 953

.
^w. Gflpin (1871) ....

Great Western Railway
844
Accident Insurance of North V.
America v. Young, [1891] . 933, Company (1880) ... 183
935, 951, 953, 957, 960, 961 V. Hawkins, [1900] ... 524
Accidental Death Insurance, In V. Mersey Railway Co, [1907] 183
re (1878) 3 V. Murray, [1903], [1904] . 159,
Acer V. Merchant Insurance (1870) 700, 445, 526
900 u. Phillips (1871) ... 844
Aeey v. Fernie (1840) . . 240, 264, V. Ray (1874) 270, 271
. .
265, 268 V. Robinson, [1901] ... 525

Acme Wood Paving Co. v. Ross, V. Ross, [1909] .... 818
[1910] 899 V. Rowsell (1844) ... 644
Acraman v.Corbett (1861) . . 609 u. Wack, [1899] .... 631
Adams v. Adams, [1900] ... 397 A. G. Peuoheu Co. v. City Mutual
V. Greenwich Insurance Pire, [1891] 125
(1876) 888, 902 Agar V. Athenaeum Life (1858) . 181
!;. Lindsell (1815). ... 211 Agra Bank, ^'xporie (1868) . . 688
Adam's Policy Trust (1883) . 557, 564 Agricultural Cattle Insurance, In
Adlard v. Booth (1835) ... 144 re (1874) 97
Adrereno v. Mutual Reserve Life Agricultural Insurance v. Ansley
(1889) 271 (1888) 345
Aetna v. Smith, [1898] 255, 266 . Agricultural Savings v. Liverpool,
Aetna Indemnity v. Crewe, [1907] 213, London, and Globe, [1901],
966, 972, 975 [1902] 326, 898
V. Farmers' National Bank, Agriculturist Cattle Insurance, In
[1909] 971, 974 re (1849) 74
Aetna Insurance v. A.-G. of On- Ainslie v. Harcourt (1860) . . 636
tario, [1890] 878 Aitchison v. Dixon (1780) . . 536
—
XXVI TABLE OP CASES.
PAQE PAQE
Albert Life, Cook's Case (1870) .
, 96 Anderson v. Commercial Union
(Lancaster's Case) (1885) 679, 687, 690, 694, 914
Albert Life Indemnity Case V. Fitzgerald (1853) 279, 285, .
(1871) 49 291, 300, 323, 324, 330, 332, 333,

Albion Fire Soo. v. MiUs (1828) . 351 335, 377, 381, 386, 786, 787, 790,
Works Williamsburg 853, 871, 874
Albion
....
—
v.
(1880) .... 367, 887, 889 V. Hillies (1852)
V. Martin, [1907]
237
666 ...
Alchorne v. Favill (1825) 600, 914 . .
Alcock V. Smith, [1892] 449 ... V. Morice (1875), (1876) 123, 134
Aldrich v. British Griffin, &c., Co., V. Pacific Fire and Marine
[1904] 981
— (1872) .... 279, 313
V. Equitable Safety (1846) 138 . V. Saxigeen Mutual, [1899] 743, .
—— V. Mercantile Mutual Acci- 745, 746, 898, 903

dent 950 V. Supreme Council [1892] . 235
Aldridge G. W. Railway (1841) 759 V. Thornton (1853) 232, 788, 798
Alexandra
v.
v. Germania Fire (1876) 373, Andrea v. Fletcher (1789) 793 ...
887 Andrew v. Failsworth, [1904] . 923
Allan V. Markland (1882) . 137 Andrew's Case (1872) . . ; . 68
Allemannia Fire v. Firemen's In Andrews, Ex parte, Emmett, In
surance, [1907] .... 918
626
re (1816)
Andrews
.
Patriotic (1886)
. . 640,774,780
132,
AUen V. Backhouse (1813) v. .
t'. Dundas(1789) . . 626 146, 699, 709, 712, 737, 740, 741, 742
V. Hearne (1785) . . 104 743, 750, 900
— V. Jackson (1875) 468 Angel V. Merchants' Marine, [1903] 675
V. Morrison (1828) . . 812 Angers v. Mutual Reserve Life,
V. Watertown Fire (1882) 746 [1904] . . 278, 294, 791, 859
Allen's Case (1872) . . . 67 Anglo -Australian Assurance, In
AUetsont'. Chichester (1875) 588 . re (1860) 75
Allkins V. Jupe (1877) . . . 793 Anglo-Australian Co. Indemnity
Allom V. Property Insurance, Case (1874) 61
[1911] 860, 878 Anglo - Australian Life, In re
Alston V. CampbeU (1779) . 139 . (1862) 61
Alton V. Harrison (1869) 606 ... Anneni). Woodman (1810) . . 792
American Accident v. Carol, [1896] 960 Anstey v. British Natural Pre-
—- V. Carson, [1896] 923, 924, . mium Life, [1908] 295, 299, . .
940, 941 858, 875, 876, 877

V. Reiyart, [1893] 923, 924 . Appel V. Aetna Life, [1905] 919, 924
American Basket Co. v. Farm- Appleby v. Myers (1867) . 144 . .
ville (1878) 126, 893 Arden v. Arden (1885) 441 ...

American Bonding Co. v. Spokan V. Pullen (1842) 753 ....
Building Society, [1904] 971, 974 . Ardill V. Citizens Insurance, [1893]
American Credit v. Aetna Woollen 134, 895
Mills, [1899]
V. Carrolton, [1899]
....983 Argus Life, In re (1888) .
Armenia Fire v. Paul (1879)
. 49, 50
283
329, 983 . . . .
V. Champion [1900] 238, 973, 976 Armstrong v. Provident Savings

V. Wood, [1896]
American Employers' Liability v.
....983
V.
Life, [1901]
State (1883)
206, 209, 228, 860
201 ....
Barr, [1895] . 189, 931, 932
. . V. Turquand (1858) 341 ...
American Life v. M'Aden (1885) 796 Arnison v. Smith (1889) 288 ...
American Steam Boiler Insurance
.
Arthur, In re (1880) 527 ....

V. Chicago Sugar Co., [1892] 651, . Arthur Average Association, In
986 re (1876), (1875) 9, 181, 787 . .
American Surety v. Pauley, [1986] 350, Arthurholt u. Sasquehauna, [1893] 235

971, 972, 974, 975, 976 Arundel D. Phipps (1804) .611 .
V. Wrightson, [1910] . 706, . Ashbury Railway Carriage Co. v.

707, 720 Riche (1875) 181, 182, 187
. . .
Amicable Society v. BoUand (1830) 170, Ashby V. Ashby (1844) 537 ...
172, 176 Ashenfelter v. Employees' Lia-
Amiss V. Witt (1863) 467 .... bility, [1898] ....
945, 947
Amott V. Holder (1852) 616 ... Ashley v. Ashley (1829) . 168, 439 .
Amsincki;. American Ins. (1880) . 120 Ashworth v. Builders' Mutual

Amys?;. Barton, [1911] 929 ... (1873) 887
Anchor Insurance, In re (1870) 64 . Assicurazioni Generali v. Empress
Anctil V. Manufacturers' Life, Assurance 757
[1899] .... 104, 152, 876 Assievedo v. Cambridge (1710) . 105
TABLE OF CASES. XXVU
PAGE PAGE
Assurance Co. v. Spooner, (1905] . 749 BaJestraooi v. The Firemen's (1882) 657,
Astrich v. German-American, 882, 906
[1904] 905 Balfour's Case (1871) .... 68
Athenssum Life, 7n re, (1858). . 185, Balfour v. Ernest (1859) ... 181
186, 187, 197 Balkis Consolidated v. Tomkinson,
, In re (1859) 97 [1893] 182
V. Pooley (1858), (1859) . . 181, Ball, Ex parte, In re Shepherd
182, 457 (1879) 759
Atherford v. Beard (1788) 104 BaU V. BaU (1847) .... 533
Atherton v. Phoenix Insurance
. .
u. Storie (1823) .... 860

(1871) 896 Ballagh v. Royal Mutual Fire
Atkinson, In re (1852) ... 597 (1880) 883
Atkinson's Policy, In re, [1895] . 564 Ballantyne v. Employers, [1893] . 393,
Atlanta Accident v. Alexander, 924, 929, 931, 932
[1898] 951, 953 Baltimore and Ohio Employees'
Atlas Reduction Co. v. New Zea- Relief v. Post (1888) 937, 938 .
land Insurance, [1905] 894, 898, 917 Bancroft v. Heath, [1901] 885 . .
Attleborough Bank v. Security V. Home Benefit, [1890] 872 .
Co., [1897] 746, 897 Bank of Ireland, Ex parte

Attleboro' Co. v. Frankfort In- (1886) 617
surance, [1909] 970 Bank of London and National Pro-
Attwood V. Small (1838) . . 277, 290 vincial, In re (1871) . . 9, 71
Aubert v. Gray (1861) . 173, 179 .
Bank of London Assurance, Part's
«. Walsh (1810) 795 ... Case (1870)
Bank &
61
Audubon v. Excelsior (1863) 198, 210 of N.S.W. v. N.B.
Austin V. Drewe (1815), (1816) 650, Merc. (1881) 130, 133
...
.
651, 664 O'Connor (1889)

V. 485
Australian Agricultural Co. v. Bankers' Mutual v. GofEs, [1906] . 966
Saunders (1875) 333, 708, 879, 901, Bankhead v. Des Moines (1886) . 332
902 Banque Jacques- Cartier v. La
Austrian Lloyd v. Gresham Life, Banque d'Epargne, La 193 . . .
[1903] 909, 913 Barber v. Morris (1831) 112, 454, 456

Ayerst v. Jenkins (1873) ... 469 Barclay v. Cousins (1802)
Bardwell v. Conway Insurance
123, 124 . .
Aylwin v. Witty (1861) . . 802, 804

(1877) 67b, 901
Baring, In re, [1893] 635, 779. . .
B Baring Bros. v. Marine Insurance,

[1894] 855
B. Co. V. New Amster-
Roth Tool Barker v. Illingworth, [1908] 501 . .
dam
Casualty, [1908] 968, 969 . . V. Marine (1821) 130 ...
Babcock v. Montgomery (1849) 652 . V. North British (1831) 237, 255
Back t). Phoenix (1885). ... 372 V. PuHman Co, [1904] . 786 .
Bacon v. U. S. Mutual Accident, V. WaUers (1844) 272, 790 .
[1890] . . . 922, 924, 952, 953 Barker Estate, In re (1875) 608 . .
Baddely v. Baddely (1878) . . 458 Barling v. Bishopp (1860) 609 . .
Badenfeld v. Massachusetts' Barnard v, Faber, [1893] 268, 324, . .
Mutual Accident, [1891] 947 327, 329, 332, 885

....
. .
Badham, In re, [1893] 593 . . . Barnes' Case (1873) 53

Baerlein v. Dickson, [1909] 877 . . Barnes v. Dominion Grange
Bagot V. Chapman, [1907] . 455, 456 Mutual, [1895] 200, 892 . .
Bails V. St. Joseph (1880) 209 . . V. Fidelity Mutual, [1899] 296, .
Bailey v. American Central ( 1882) 895 872

V. Barnes, [1894] 503 ... V. Hartford Fire (1882) 705, 728
V. Intestate Casualty, [1896] 922, Barnes v. London, Edinburgh, and
924, 947, 953, 955 Glasgow Life, [1892] 161, 162
Baker v. Commercial Union, [1894] 23, V. Racster (1842) 491 ...
264 Barnett, In re, [1908] 530, 588, 589
.
V. Denning (1838) ... 618 Baron j;.'Fitzgerald (1840) 640 . .
«). HoltpzafEeU (1811) 754 Baroness Wenlock v. River Dee

....
. .
V. IngaU, [1911] 20 (1887) 181

V. Jones (1850) .... 753 Barr's Trusts,
Barr v. Gibson (1838)
In re (1858)
....
. . 597
106
V. Union Mutual (1871) 239, 868
V.Union Mutual, [1894] . 198 Barrack ^. M'CuIlooh (1857) . . 605
V. Yorkshire Fire and Life, Barras v. Scottish Widows' Fund
[1892] 908 [1900] 565
XXVIU TABLE OP OASES.
PAOE PAGE
Barrett v. Jermy (1849) . 341, 366, Bell f. Carstairs (1811), (1810) 173, .
369, 888 286, 661

Barry v. Hamburg-Bremen Fire Bellamy v. Briohenden (1861) 484, 772
(1888) 895 Bender v. Owners of S.S. Zent,
V. United States Mutual. See [1909] .... 924, 929, 930
Mutual Accident Assurance v. Benham v. United Guarantee and
Barry. Life (1852) . . 329, 336, 338, 974
Barston v. Cook (1862) ... 405 Benjamin v. Saratoga Mutual
Bartlet v. Goodwin (1816). 121, 137
. (1858) 718, 750, 900
Barton v. Bank of New South Benjamin Smith's Case (1874) . 67
Wales, [1890] 479 Bennecke v. Connecticut Mutual
Bashford v. Cann (1863) ... 638 (1881) .... 255, 263, 343
Bassil V. Lister (1851) .... 535 Bennetts. Gamgee (1876). 591
....
. .
Bateman, Ex parte. In re Rout- Ireland (1858)

V. 756
ledge (1856) .... 757 Bennett v. Slater, [1899] . 647, 648
V. Lumberman's Ins., [1899] 715, Bensaude v. Thames and Mersey,
901 [1897] 327
Bates V. Equitable Insurance Bentinok's Case (1873) 90, 91
....
. .
(1869) 129, 896 Bentley v. Lumbermen's Insur-

1;. Hewitt (1867) 313,316, . . ance, [1899] 369, 889
317, 318 Benyon v. Nettlefold (1850) . . 467
Battin v. North-Western Mutual, Beresford v. Beresford (1857) . 533
[1904] 256 Berger v. Pacific Mutual, [1898] . 941
Battles V. York Co. Mutual (1856) 329 Berliner v. Travellers', [1898] 925, 927,
Baudains v. Richardson, [1906] 457 . 944, 947, 948
Bawden v. London, Edinburgh, and Bermon v. Woodbridge (1781) 786, 793
Glasgow, [1892] 289, 355, 358,
.
" . Bernays v. V. S. Mutual Accident,
359, 861, 937, 938 [1891] 872, 928
Baxendale v. Harvey (1859) 319, 332,
363, 364, 879, 884, 888
Berry, In re, [1896]
V. American Central,
....
580
Baxter, In the Goods of, [1903] 647, . [1892] 137

648, 649 Berry v. Halifax Commercial
Baxter v. Hertford Fire (1882)
Bayless v. Travellers (1877)
147
924, 954,
. Banltlng Co., [1901] ....
501
Betty, 7re re, [1899] 779
Bayne v. Walker (1815)

955
...
Beyer v. Adams (1857) ...
487
753 Biokerton v. Walker (1885) 510, 511
Bayspoole 4). Collins (1871) 607 . . Bigelow V. Berkshire Life (1876) 863,
Bazett V. Meyer (1814)
Beacon Life and Fire
664 ... 864
v. Gibb Bignold V. Audland (1840) . . 425
(1862) 855, 885 Biggar v. Rock Life, [1902] 355, 356,
Beaker v. Phoenix Ins., [1894] 881, 986 357, 358, 359, 789
Beals V. The Home (1867).
Bean v. Stupart (1778)
.
.
699,
327, .
913
328
Bishop Curtis (1852)
V.
Billington v. Provincial Insurance
...
625
V. Travellers, [1892] 937, 938, 939 (1877) .... 346, 720, 900
Beaton v. Boulton, [1891] . 495, 497 (1879) .... 357, 883, 900
Beattie v. Lord Ebury (1874), Birch V. Clifford, [1891] ...
752
(1872)
Beatty v.
194,
Mutual Reserve Fund
294 Bird V. Appleton (1800)
Birrell v. Dryer (1884)
...
171
. . 853, 861
Life, [1896] 257, 263 Bishop V. Clay Insurance (1878) . 895
Beauchamp Faber, [1898] v. 885 . . Biss, In re, [1903] 632
Becker v. Exchange Mutual, [1908] 236, Bisset V. The Royal (1821) 690, 914
882, 917 Bize V. Fletcher (1779) . 326, 857
Bedouin, The, [1894] 290, 318, 319, . Black & Co.'s Case (1872) . 92
.
Beekman v. Fulton Co. Farmers'

654 Blackburn, In re, [1899]
Blackburn v. Haslam (1888) .
...
613
349
Insurance, [1901]
Beer v. Prudential Assurance,
.... 136 V. Vigers (1887) . . .
.
279, 349
Blaokett v. Royal Exchange
[1902] 794, 798 (1832) ^.861
Behn v. Burness (1863) 279 Blackhurstt). Corkell(1789)
. . ,
. . 327
Belfour v. Weston (1786) . . 755 Blake v. Exchange Mutual (1882) 705,
Bell's Case (1870) 94 719, 728, 878, 883, 900, 916, 917
Bell,
[1896]
In re, .JefEery v. Sayles',
508
Blake v. Peters (1863)
Blakeley Ordinance Co., In
.... 632
.
re
Bell V.Ahearne (1849) . . . 640 Brett's Case (1873) ... 25, 87
D. Ansley (1812) . . . ! 157 Blandy v. Herbert (1829) ... 819
TABLE OF OASES. XXIX
PAGE PAGE
Bleakley Niagara District (1869) 311,
v. Braunstein v. Accidental Death
Blewing, In Gooda of (1880)

346, 358 (1861) ....
Brealey v. Collins (1831)
393, 907, 912
618 454 . . .
Bloom V. Franldin Life (1884) 865, Breasted v. Farmers (1853) 862, 864
866 Brecht v. Law Union and Crown,
Blue and Desohamps v. Eed [1907] .... 894, 896, 898
Mountain Railway, [1909] 760 . . Bree v. Holbeok (1781) 275 ...
Blue Ribbon Life, In re (1889) 31 . Breese v. Metropolitan, [1899] 163 .
Blundall's Case (1872) 53, 62, 65 Brenden v. Traders and Travellers',

Blythe v. Birtley, (1910) 19 . [1903] . . 935, 936, 937, 938
.
Boardman v. Scott, [1902] 924 . . Brereton v. Day, [1896] 779

Bodine v. Exchange Fire (1872) 233 .
Brett V. Clowser (1880) 277
Boehen v. Williamsburgh Insur- Brewster v. National Life,,[1892]. 166,
ance (1866)
Boehm v. Bell (1799)
.....
233 ,256
121, 130, 148 Brice v Bannister (1878)
356, 796
410 ...
Bohn Manufacturing Co. v. Bridge v. Bridge (1852) 458, 459 .
Sawyer, [1897] 134 V. American Mercantile

Boice V. Thames (1885) ... 210 (1873) 881
BoUand v. Disney. See Amicable V. Merchant Traders (1849) 143 .
Society v. BoUand. V. National Life (1882) 262 . .
Bolton V. Ferro (1880) . . . 618 Bright's Trusts, /» re (1880) 597 . .
Bolton Partners v. Lambert Brighton Manufacturing Co. v.

(1888) 193 Reading Fire (1887) 367, 369, 889
Bonnard v. Dott, [1906] ... 472 Brinley?;. National (1846).
Brinn v. Featherstone (1813)
674 . .
Boose u. World Mutual Life (1876) 872 293 . .
Bordine v. Exchange Fire (1872) 256 Brintons u. Turvey, [1905] 921,924 .
Boston Fruit Co. v. British and British Alliance Assurance, In re

Foreign, [1905], [1906] 151 ... (1878)
British American v. Joseph (1857)
75
Boston Ice Co. v. The Royal 661
(1866) 135 British-American Assurance v.
Boulton, Ex parte (1857)
Borrodaile v. Hunter (1842)
589 ... Darragh, [1904]
Bristol (Marquis) v. Inland Re-
....
908, 912
862, 864
Bourne's Case (1871)
Boussmaker, Ex parte (1806)
....
96 venue, [1901]
British and Foreign Marine v.
828
177 . .
Bowden v. Vaughan (1809) . 293 . Gulf (1885) 310

Bowden v. Henderson (1854) . 401 . British Empire Assurance v.
Bowen v. Lewis (1884). 890, 915 . Browne (1852) 6
Bowker V. Burdakin (1843) . 222 . British Equitable v. Bailey, [1906] 857, .
Bowling and Welby'a Contract, 858, 859

[1895] 71 V. Great Western Railway Co.
Bower ?;. Shand (1877). 861 ... (1869) . 297, 311, 872
....
. .
Bowling's Case (1872) 98 V. Musgrave (1887) 272, 276, 789

Box V. Railway Passengers (1881) 926, British Equitable Bond and Mort-
947 gage Corp., In re, [1910] . . 74
'v. Provincial Insurance British Imperial, In re (1878). . 96
(1868) 134 British Imperial Insurance, Farr's
BoxaU Boxall (1884)
V. ... 627 Claim (1878) 97
Boyoe v Phoenix Mutual (1887) . 867 British Industry v. Ward (1856) . 346
Bradford v. Brown-John (1868) . 633 British Insurance v. Magee (1834) 105,
Symondson, (1881)
V. . . 215 115
Bradley v. Essex and Suffolk Acci- British Nation Life, Ex parte
dent . 274, 328, 785, 956, 967, Liquidators (1878)
British Provident Life
.... 51
968 and Fire,
V. Mutual Benefit Life (1871) 865, In re (1864) .... 51, 61, 64
866 British South African Co. Do v.
Brady v. Aid Association, [1899] 237 Beers, [1910] .... 181, 479
Brady v. U. S. Life, [1894] 871, 873 . British Widows' Assurance, In re,
Bragdon v. Appleton Mutual (1856) 222, [1905] 79
233 British Workman's General v.
Brail, In re, [1893]
Brandon v. Curling (1803)
.... 599 CunlifEe, [1902]
Briton Life, In re (1887) ...
794
47
177, 178 .
Brandt v. Dunlop, [1905] 425, 436, 438 Briton Medical and General, In re
u. Heatig (1818)
Branford v. Saunders (1877)
.... 625 (1886)
Britton v. Royal (1866)
79
173, 662, 906
155, 156
Brasier v. Hudson (1837) ... 605 Brooklebank, Ex parte (1877). . 577
XXX TABLE OF CASES.
PAGE PAGP4
Brocklebank v. Sugrue (1831). 190 Burrowes v. Locke (1805) . . . 277
Bromley D. Smith (1859) . . 641 Burson v. Fire Association, [1890] 893,
Brook V. Stone (1865) . . . 772 895
Brooke v. Haymes (1868) . 627 Burt V. Union Central Life, [1902]
V. Lord Mostyn (1864) . 577 172, 174
Brooking v. Mandsley (1888) . 272 Burton v. Connecticut Mutual Life
Brooks V. Brio Fire, [1902] . 126, (1889) 163, 164
133, 894 V. Gore District Mutual Fire
Brophy North American Life, (1865) 140, 709, 747, 899
[1902]
v.
. . . 152, 164, 793, 796 Buse V.
.
Turner (1815)
. .
.... 305
411
Brougham v. Squire (1852) 501 Bushman Morgan (1833)
w. . .
....
. .
Brown's Case (1873) 90 Busk V. Royal Exchange (1818) . 664

(1872) 92 Busteedr. West of England (1857) 240,
Brown v. Cotton, &c., Insurance, 263, 264, 331, 799, 867, 868
[1892] 890 Butcher «. Stead (1875) 613 ...
Equitable Life, [1907] 877 Butero v. Travellers', [1897] 940, 941
V.
V. Franklin Mutual, [1895]
.
. 198 Butler's Case (1871) 67

98
....
V. Freeman 160, 638,
(1851) . (1872)
639, 640 Butler V. Standard Fire (1879) . 129,
v. Greenfield Life, [1899] . 283, 879, 883, 884, 886
315 Bylow V. Union Casualty, [1900] 937,
V. Leeson (1792) . 104 938
V. MoCrae (1889) . 734 Byram v. Sovereign Comp., [1899] 248
V. Metropolitan Life (1887) 357, Byrne v. Muzio (1881) . . 279, 972
872, 873
V. Quilter (1764) . 755 .
Brown v. The Royal (1859) 690,691,
— 914
V. U. S. Casualty, [1898] 940, 941
Brown and Tylden's Case (1874) 93 .
Caballero v. Home Mutual (1860) 653,
654
Browne v. Browne (1860) 632, 634, 636 Cable V. U. S. Life,
[1901] . 296, 343
D. Lockhart (1840) 480 ... Cadahay Packing Co. v. New
V. Price (1858) 483 .... Amsterdam Casualty, [1904] 969, 970
Cadman v. Cadman (1886) 575
Browne v. Savage (1859) 442 . . . . .
Browne's Policy Trust, [1903] 558 . Cahan v. Continental (1877) . . 298

Browning v. Home Insurance Caldwell v. Dawson (1850) . 819 .
(1877) ....
319, 372, 895 V. Stradaoona Fire and Life
132, 136, 145, 891,
Brownlee v. Robb, [1907] 440, 460, . (1883) . .
465 892, 904, 916, 917

Brownlie v. Campbell (1880) 277, 301 Caledonian v. Gilmour, [1893] . 907,
Bruce v. Garden (1869) 638 ... 909, 911
V. Ross (1787) 104 .... California Insurance v. Union
Compress (1889) .
V. Smith (1871) 404, 405 . . . 129, 139, 368,
Bruneau v. Laliberte, [1902] 170 . . 664, 682, 709, 879, 895, 896, 901
Bryan v. Traders' Insurance (1888) 396 Calishere v. Forbes (1871) . . 486
Bryne v. Muzio (1881) 971, 976, 977 Cammock v. Lewis (1872) . 157 .
Buchanan v. Ocean (1826) 143 . . Camden V: Anderson (1798) . . 169

V. Faber, [1894] 124, 139 Campbell v. Holyland (1877) . 497
....
. . . .
Buchard v. Travellers' (1883) 945, 947, V. Innes (1821) 663

948 j;. Lamont (1824) .405,406 .
Buokland Buckland, [1900]

v. 551 V. Monmouth Mutual (1871) 882,
....
.
Buckner's Case (1873) 66 904

Buddin's case (1872)
Bugden v. Bignold (1843)
.... 69 V. National (1874) . 266, 267,
. . 491 868, 872
BuU V. North British Insurance V. New England Mutual
(1888) 895 (1867) . 280, 285, 286, 300, 330,
Bulmer Hunter (1869)
v. . 612, 752 377, 873
Burchell v. Hornsby (1808) . 751. Campbell's Trustees v. Campbell
Burdett v. Home, [1911] ... 567 (1834) 405
Burgess v. Eve (1872) . . . 972, 980 Canada Credit Co. v. Canada Agri-
Burgess and Stock's Case. See cultural Insurance (1870) 887, 342,
Phoenix Life, In re. 346
Eurnand v. Eodochanachi (1882) 739 Canadian Casualty v. Hawthorn,
Burn's Case (1873) .... 70 [1907] 205
Burridge v. Row (1842) . . 799, 804 Canada Fire v. Northern (1878) . 917
TABLE OP CASES. XXXI
PAGE PAGE
Canadian Fire v. Robinson, [1901] 192, Central Railway of Venezuela v.
265 Kisoh (1867) 277
Canadian Pacific v. Ottawa Kre, Chalmers v. Bell (1804) ...
169
[1907] 786 Chamberlain v. Butler, [1901] 168
....
.
Canadian Railway Accident v. V. Napier (1880) 852

MoNevin, [1902] 945, 947, 949 Champlin v. Railway Passengers
....
.
Canham v. Rust (1818) 625 ... (1872) 923, 925, 926

Canning v. Farquhar (1886) 206, 207, Chandler v. Commerce Fire (1878) 893
210, 213, 215, 216, 217, 296, 868, 871 V. Worcester Mutual (1849) 665 .
Cannon v. Home Insurance, [1897] 714, Chaples v. The Brunswick Building

899 Society (1881) 182, 194
Canterbury v. A.-G. (1842) 760 Chaplin v. Provincial (1873) 336
....
. .
Capel V. Wood (1828) 632 Chaplin v. Hicks, [1911] .119

CapeU V. Winter, [1907] . . 440, 534 Chapman v. Bernard (1869 420, 423 .
Carbis, Ex parte (1834) ... 588

——
v. Chapman (1851) 476
...
.
Carl Hirth, In re, [1899] 592 t;. Fraser (1793) 787, 788
. .
'.
Carlill V. Carbolic Smoke Ball Co., V. Michaelson, [1908], [1909] 473,

[1893] 110, 211 790
Carnes v. Iowa State Travelling D.Pole (1870) .... 906
Men's, [1898] 922, 924, 930
. . Chappell V. Gregory (1863) . . 292
Carpenter v. American (1839) 280, 348 Charles v. National Guardian
V. Canadian Accident, [1908] 189 (1857) 185
V. German-American, [1892] 126, Charlesworth v. Jennings (1864) 277
....
. .
133, 894 V. Faber, [1900] 319

V. The Providence Washing- Charlton v. Newcastle and Carlisle
ton (1842) 122, 140, 142, 715, Railway Co. (1859) . . 54
744, 853, 900 V. Earl of Durham
(1869) . 629
V. Treasury Solicitor (1882) 981 Charter v. Watson, [1899] . . 482
V. U. S. Life, [1894] 163, 168, 169 Charter Oak Life v. Brant (1871) 164
Carpmael's Case (1873) 65, 67 . . Chattock V. Shawe (1835) . . 873
Carr v. Pacific Mutual, [1903] 953 . Chavasse, Ex parte (1865) 171
Carringtons v. Smith, [1906] 472 . . Cheeves v. Andes, [1894] . 157
Carroll v. The Charter Oak (1862) 719 Cherry v. Colonial Bank of Austra-
(1863)
Carrollton Furniture Co. v. Ameri-
900
«.
lasia (1869)
Heming(1849).
.... . .
194
198
.
can Indemnity, [1902] 279, 286 . Chesterfield v. Bolton (1739) . . 752

Carrollton Manufacturing Co, v. Chisholm v. National Capitol Life
American Indemnity, [1903] 356, . (1873) 164
851 Chicago Coulterville v. Fidelity and
Carrnthers v. Sheddon (1815) 121,
. Casualty, [1904] . . 968, 969, 970
122, 138, 143 Chicago Railway v. Pullman Car
Carstairsv. Allnut (1813) 169 Co., [1890] 734
....
. .
Carter, In re, [1897] 599 Chickering v. Globe Mutual (1874) 265

V. Boehm (1766) 278, 300, 302, China Traders' Insurance v. Royal
....
.
312, 313, 316, 317, 318, 790 Exchange, [1898] 303

V. Bond (1803) ....
844 Chown Baylis (1862)
V. . 438, 439
V. Wake (1877) . 477, 494
. . Christie v. North British (1825) . 210
Cartwright, In re (1889) ...
776 Church V. La Fayette (1876) 234, 265
Cashman v. Liverpool Fire (1862) 375 Citizens' Fire v. Doll (1871) . . 893
Cassel V. Lancashire and Yorkshire Citizens' Insurance v. Salteris,
Accident (1885) .... 958, 961 [1894] 896
Castellain v. Preston (1883) . . 113, Citizens' Insurance Company of
130, 131, 133, 136, 137, 138, 145, •Canada v. Parsons (1881) 197, 203,
148, 672, 733, 734, 735, 736, 737, 900
739, 749, 750 City and County Investment Co.,
Castle V. Playford (1872), (1883) 134 /» re (1879) 55
....
.
Cathie's Case (1872) 87 City Bank v. Sovereign Life (1884) 175,

Catt V. Wood, [1910]
Cave V. Pacific Mutual, [1903]
....
19 863, 865
659, 881
. 951 City Fire v. Corlies (1839)
Cawley v. National Employers' City of London Fire v. Smith
Accident and General (1885) . 950, (1888) 885, 906
953, 957, 961 Clack V. Holland (1854) 532, 799, 803
Cazenove v. British Equitable Claflin V. Commonwealth Insur-
(1860), (1859) . 282, 323, 377, ance (1883) 905, 906
...
.
383, 871, 872, 873 Clark, In goods of (1839) 618

XXXll TABLE OP CASES.
PAGE FAQE
Clark, (1858) 618 CoUlngrMge v. Royal Exchange
V. BIything (1823) ... 734 (1877)
Collins V. Locke (1879) ...
133, 678
907
V. Dwelling House Insurance
Co. (1889) . . . 119, 132 V. London Assurance, [1895] 367,
V. Manufacturers' Insurance 889, 893, 895, 896
(1850) 303 V. New York Central (1875) 734
Clarke's Case (1872) .... 66
52
Colonial Bank v. Cady, [1890] 449, 4S2
Colonial Insurance v. Adelaide
Clarke's Exors'. Case (1872) .
Clarke v. Dickson (1858)
.
... 275 (1886) .... 134, 135, 213

Clarke v. Equitable Life Assurance Colonial Mutual Life, In re (1882) . 33
Co., [1902] . . 863, . 864 Columbian Insurance v. Cooper
V. Glasgow Assurance (1854) 752 (1865) . . . 330, 356
•
V. Scottish Imperial (1879) . 143 V. Lawrence (1829) 122, 133, 310,
V. Western, [1891] 707, . . 901 664, 905
Clay, In re, [1895] 612 V. Lawrence (1836) .285, 905
.
...
—
Cleaver
V.
V.
Harrison (1829)
Willis (1852)
v.
....
...
Mutual Reserve Fund
136
625
Comegy Vasse (1828)
v.
Comerf ord v. Britannia Assurance,
[1908]
740
.860
Life, [1892] 174, 176, 407, 408,
.
Commercial Assurance v. Pacific
414, 559 Union, [1909] 881
w. Traders' Insurance (1889) 347 Commercial Bank, In re 72 . . .
Clegg's Case (1873) .... 68 Commercial Mutual Marine v.

Union Mutual (1856) 196, 197, 198
Clement v. British American
Assurance (1886) . 136, 310, 311 Commercial Travellers' Mutual
Clements v. L. &. N. W. Railway, Accident Fulton, [1897]
v. 950, 953
[1894] ....
568, 569 Commercial Union v. Lister (1874) 736,
740, 758
V. National General Insur-
ance, [1910] 965, 966 V. Margeson, [1899] 916, 917 . .
Clidero v. Scottish Accident, V. Temple, [1898] 719 ...

[1982] ....
919, 924, 953 Commissioner of Stamps v. Hope,
450
Clifford V. The Commissioners [1891]
[1896] 841 Commonwealth Insurance v.
Clift V. Schwabe (1846) . . 862, 864 Gennett (1860) ... 913

Clifton Coal Co. v. The Scottish «. Hyde (1873) . . .369,890
Union, [1897] 887 Commonwealth Mutual v.
Clinch V. Financial Corporation Knabe, [1898] 213
(1868) 56 Compagnie G6n6ral Transatlan-
Clover V. Greenwich Insurance tique V. Law, [1899] ... 46
(1886) 682, 687, 906, 913
. . . Comptoir Nationale d'Escompte
Clufiu. Mutual Benefit Life (1886) 865, de Paris v. Ihe Law Car and
866, 878 General 353, 971
Coats V. Inland Revenue, [1897] . 828 Compton V. Mercantile Insurance
Coburn v. Travellers (1887) . . 961 (1880) 893
Cockburn v. British-American, Concord Union Mutual v. Wood-
[1890] 190, 191 bury (1858) 742, 743, 747
.... . . .
Cocker's Case (1876) 50 Cone V. Niagara Fire (1875) 122, 142 .
Coffin V. New
York, [1904] 218 Confederation v. Miller (1887) 377,
....
. . .
Coghlan's Case (1872) 66 871

Cohen v. Hannam (1813) ... 151 Confederation Life v. O'Donnell
Colby V. Cedar Rapids (1885) . 792, (1888) 198
891, 892 Conley v. Washington Casualty,
V. Hunter (1827) .... 792 [1900] . . 244
Cole V. Accident Insurance (1889) 853 Connecticut Fire u. Buchanan,
V. Canadian Eire, [1907] 913 [1905] 887
....
.
V. Germanic Fire (1885) . 348 D. Erie (1878) 736

V. London Fire, [1907] . . 913 V. Hamilton, [1894] . . 908, 912
Coleman's Depositories, Ltd. v. V. Manning, [1908] ... 285
Life and Health Association, Connecticut General o. MoMurdy
[1907] . 188, 204, 855, 956, 960, (1879) 356
962, 968 Connecticut Mutual v. Akens,
Colemore v. North (1872) ... 981 [1893] 864
Coles V. New York Casualty, V. Luchs (1883) 157, 283, 318,
[1903] 943, 947 336, 347, 348
Collen V. Wright (1857) 193 . . . V. McWhirter, [1896] . 305, 874
CoUett V. Morrison (1851) 167, 182, 859 V. Moore (1881) . . . . 333
TABLE OF CASES. xxxm
PAGE PAGE
Connecticut v. New York, &c., Cowie V. Barber (1814) ... 169
Railway (1856) ... 733 Cowling V. Topping, [1906] . 22,23
V. Schafer (1876) . 113, 152, 163, Cox V. Barnard (1850) ... 460
164 Coxhead v. Mullis (1878) ... 570
V. Union Trust (1884) . . 873 C. P. Railway Co. v. Ottawa Fire,
Conner v. Manchester Assurance, [1907] 183
[1904] 881 Craig V. Imperial Union, [1896] . 286
Conquest's Case (1873), (1875) 64, 66 C'randall v. Goodrich (1883) 735, 758
Conway v. Nail (1845) ... 594 Crane v. City Insurance (1880) 369, 888
Continental «. Dulpeuch (1876) . 862 Crawford County i;. Cochran (1878) 263
Continental Insurance v. Chamber- V. Canada Life, [1897] . . 441
lain (1889) 874 Creed v. Sun Fire, [1893] . . 144
Continental Life v. Volger (1883) 163 Crenshaw v. Pacific Mutual, [1895] 939
Converse v. Citizens' Mutual Crippen, In re, [1911] .... 174
(1852) 136 Crittenden v. Springfield Fire,
Knights Templars, [1898] 866,
V. [1892] ....
318, 367, 889
867 Crofts V. Marshall (1836) ... 861
Conway v. Gray (1809) 151, 662 . Crokett v. Ford (1856) ... 411
V. Phoenix Mutual, [1893] 158, Cronkhite v. Accident (1888) . . 234
...
.
188, 264, 265 r. TraveUers (1889) 929

Cook V. Black (1842) 436, 438, 439,
. Crook V. Midland Great Western,
864, 865 [1909] 758
V. Field (1850) . . .110,156 Croom, In re, [1891] .... 618
V. Jennings (1797) ... 144 Cross f. Mutual Reserve Life,
V. Oxby (1790) .... 214 [1905] . . . . 278, 791
V.Scottish Equitable (1872) 419 V. National Fire, [1892] 121, 126,
Cooke V. Fuller (1858) .... 567 139, 294
Cooper, Ex
parte (1875) ... 613 Crossland v. Wrigley, [1895] 852
....
. .
V. Cooper
(1888) 574 Crossley v. Elworthy (1871) 609 . .
V. Macdonald
(1877) ... 536 V. City of Glasgow Life (1876) 508
V. Phebbs
(1867) .... 295 Grossman v. Massachusetts (1887) 258
Cope V. The Thames Haven Dock Crotby v. Union Mutual, [1891] . 878
Co. (1849) 197 Crowley v. Cohen (1832) . 121, 122,
Copis V. Middleton (1817) . . 610 139, 310
Corley v. Traveller's Protective, Crown Bank v. London Guarantee,
[1900] 940, 941 &c., [1908] 973, 976
Cornell v. Fraternal Accident, Crozier v. The Phoenix Insurance
[1896] 949 (1870) .... 112, 440, 897
Cornfoot v. Fowke (1840) ... 279 Cruickshank v. Northern Accident,
Comisb V. Accident (1889) 944, 945, [1895] 873
947 Cryer v. Universal Insurance, [1910] 30
Cornwell u. Fraternal Accident, Cuenod t). Leslie, [J 909] . 567
[1896] .... 942, 944, 949 Culverhouse, In re, [1896] 625
Corpe V. Overton (1833) . . 571, 572 Cumberland Bone Co. v. Andes
Corrigan v. Connecticut Fire (1877) 887 (1874) 135
Cory V. Gertcken (1816) ... 570 Cumberland Valley Mutual v.
Gotten V. Fidelity and Casualty, Douglas (1868) . . . 372
(1890] 872 V. MitcheU (1864) . 310, 311,
Coulter V. Equity Fire, [1904] . 195, 329, 360
203, 211, 311, 883 V. SoheU (1857) .... 290
Count D'AIte's Case (1873) . 65, 68 Cummings v. Kennebeck Mutual,
Counter v. Macpherson (1845) 756, 767 [1896] 377
Countess of Shrewsbury (1601) . 751 Cummins Fletcher (1880)
v. . . 490
County Life Assurance, In re Cunard v. Hyde (1858) . . . 169
(1870) 186 V. Hyde (1859) 169
Court V. Martineau (1782). 318, 322 . Cuno, In re (1889) 549
Courtenay v. Wright (1860) . 638, 639 Curling v. Long (1797) ... 124
Courtney v. Ferrers (1827) 528 Currier v. Continental (1885) 164
....
. . . .
Courtier, In re (1886) 779 Curry v. Sun Fire, [1893] ... 305

Cousins V. Nantes (1811) . . 105, 108 Curtin v. Jellicoe (1862) ... 509
Coventry Mutual Live Stock (1883) Curtis V. Home Insurance (1865) 915
Cowan r. O'Connor (1888) . . . 851 Curtius V. Caledonian Fire and Life
Coward and Adams, In re (1875) 567 (1881) 508
CoweU V. Yorkshire Provident, Cushman v. United States Life
[1901] 273, 910 (1875), (1877) 330, 873,
. . 878
XXXIV TABLE OF CASES.
PAGE
Dearie, Ex
parte, (1884) .... 76
D Dearie i;.HaU( 1828) .... 441
FAOE De Armand v. Home Insurance
Daoey v. Agricultural (1880) 294, 886, (1886) 893
895 Debtor, In re a, [1908] .- . . 238
Da Costa v. Jones (1778) ... 104 Debury v. Eckett (1894) ... 779
V. Soandret (1723) . . 311, 788 Deering v. Bank of England
Dafoe V. Johnston District Mutual (1886) I . 617
(1858) .... 714, 716, 899 De Forest v. Fulton Fire (1828)
149, 879
147,
Dakin v. Liverpool, &o.. Insur-
ance (1879) 893 De Frece v. National Fire, [1892] 257
Daintree v. Butcher (1888) . . 620 De Fry v. Travellers' (1894) . . 948
Dalby V. India and London LUe DeGamindew. Pigon(1812) . . 232
(1854) 103, 105, 111, 112, 113,
. De Graw v. National Accident
117, 152, 154, 157, 456 (1889) 940, 941
Dale's Case (1871) ...
65, 70, 640 De Hahn v. Hartley (1786) 269, 328,
331
Dalglish V. Jarvie (1850) . 301, 313 .
Dalmady v. Moteux (1785) . .171 Deitz Metropolitan Life, [1895]

V. 872
DalzeU v. Ulair (1808) . . 232, 798 Delahaye v. British Empire Mutual
Dane v. Mortgage Insurance, Lite, [1897] . . . 294, 379, 389
[1894] 977, 979 De LasaUe v. Guildford, [1901] . 861
D'Angibau, Jn re (1880) ... 576 Delaware Insurance v. Swan
Daniels v. Hudson River Fire [1903] 897, 898
(1853) . 320, 330, 360, 370, 373 De Loy v. Travellers, [1894] 945, 947,
Danish v. Hudson River Fire 948
(1853) 861 De Moines Insurance Co. v. In-
Dant V. Fireman's Insurance surance Co., [1896] . . 369, 889
(1883) 913 Denison v. Masons' Accident,
DarUngton v. Ulph (1849) . . 753 [1901] 939, 963
Darren v. TibWtts (1880) . 113, 733, Dennis v. Massachusetts' Benefit,
736, 750 [1890] 259
Darrow v. FamQy Fund (1886), Dennison v. Phoenix (1879) 887 . .
(1889) 865,866, Dennistoun v. Lillie (1821) 279, 291

DarviU r. Terry (1861) ... 611 Denton's Estate, In re, [1904]
Date V. Gore District Mutual 977, 978, 981
(1864), (1865) 367 Depaba v. Ludlow (1721) . . ., 105
Daul V. Firemen's Insurance (1883) Depue V. Travellers' Insurance,
687, 906 [1909] 927
D'Autremont v. The Fire Associa- Derry v. Peck (1889) 275, 278 . ., .
tion, [1892] 665 Desborough v. Curlewis (1838) . 789

Davidson Burnand (1868)
v. . . 664 V. Harris (1855) 414, 423, 508 .
V. Waterloo Mutual Fire, Devauxt). J' Anson (1839). . . 123

[1905] 880, 883 v. Salvador (1836) 654 ...
Davie's Case (1873) 92 «. Steele (1840) .... 118
Davies, In re, Davies v. Davies, Dever, Ex parte, In re, Luse and
[1892] 642 Sibeth(1887) . 553,582,852
.
Davies v. Hawkins
(1815) 100 De Winton's Case. See Arthur
....
. .
V. Home (1866) 143 Average Association, In re.

V. London and Provincial De Witt Agricultural Insurance,
V.
Marine (1878) . . 294, 296, 302 [1898] . . 709, 714, 893,
. 899
V. National Fire and Marine, De Wutz V. Hendricks (1824) . 171
[1891] . 198, 279, 280, 860, 886 Dezell V. Fidelity and Casualty,
Davies' Policy Trusts, [1892]
Davis V. Giddart (1777)
.
...
658
706
[1903] ....922, 934, 955
678
Dickenson v. Jardine (1868) . .
V. Iowa State Insurance V. German-American, [1896] 901

(1885) 894 Dicker v. Angerstein (1876) . 503
V. Petrie, [1906] ....
Western Home Insurance
595 Dickinson v. Dodds (1876)
.
. . 214
V. Dickson t;. Equitable Fire (1859) 294
(1890) 367, 889 V. Provincial (1874) . 715, 900
Dawson v. Atty (1806) ... 297 Diehl V. The Adams'
.
County
Day V. Charter (1862) .... 126 (1868) 368, 890
V.
(1878)
Connecticut General Life
248
Digby
Dilleber
V. Atkinson (1815)
Home Life
... 752
v. (1877) . . 282
Dean v. Aetna Life (1876) 265, 267 V. Knickerbocker Life
....
.
V. Dicker (1746) 105 (1879) 256

TABLE OF CASES. XXXV
FADE PAGE
Dillon, In re,[1890] . 467 Duckett V. Williams (1834) 279, 377,
Dimmook v. Hallet (1866) 282 380, 381, 789, 790, 871
Diacoveriee Finance Co., In re, Dudgeon v. Pembroke (1877) 169, 662,
[1910] . . 90 854
Ditohbum v. Goldsmith (1815) 104 . Dufaur Professional Life (1858) 862,
v.
Dobbs V. Brain, [1892] . 576 864, 865
Dobson V. Collis (1856) . 196 Duff V. Fleming (1870) ...
137
V. Laud (1850) 772, 747. Duffell V. Wilson (1808) . . 278, 790
Dobson V. Sotheby (1827) 130, 361, Duffleld V. Elwes (1827) . . 458, 467
369, 664 Dufourcet v. Bishop (1886) . . 757
Dodkin v. Brunt (1688) . 521 Duncan v. Dixon, [1890] . 574
Doe V. Day (1809) . . 219 . V. Missouri State Life, [1908] 263,
V. Knight (1826) . 219, 220, 221 868
Doe d. Pitt V. Shewin (1811) 248 . Duncan, Fox & Co. v. North and
V. Andrews (1850) . 397, 400 South Wales Bank (1880) . . 512
V. Guy (1802) . . 625
. Dunkley and Son, In re, [1905] . 593
Doe d. Pitt V. Laming (1814) • 885 Dunlop V. Higgins (1848) . 211, . 214
Doherty v. Miller's Insurance, V. Johnson (1867) 530, . . 582
[1902] 256, 883 Dunlop Pneumatic Tyre Co. v.
Dohn V. Farmers' Joint Stock Actien GeseUsohaft Co., [1902] 46, 102
(1871) . 121, 122, 347, 372, 894 Dunlop V. Usborne, &o.. Fire,
Doll V. Equitable Life, [1905] . 871, [1895] 895
872, 873 Dupres Exorc. Case (1872) 68 . .
DoUiver v. St. Joseph Fire, &c. Dupue V. Travellers' Insurance,

(1880) 893, 896 [1909] 939
Doman's Case (1873) .... 62 Dupuy V. Delaware, [1894] 120, 126,
(1874) 52 133, 158, 345, 893
Donellan v. Bead (1832) ... 196 Durham v. Legard (1865) ...
278
Donnell v. Donnell, [1894] . 143 Durham and Northumberland
....
.
Doolan v. Midland Railway Co. Assurance (1872) 51

(1877) 181 Durrell V. Bederley (1816) 311 . .
Dormay v. Borrodaile (1847) . . 532 Dursley V. Fitzhardinge (1801) 156 .
Doming's Case (1872) 64, 66 Dwyer v. Edie (1878) 158, 159

....
. . . . .
Doud V. Citizens' Insurance, Dyke's Case (1872) 78

[1891]
Dougharty
887 Dymook's Case (1873) ....90
v. London Guarantee Dyson v. Morris (1842) 494, 495
.
(1880) 330, 338, 370,

. . . 975
Douglas V. Knickerbocker Life
(1881) 792, 869
D'Onseley's Case (1873) ... 92 E
Dowker v. Canada Life (1865) 167, 794
Downes v. Green (1844) ... 167 Eaorett v. Gore District Mutual,
Downing v. Marine and General, [1903] 903
[1899] 164 Eagle Insurance, In re, (1872) 97 .
Dows V. Faneuil Hall Insurance Eaglesfield v. Marquis of London-

(1879) 881, 882 derry (1876) 295
Dowse's Case (1876) .... 53 Eames v. Home Co. (1876) 195, 207,
Dowson V. Solomon (1859) . 767, 768, 210, 211, 356
779 Earl of Chesterfield's Trusts, In
Dowson's V. Jenkin's Contract, In re (1883) 634
re (1904) 504 Earl of Egmont's Trust, In re,
Doyle V. City of Glasgow Life [1908] 781
(1884) 393, 878 Earl of Winohelsea's Policy, In
Dozier v. Fidelity and Casualty, re (1888) 803
[1891] 923, 924 Early v. Standard Life and Acci-
Drake v. Footitt (1881) ... 762 dent, [1897] 954
Drinkwater v. London Assurance Eastabrook v. Union Mutual Life
(1767) 881 (1866) 862, 864
Driser v. Continental Insurance Ebsworth V. Alliance Marine
(1885) 873 (1873) 130, 138, 146, 140, 151
....
..
Driver's Case (1871) 50 Ecclesiastical Commissioners v.
Druce v. Gore District Mutual The Royal Exchange Assurance,

(1869) . . 899 [1896] .... 113, 134, 765
Drysdale v. Piggott (1856) 638, 639, Eckardt v. Lancashire Insurance,
802 [1900] 903
XXXVl TABLE OP CASES.
PAGE PAGE
Eddy V. London Assurance, Erb V. Fidelity, [1896] 170, 727, 893,901
[1892] . . 739, 746, 898 Insurance Co., [1896] . 895 .
V. Hawkeye Insurance (1886) 887 Ermentrout v. Girard Fire and

Edei). Knowles (1843). 478 Marine, [1895] 652, 653, 904
.
.... . . . .
Edge V. Duke (1849) 262 Ernest v. Nicholls (1857) 49, 62, 181, .
Edgington v. Eitzmaurice (1885) 293, 183

294 Erskine v. Adeane (1873) 196 ...
V. Aetna Life (1879) . . . 377 V. Stevens (1622) 405 ...
Edward Lloyd, Ltd. v. Sturgeon Esch V. Home Insurance (1889) 889 .
EaUs, &c., Ltd., [1901 861 ... Esposito V. Bowden (1857) 177, 179
Edmunds v. Edmunds, [1904] 609, 611 Etherington v. Lancashire and
Edwards v. Aberayron Mutual, Yorkshire Accident, [1909] 951, 952
(1875) 907, 912 . . . Eureka Insurance v. Robinson
V. Carter, [1893] . . 568, 574 (1867) 204
«. McLeay (1818). ... 277 European Assurance, In re (1811) 75
V. Martin (1865) . 588, 804 , Gloag's Case (1873) 96 ...
....
.
V. West (1878 770 ,Miller's Case (1876) 65, 67

....
. .
V. Scott (1840) 588 , Ramsey's Case (1876) 9, 88 .
Eggenberger v. Guarantee Mutual European Life, In re (1869) 74 . .
Accident, [1890] . 927, 928, 950 Evans v. Bignold (1869) 166, 167 .
Elder v. Beaumont (1857) . . 613 V. Coventry (1857) 97 ...

Ellinger v. Mutual Life, [1905] 175, 327, V. Edmonds (1853) 275 ...
863, 864 V. Jones (1839) 104 ....
Elliotte, In the Goods of (1871) 657 Evens v. Hallan (1871) 594 ...
EUiott V. Elliott (1841) . . 625 Evetett V. Desborough (1829) 156, 318,
EUiot V. Ince (1857) . . . 577 350, 351, 871, 873
V. Insurance Co. (1888) 894 V. The London Assurance
....
.
V. Royal Exchange (1867) 907, (1865) 652, 654, 655

911 Ewing V. Commercial Travellers,
Ellis V. Albany City Fire (1872) 198, 199 [1900] 931, 932, 958, 961
....
. . .
V. Ellis, [1905] 627 Excelsior Eire v. The Royal (1873) 141,

V. McHenry (1871) 158 ... 744, 747
V. Insurance Co. (1887) 894 . . Exton V. Scott (1833) .... 219
Ellison
Elton
V.Ellison (1802)
Larkins (1832)
...
...
459 Eyre v. Glover (1812) .... 123
V. 307
Embirieis v. Anglo -Austrian Bank,
[1905] 449, 452
Emperor Life, iw re (1885) . . P
Empire Assurance, In re (1867) 50
....
.
, Challis' Case (1870). . . 51 Pagan's Case (1871) 64

, Dougan's Case (1873) . . 50 Pair V. Niagara District (1876) . 719,
Empire Guarantee, &o.. Peti- 720, 899
tioners, [1911] . . 47, 48, 49, 53 Pairchild v. Liverpool and London
Employers' Liability v. Bach, (1872) 879
[1900]
V. Morrow, [1906]
949 .... Fairholm v. Fairholme's Trustees
856 (1858) 405
....
. . .
V. Taylor, [1898] 956 Palcke V. Scottish Imperial (1886) 799,

Employers' Liability Assurance 800, 801, 802
V. Chicago Coke Co., [1905] 970 Family Endowment Society, Pitt's
England v. Tredegar (1866) . . 411 Case (1870) 65, 70
English and Irish Church Assur- Fanning v. London Guarantee and
ance, In re (1863) 4, 97 ... Accident (1884) 976
Equitable Fire and Life v. The Parebrother v. Wadehouse (1857) 612
Ching Wo
Hung, [1907] 223, 230, Farmers' Loan Co. v. Penn,
'
231, 234, 716, 882, 900 [1900] 773

Equitable Fire?;. Quinn (1861) 672, 673 Farmers' Mutual v. HaU, [1893] . 346
Equitable Life v. Brown [1900] 877 . V. New HoUand Co. (1888) . 671
V. Clements, [1890] 851 ... Parnum v. Phoenix, [1890] 233, 264
V. Hazlewood (1889) 157 . . Farrar v. Parrars, Ltd. (1888) . 502
V. Keiper, [1908] 871, 872 . . Parrell v. Security Mutual, [1903] 874
V. McElroy, [1897] . 206, 211, Farwell v. Home Insurance,
214, 233, 296 [1905] 869
Equity Fire v. Thompson, [1909] 880 Pawous Sarsfield(1856).
w. . . 660
Era Assurance, In re (1860) . . 49 Fayerweather v. Phoenix, [1890] . 310,
Era Company's Case, (1862) . 49, 62 916
TABLE OF CASES. XXXVU
PAGE PAGE
Fazakerly v. MoKnight (1856) . 860 Fisher «. Crescent Insurance (1887) 279,
Peatherstonhaugh v. Lee Moor 673, 913
Porcelain Co. (1865) 186 ... V. Metropolitan Life, [1894] 790,
Feder v. Iowa State Travelling 792
Men's Assurance, [1899] 920, 924 Fisk V. Masterman (1841) . . 797
Feise v. Parkinson (1812) 787, 788, 792 Fisken v. MarshaU, [1905] . , 503
Felix Hadley v. Hadley, [1898] 238 Fitch V. North British and Mer-
Felthouse v. Bindley (1862) 211 . . cantile (1884) ... 887
Fenn v. Craig (1838) 272 . . . . «. Snedaker (1868) ... 211
Fenton v. Thorley & Co., [1903] 918, Fitchpatrick v. Hawkeye Insur-
924 ance (1880) 343, 347
Fenwiok v. Schmaltz (1868) . . 924 Fitton V. Accidental Death (1864) 853,
Ferguson v. Massachusetts Mutual 951, 952
Life (1884) 158 Fitzgerald's Trustee v. MeUersh,
Ferrenbach v. Mutual Reserve, [1892] 481
[1903] 868 Fitzgibbon v. Scanlan (1813 532 . .
Fettiplace v. Gorges (1789) . . 536 Fitzherbert v. Mather (1785) 215, 279,

Fetter v. Fidelity and Casualty, 349
[1903] 934, 935 Fitzraudolph v. Mutual Relief,
Fettes V. Gordon (1825) 406 ... [1890] 283, 871
Fidelity V. Gas Co., [1892] 733, 735, FltzwilUam v. Price (1858) . 483, 773
742, 743, 758 Flight V. Bolland (1828) . 573, 577
•
V. Waterman (1896) 954 ... Flindt V. Waters (1812) . . 177
Fidelity and Casualty v. Bank, Flinn v. Headlam (1829) . . 287
[1905] 290, 973, 974, 976
. . V. Tobin (1829) . . 293
...
.
V. Egbert, [1897] 862 Flint V. Flemyng (1830) . 124

...
.
V. EickhofE, [1895] 173 V. Howard, [1893] 491, 493

V. Freeman, [1901] . . 862, 864 V. Le Mesurier (1796) 124, 138
V. Lowenstein, [1899] . 955 . Florida Central, &c. v America
V. Phoenix, [1900] 966 ... Surety Co., [1900] 973,
. .976 .
V. Stacey, [1906] . . . 920, 924 Flower, In re (1884) . 516...

V. Thompson, [1907] 922 i;. Peck (1830) 753
„„
....
. .
V. Willey, [1897] 266 Foley V. Manufacturers, [1897] 678, 913

Fidelity Mutual v. Jeffords, [1901] 166, V. Tabor (1861) ....317
872 Forbes v. Aspinal (1811) ...
124
V. Miller, [1898] 872, 874 . . . V. Edinburgh Life (1832) 318, 351
Field V. Insurance Co. (1874) 885 . . V. Jackson (1882) 512

. .
V. Receiver of Metropolitan Forbes & Co. v. Border Counties

Police, [1907] 763, 881 .... Fire (1873) . 129, 136, 894
. .
Field Steamship Co. v. Burr, Ford V. Tynte (1872) 491, 495

. .
[1899] 654 V. United States Mutual

Fieldings v. Pawson, [1907] 472 Accident (1889) 937, 938
....
. .
Fife V. Fife (1855) 405 V. White (1852) 442

Fifth Liverpool, &c. v. Travellers' Forest Oil Co. Appeals (1888) 734
Accident, [1892] 974, 977 .... Forgan v. Pearl Life, [1907]
Forrester v. Boutcher (1760)
793 .
.
Filliter v. Phippard (1847) 752, 758 . 405 . .
Findley v. Fire Insurance, [1894] 883 . Portescue v. Barnett (1834) 460, 481
Finlay v. Mexican Investment, Foster V. Baker, [1910] ...
432
[1897] . . . 977, 979, 982, 983 V. Bates (1843) .... 627
Firbank Ex. v. Humphreys V. Council Bluffs (1885) 887 . .
(1886) 194 V. Equitable Mutual (1854) 678, .
Fire Association v. Rosenthall 709, 899

(1885) 690, 913 V. Home Insurance, [1906] 882 .
Fire Insurance Association of V. Mackinnon (1869) 455 . .
England!). Merchants (1886) . 139, V. Mentor Life (1854) 297, 335,

147, 149, 151, 709, 902 855, 859, 861, 871
Firemen's Fund Insurance v. V. Mutual Reserve Life,
Norwood, [1895] ....
Holyoke
899 [1904]
Roberts (1861)
. . . 278, 791
First Congregational v. V. . 640, 770
Fire, [1893] . . 366, 369, 886, 890 V. Van Reed (1877) ... 748
First National Bank v. Insurance Fourdrinier v. Hartford
Fire
Co. (1872) 373 (1865) .... 346, 365, 889
Firth and Son v. Commissioners, Fowkes V. Manchester (1863) 279, . .
[1903] 817, 836 299, 306, 324, 332, 334, 377, 378,
Fischer v. Hope Mutual (1877) 796 . 384, 788, 853, 871, 873, 874
I.L. d
XXX vm TABLE OP CASES.
PAGE PAGE
Towler, In re (1881) 779, 780
.
Gamba v. Le Mesurier
(1803) . . 177
859 Gamble v. Accident (1869) 957, 962
V. Metropolitan Life (1886)
•
V. Scottish Equitable (1859) 787,

.
Games, Ex parte (1879) ... 606

860 Gandy v. The Adelaide Marine
Fowlie V. Ocean Accident, [1901] 929, (1871) 318
946 Garbutt v. Citizens' Life, [1892] 263
.
Poy V. Aetna (1854) .... 889

232
Garoelon v. Hampden Fire (1862)
Garden v. Ingram (1852)
263
703, 774
i; Bell (1811) . .
Fracis v. Sea Insurance, [1898] 171

. Gardiner v. Piscatuques Mutual
Pragano v. Long (1825) 134 (1853) 346
Frank v. Sun Life, [1893] 238, 239, Gardiner's Case (1873) ... 65
246, 868 Gardner v. Parker (1818) . . . 467
Franklin v. Phoenix, [1894] . 888 Garland Stewart (1841)
v. 406
....
. . .
V. Gruver (1883) . . . 368, 889 Garlant's Case (1872) 93

Franklin Fire v. Chicago Insur- Garliok v. Mississippi Valley In-
ance (1872) 891 surance (1876) 883
u. Coates (1859) .122,143 Garner Moore (1855)
v. ... 780
....
. .
V. Kepler (1880) 887 Garniss v. Heinke (1871) ... 531

V. Vaughan (1875) 294, 885, 894 Garretson v. Merchants, [1890] . 344
Franklin Life v. Hazzard (1872) 168 . Garrett v. Provincial (1860) . . 324
Frank Parmelee Co. v. Aetna Life, Garrison v. Memphis Insurance
[1908] 969, 970 (1856) 735
Freeland v. Glover (1806) 317 ... Garver v. Hawkeye Insurance
—
Freeman v. Fulton Fire (1862)
V. Inland Revenue (1871)
V. Laing, [1899]
105
819
....
487
.
.
(1886)
Gaskarth v. Law Union (1876)
Gates V. The Madiston Mutual
.
893
654
V. Mercantile Accident, (1851) 283, 363, 364, 369, 664, 879

[1892] 927, 928, 934, 936, 951, 953 891
V. National Benefit (1886) 166 Gaussen v. Whatman, [1905] . 777
....
. .
V. Pope (1870) 606 Gauthier v. Waterloo Mutual

V. Rosher (1849) ....
193 (1881) 717, 900
V. Travellers (1887) 946, 947 . . Gaw V. British Law Fire, [1908] 904, .
Freme v. Brade (1858) 638, 641 . . 907, 910

French v. Connelly (1794) 272 . . Gay V. Union Mutual Life (1871) 862,
V. Hartford, [1894] 258 ... 864
Fibre's Case (1872). 61,67
. . . Geach v. Ingall (1845)- . 304, 871, 872,
Fried v. Royal Insurance (1872) 212 873
V. Wemyss (1667) 405 ... Gedge v. Royal Exchange, [1900] 104
V. Royal Exchange (1857) 407 . Geilinger v. Gibbs, [1897] ... 577
Friedlander v. London Associa- Geisok v. The Crescent Mutual
tion (1832) . 372, 884, 887
. . (1867) ....
652, 657, 659
Friendly Endowment Society, In General Accident v.
. Day, [1905]
785,
re (1870) 71 967, 968
Frierson v. Brenham (1850) . . 119 V. Cronk, [1901] . 207, 211, 784
Fries Breslin Co. u. Star Fire, V. Inland Revenue, [1906] 27, 812
[1907] 894, 896 V. Robertson, [1909] 212, 227 .
Friezenv. Almania Fire (1887) . 895 General Provincial Life, In re

Frishie v. Fayette (1856) 339, 360, 888 (1870) 282, 299, 308, 874
Fritz V. Bull (1851) .... 734 George
. . .
v. Goldsmiths and General

Fritzley u. Germania, &o., Fire, Burglary, [1899] 899, 964, 965
. .
[1909] . 883 Georgia Home Insurance v. Rosen-

Fry V. Fry (1859) 780 feld, [1899] 242, 718
V. Lane (1888)
Furlongs. Carroll (1881)
. .
...
. 457, 770 Gerard v. Lewis (1867) 437 ...
760 Gere v. Council Bluffs (1885) 912, 984
Furtado v. Rogers (1802) . . 177, 795 Germain v. Brooklyn Life (1883) 862
German Insurance v. Downman,
[1902] 214
G
V. Hearne, [1902]
German Life Company's Case
891 ...
(1871) 67
Gabey v. Lloyd (1825) ... 653 Germania Fire v. Memphis Rail-
Gadd V. Equitable Life, [1907] . 877 way Co. (1878) 741, 757 . .
Gale V. Mutual Aid and Accident, V. Thompson (1877)

[1893] .... 927, 928 Germania Insurance v. Home In-
. 127, 128 .
V. Lewis (1845) .... 589 surance, [1894^ ggg

TABLE OF OASES XXXIX
PAGE PAGE
Gibbons Procter, [1891]
v. . . 211 Gorely, Ex parte, In re Barker
Gibsons. Overburry (1841) . . 447, (1864) 696, 697
448, 477, 688, 800 Gorman v. Hand-in-Hand (1877)
371,
V. Seagrine (1855) 490 ... 667, 670, 879, 891, 907, 912
V. Service (1814) 169 .... Gorrlnge v. Irwell (1886) 438 ...
Gieve, i» re, [1899] 116 .... Gott V. Sandy (1853) ....
753
Giffard v. Queen Insurance (1869) 216 Gottlieb V. Cranch (1853) . . 638, 639
Gilbane v. Fidelity and Casualty, Goucher v. North- Western Travel-
[1908] 968 ling Insurance (1884) . . . 872
Gilbert v. Insurance (1840) 133 Gould V. New York County (1859) 340,
....
. .
V. Sykes (1812) 104 373

GiU V. Canada Kre and Marine
126, 130, 367, 372, 889
Gould, In re (1887)
Goulstone v. Royal (1858).
618....
(1882) . 131, 906 .
GiU V. Downing
(1874) 802 Gove V. Farmers' Mutual (1868) 664 .
Gillet V. Mawman (1808) . . . 144 Grace v. American Central (1883) 853,

Gilley v. Burley (1856) 527 892, 917
....
. . .
GiUo, In re, [1891] 607 Graham w. Graham (1791) . . 223

Gilman v. Dwelling House (1889) 133, Graham Johnson (1869)
v. . . 457
311 V. Ontario Mutual (1887) . 358,
Girard Fire v. Hebard (1880) 895 899, 902
Girard Life v. Mutual (1881), Grain's Case (1874)
Grandin
....
Rochester German In-
67
(1878) 243, 258 v.
Gjers, In re,[1899] .... 779 surance (1884)
Granoline v. Rochester- German
893
Gladstone v.King (1812) . 349, 350
....
.
Glahohn v. Rowntree (1837) . 477, 629 Insurance (1884) 880

Glasgow Assurance v. Symondson, Grant v. Aetna Fire (1862) 287, 320,
[1911] 150, 294, 308, 319
. . 322, 329, 338, 672
Glasgow Provident v. Westminster V. Hill (1812) 414
Fire (1887). See Westminster V. Citizens (1880) ... 900
Fire v. Glasgow Provident 104, 141, V. Equitable (1864) ... 339
671, 676, 683, 709, 901
Glass V. Mason's Fraternal Acci-
Grant (1865)
V.
Parkinson (1781)
.... 458
V. 107, 123 .
dent, [1901] 944, 947 V. United Kingdom Switch-

Glazebrook's Case (1872) 67 .... back Railway Co. (1888) . 187
....
.
Gleen v. Gleen, [1900] 397 Grattan v. Metropolitan Life

Glen V. Lewis (1853) . 325, 371, 852, (1880) . . . 357, 871, 878
889, 890 (1883) 872
Gloag's Case (1873) 96 .... Graves v. Hempden Insurance
Globe Accident v. Gerisoh, [1896] 920, (1865) 745
958, 962 Gray v. Lloyd (1811) .... 169
Globe Fire v: Moffat, [1907] 851 V. Mathias (1800) ... 468
Globe Mutual v. SneU (1880) . 216 Great Britain Mutual, Z» re ( 1880) 2,
Glover v. Black (1763) . , 140 71, 76, 77^ 79
Goddard v. Casualty Co., [1909] 969 Great Britain Mutual Life, In re
V. East (1886) . . 326 . (1882) 79
Goddart v. Garret (1692) . 105 . Great Eastern Railway Co. (1880) 182
Godin V. London Assurance (1758) 122, Great North-West Central Rail-
705, 709, 710 way V. Charlebois, [1899] 182
....
. .
Godsal V. Webb (1838) 529 ... Green v. Eales (1841) 755

Godsall V. Boldero (1907) . .112, 157 V. Lycoming (1879) ... 223
Godwin v. Francis (1870) 193 ... GreenhiU v. North British and
Golde V. Whipple &
Co., [1896] 729, 901 Mercantile, [1893] .... 538
Goldschmidt v. Mutual Life (1886) 862 Greenlea v. Mercantile Insurance,
Goldshede v. CottreU (1836) . 237 [1897] 895
....
.
GoUez V. Wood (1861) 636 Greenwood v. Evens (1841) . . 636

Good V. Elliott (1790) . 104, 105, 110 V. Bishop of London (1814) 375
GoodfeUow v. Times and Beacon Greet v. Citizens (1880) . . 717, 886
(1859) 199 Gregg V. Coates (1856) ... 778
Goodson V. Forbes (1815) ... 812 Gresham v. Equitable Accident,
Gordon v. Rimmington (1807) . 663 [1891] 943
V. Street, [1899] . . . 284, 290 Grevemeyer v. Southern Mutual
V. Ware National Bank, Fire (1869) 144
[1904] 168 Grey D.Ellison (1856) .... 484
272
Gore District Mutual Fire v. Griesa v. Mutual Life, [1909] . .
Samo (1878) 374, 375, 894 Griffin, In re, [1902], [1908] . . 648
xl TABLE OF CASES.
PAGE fAGE
Griffith i;. Pound, [1890] ... 489 Hamilton v. Phoenix Insurance,
[1894] 906, 908, 912
V. Fleming and
.
Griffiths Otliers,
152, 153, 161 V. Vaughan-Sherrin Co.,
[1909] . .
V. Eccles Provident Society, [1894] .... 569, 572

[1911] 647, 648 Watson (1845)
V. ... 978
Griffith's Policy, In re, [1903] . . 558 Hamlynv. Crown Accidental, [1893] 920
Grizewood 1). Blane (1851) . . 116 924, 953
Grogan v. The London and Man- V. Talisker Distillery, [1894] 909
chester Industrial (1885) 324, 331, Hammersmith Railway v. Brand
377, 388, 871 (1868) 760
Grosvenor v. Atlantic Fire (1858) 142, Hammond v. Citizens (1886) 331, 715,
89S 882, 884, 902, 904, 905
Grover v. Matthews, [1910] 151, 879 . Hance v. Hording (1888) 600 ...
Guarantee Co. v. Mechanics, Hancock v. Hancock (1888) . . 551
[1898] 303, 972, 973, 975, 977
. . Handler v. Mutual Reserve Fund
Guardian Insurance v. Connely, Life, [1904] 255, 870
[1891] 878 Hanley v. Pacific Fire, [1893] 287, 298,
V. Hogan (1875) 163, 164 . . . 305, 315, 886
Guardians of Mansfield Union v. Hanover Fire v. Bohn, [1896] 126, 139,
Wright (1882) 971 143, 894
Gudgen v. Besset (1856) 222 ... Hanacom v. Home Insurance Co.,
Guerin v. Manchester, [1898] 367, 890, [1897] .... 342, 346, 887
898, 911 Hansen v. Dixon,
[1907] ... 450
Guinn v. Phoenix, [1890] 674 ... V. Miller (1844) .... 537
Gunn's Case (1873) 91 .... Harbour Commissioners v. The
Gunther v. Liverpool, London, Guarantee Co., [1893] 338, 974,
....
.
and Globe (1889) 886 975, 976

Gurney v. Rawlins (1836) ... 101 Harding, In the Goods of (1872) 537,
Guy V. Churchhill (1888) ... 690 624
Hardman V.Brett (1889) 741 ...
Hardy v. FothergiU (1888) 92 . .
Hare v. Barstow (1843) 374, 860, 879
H V. Groves (1796 755 ....

V. Horton (1833) 223 ...
Hadden v. Brydon, [1899] 414, 415, Hargraves v. Hargrave (1850) 573 .
416 Hargreave v. Smee (1829) 852, 853 .
Hagadorn Masonic Accident,

v. Harkness and AUsopp, In re,
[1901] 935, 936, 957, 958, 960, 961 [1896] 549

Hagedorn v. Oliverson (1814) 151, 793 Harman's Case (1873) ... 63, 65
V. Whitmore (1816) 664 ... Harman v. Kingston (1811)
V. Van Hatten (1716)
. . 177
105
Haight V. Continental
^ -^
(1883) . . 345 . .
Halford v. Kymer (1830) 154,156, . Harnett v. Maitland (1847) . . 751

159, 161, 162 Harniokell v. New York Life
Halhead v. Young (1856) . 123 . (1888) . . 797, 861, 875
Hall V: Bainbridge (1848) . 219 . . V. New York (1886) . ... 222
V. Cazenove (1804) 219 Harp V. Granger's Mutual Fire
....
. . .
V. Palmer (1844) . . 468 (1878) 211

V. Warren (1804) . . . 378 Harrington v. Fitohbury Mutual
Hall and Long v. Railroad Co. (1878) 294, 885, 887
.
....
.
(1871) 756 V. Price (1832) 446

Hallett V. DowdaU (1852) 3 ... Harris v. aarson, [1910] 472 ...
HamboTOUgh v. The Mutual Life, V. Great Western (1876) . 190
[1895] 268, 276, 279, 325, 327,
. V. Harris (1862) 633, 636
....
. . .
330, 348, 377, 389, 871 V. Sleep, [1897] 982

Hambro v. Bumand, [1903], V. York Mutual (1865) . . 132
[1904] 191 Harrison, Ex parte (1814) . . 801
V. Hull and London Fire In- Harrison v. Alliance, [1903] . 411, 419
surance Co. (1858) . . 185, 186 .
...
V. City Fire (1864) 887 ...
Hamilton, In re (1885) 575 V. Harrison, [1910] 468 ...
,[1900]
Hamilton v. Denny (1809) .
130
801
Harrold v. Plenty, [1901]
Harse v. Pearl Lite, [1904]
477 ...
. 159, 161,
.
V. Home Insurance, [1890] . 907, 162, 164, 793, 794

912 Harsencamp v. Mutual Benefit
V. Liverpool, London, and Life Insurance Co., [1902] 862, 864 .
Globe (1889) 912 Hart's Case (1876) . . 63

TABLE OP CASES. xli
PAGE PAGE
Hart V. National Masonic Accident, Hedger v. Union (1883) 673, 913
.
[1898] 939 HefEron v. Insurance Co. [1890] 667,

V. Standard Marine (1889) . 332, 881
333, 852, 854 Heilman v. Westchester Fire
V. Swaine (1877) .... 277 (1878) .... 687, 898, 913
V. Western Railway Co. Helbertu. Banner (1871) . . . 87
(1847) 743 Helen, The (1865) 171
Hartford Fire v. Chicago Railway Hemmings v. Sceptre Life, [1905] 271,
Co., [1894] . . . 741, 757 272, 390, 787
V. Keating, [1898] 126, 894 Henoker v. British-America
—
. .
V. Peebles Hotel, [1897] 692, 901, (1863) 367

913 (1864) 368, 889
V. Small, [1895] .... 719, Henderson v. Insurance Co.,
899, 907 [1896] 691, 913
Williams, [1894]
V. . . 898, 902 V. Morton (1710) .... 406
V. Wilson, [1902] ... 222 V. State Life, [1905] . 214, 787,
Hartford Life v. Unsell, [1891] . 257 869
Hartley v. Rice (1808) ... 104 Stevenson (1875)
V. ... 190
Hartman v. Keystone (1853) . . 871 Hendrich v. Employers' Liability,
Harvey v. Ocean Accident, [1905] 925 [1894] 926
Haselfoot's Estate, In re (1872) . 487 Hendriokson v. Queen Insurance
Haskins v. Hamilton Mutual (1871) 719, 901
(1855) 692, 914 Henessy, In re (1842) .... 589
Haslem v. Equity Eire (1904) . 898, Henkin v. Gerss (1810) ... 104
913 Henkle v. Royal Exchange (1749) 792,
Hassencamp v. Mutual Benefit 860
Life, [1903] 878 Henley v. Mutual Accident, [1890] 922,
Hastings v. Westchester Fire (1878) 746, 924
898, 902, 906 Henry v. Agricultural Mutual
Hastings Mutual u. Shannon (1865) 190, 201
(1878) 917 Henson v. BlackweU (1845)
112, 156, .
Hatch Mansfield v. Weingott, 416, 640, 641

[1906] 757 Henthorn v. Eraser, [1892] 211, 212
Hathaway v. State Insurance Hentig v. Staniforth (1816) 793, 794
(1884) 896 Henty v. Staniforth (1816) 171 . .
Hatton V. Beacon Insurance Hercules Insurance, In re (1871) 71, 81

(1859) 717, 899 Hercules v. Hunter (1837), (1835),
Havens v. Middleton (1853) 753 . . (1836) 294, 663, 667, 673, 907, 910,
Hawke v. Niagara District (1876) 191, 9U
200, 204, 205, 2Q6, 792 Herdie v. Maryland Casualty,
Hawkins t). Coulthurst (1864). 531 . [1906] 955
V. Woodgate (1844) 638 ... Herkmier v. Rice (1863) . . 129, 144
Hawkshaw v. Supreme Lodge Herman v. Jeuchner (1885) . . 795
(1886) 259 Herrick v. Union Mutual Fire
Haworth & Co. v. Sickness and (1860) 336
Accident, [1891] .... 338, 975 Herring v. Janson, [1895] . 315, 316
Hawtrey's Case (1,872) ... 70 Herrman v. Adriatic (1881) . . 887
Haycock's Policy, In re (1876) . 429 Hervey v. The Mutual Fire (1861) 367,
Hayes v. Milford Mutual Fire, 889
[1898] .... 124, 717, 899 Hetting & Merton's Contract, In
Hays, Ez parte (1849) .... 533 re, [1893] 516
Hay's Trustees v. Hay, [1904] . 530 Hews V. Equitable Life, [1906] . 275
Hayward v. Cain (1870) ... 734 Hey V. Guaranter's Liability In-
Haywood v. Rodgers (1804) 319, 320 demnity, [1897]. . . 319
Head v. Egerton (1734) ... 447 Wyehe (1842)
u. ... . 754
Heald v. Builders' Insurance Heyman v. Dubois (1871) ... 513
(1872) 143 Heywood v. Accident, [1893] . 959
Heartly v. Nicholson (1875) 459 Hibbert Carter (1787) ...
v. 139
.... ....
. .
Heath, In re, [1907] 624 Hickey, In (1875) re 589

Heath v. Durant (1844) 857 ... Hickman Orton (1876) ...
v. 402
Heather v. Webb (1876) 158 ... Hiem v. MiU (1806) .... 443
Hebdon?;. West (1863) 118,120, . Higbie v. Guardian Mutual (1873) 873
154, 155, 157, 158, 159 Higgins V. Samels (1862) ... 277
Hebertu. Mutual Life (1882) 206 J). Sargeant (1823) 406
....
. . . . .
Heckman v. Isaac (1862) . . 121, 137 Hill V. Cooper, [1893] 567

xlii TABLE OP CASES.
PAGE PAGE
Hill V. Hartford Accident (1880) 924, Holt V. EveraU.(1876) .... 552
755
954 HoltzapfEel v. Baker (1811) . .
V. Middlesex, [1899] 324 Home Assurance, In re (No. 2)

139 (1871) 77
V. Scott, [1895] . .
V. Secretan (1798) 129, 138 Home Benefit v. Sargent, [1891] . 862,

V. Spencer (1767) 467 . 863, 864
r. Trenery (1857). 533 ... Home Insurance
Warehouse Co. (1876)
v. Baltimore
149, 709,
HiUerman v. National Insurance
889 880, 901
(1870)
Hillier v. Allegheny Mutual (1846) 657 V. Victoria Montreal Fire,
Haton V. Phoenix, [1898] 672, 673, 906 [1907] 855
Hinckley v. Germania Fire (1885) 170 Home Life v. Fisher, [1902] . 871, 874
Hindle v. Brown, [1907] 278 V. Myers, [1901] . . . 343, 874
Hine v. Woolworth (1883). 895
. .
.
.
. V. BandaU, [1899] 878 ...

Hinton v. Mutual Reserve, [1904] 159, Home Marine v. Smith, [1898] . 194
164 Homer v. Guardian Mutual (1876) 256
Hirschfield v. London, Brighton, Honyman v. Marryat (1857) . . 213
and South Coast Railway (1876) 295 Honour v. Equitable Life U. S. A.,
Hiscock, In the Goods of, [1901] 576 [1900] 248, 273
Hoare v. Bremridge (1872) 272 Hooper, Ex -parte (1815) 478 ...
Hobbs V. Guardian (1886) 882 V. Accidental Death (1860) . 936,
V. Hannam (1811) 138 938
Hockey Western, [1898]
v. 608 Hopkins v. Hawkeye Insurance
Hodge's Case (1873) . . 90 (1881) 903
Hodge V. Security (1884) 222, 224, V. North Western Life, [1900] 414
.
233, 245 V. Prescott (1847) ... 374

Hodgkins v. Wrightson, [1910] . 965, Hopkinson v. Bolt (1861) . 486, 487
966 Hordern v. The Commercial Union
Hodgson V. Glover (1805) . . . 123 (1887) 310,374,718,861,879,
.
V. Hodgson (1837) . . . 482 884, 887, 901

Hodson V. Guardian Life (1867) 263, Horn Anglo-Australian and
V.
Universal Family Life (1861) 172 .
Hodson V. Observer Life (1857) 167 Horncastle v. Equitable, [1906] 860, .
V. Railway Passengf 875

[1904] 810, 890 Horneyer v. Lushington (1812) . 173,
Hoffman «. Cooke (1901) . . 641 660
V. Hancock Mutual (1875) 265 Horsfall v. Pacific Mutual Life,
Manufacturers (1889) . 718, 901 [1903] . 920, 924, 927, 928, 961
V. Standard Life and Acci- Horton v. Provincial (1888) . 255
....
.
dent, [1900] 949 Hort's case (1873) 65

V. Western Marine (1846)
. 662, Hosford V. Germania Fire (1888) 370,
672, 674, 675,906 886, 893
Hogan V. Metropolitan Life, [1895] 873 V. Hartford Fire (1887) . . 894
Hogg V. Whitefield (1706) 405 Hough V.Guardian Fire and Life,
....
. .
Holden, In re (1887) 600 [1902] 859

Holdsworth Lancashire and
v. People's Fire (1872)
V. 149, 675,
Yorkshire Insurance, [1907] 271,289, 707, 709, 860, 879, 901
355, 357, 966 Houghton V. Gribble (1810) . . 129
Holiday v. American Mutual Hoxildsworth v. Evans (1868) . 188
Accident, [1897] . . . 949, 950 Household Fire Insurance v.
Holland, In re, [1902] . . 527, 607 Grant (1879) 211, 212
611 610, Howard v. Lancashire Insurance
Millard (1816) .
V. . . 610 609, (1885) 117
V. Smith (1806) . . . 639 638, 1). Refuge Friendly (1886) 159,793
Holm V. Interstate Casualty, Howard Insurance v. Soribner
[1897) 935, 936 (1843) 901
Holman v. Johnston (1776) . . 171 Howarth, In re (1872) ... 574
Holme's Case (1872) ....
67 Howatson v. Webb, [1907] . . 455
Holmes v. Blogg (1818) . . 571, 572 Howe Maoliine Co., Fountain's
v. Oilman, [1893]. 163 ... Case (1889) 77
V. Penney (1856) . . . 680, 610
«. Phoenix Insurance, [1899] 881,
HoweU's Case (1872)
Howell V. Kightley (1856)
.... 67
768
. .
986 V. Knickerbocker Life (1871) 256

Holt V. English and Scottish Law, Howes J). Dominion Fire (1882) . 145,
[1899] 164 343, 746, 748, 890, 898
TABLE OF CASES. xliii
PAGE PAGE
Howes V. The Prudential Assurance Imperial Fire v. Murray (1873) 137, 280
(1883) 460, 464 Imperial Life, In re, [1902] 49 . .
Rowland v. Continental Life Imperial Loan Co. v. Stone,

(1877) 796 [1892] 577, 578
How's Exors. Case (1872) . . 66 Imperial Mercantile Credit, In
Howson's Policy Trusts, In re re, Payne's Case (1869) 90 . .
(1885) 565 Indemnity Case (1871) . 61 . .
Hoytv. Gilman (1811). ... 790 (1872) 61

Hubbard v. Glover (1812) . . 293 Independent Protestant Loan
V. Hartford Fire (1871) 717, 893, Fund, [1895] 71
899 India and London Assurance v.
V. Lee (1866) 397 Dalby(1851) 272
V. Mutual, [1900] . 329, 871, India and London Life, In re
872, 873 (1872) 54
, [1897] 936 IngersoU v. Knights of Golden
V. Travellers', [1897] . . 953 Rule, [1891] 166, 862
Hucku. Globe Insurance (1879) . 882 Ingham v. Aguew
(1812) 169 ...
Huokins v. People's Mutual (1855) 664 Inglis V. Robertson, [1898] . 449, 451
Huokman v. Fernie (1838) 349, 351, V. Stock (1885), (1884) 121, 122,
873 130, 134, 135
Huguenin v. Rayley (1815) 298, 303, Ingram-Johnson v. Century,
315, 871 [1909] 877
Humberstone v. Chase (1836) 441 . Inland Revenue Glasgow and
v.
Humphrey v. Arabin (1836) 166, 639, S. W. Railway (1887) 328 .
640 V. North British Railway Co.,

Humphreys v. Commissioners, [1901] 828
[1900] 836 V.
Inmanu.
Oliver, [1909] .... 838
Hunt V. Fidelity and Casualty, BisohofE (1882) . . . 654
[1900] . 329, 330, 338, 975 V. South Carolina Railway
V. Springfield Fire, [1904] 853, Co. (1889) 742, 757, 915
....
. . . .
894 Insole, In re (1865) 567

Stevens (1810)
V. ... 629 Insurance v. Boon (1877) 653, 881 . .
Hunter v. Prinoep (1808) ... 123 Insurance Co. ;;. Bailey (1871) 163 .
Huntington v. Inland Revenue, V. Bennett, [1891] 928, 929, 932

[1896] 496, 828 V. Braun (1877)
V. " C. D. Ir.", The (1870)
....
733
Hussey Crickett (1811)
I). . . 104 . 735 .
Hutch V. Mutual Life (1876) . . 866 V. Chase (1866) 122, 129

. . .
Hutohcraft v. Travellers' (1888) . 923, V. Colt (1874) . 190, 197, 198,

924, 940, 941 217, 222, 264, 882
Hutchings v. National Life, V. Eggleston (1877) 261, 342
[1905] 239, 868 V. Express Co. (1977) . 882
Hutchins v. People's Mutual (1855) 903 V. Folsour (1873) . 215, 341
Hutchinson v. National Loan V. Gridley (1879) . . 873
(1845) 375, 378, 380, 872 V. Haven (1877) 893
....
. . .
Wilson (1794)
V. 772 V. McCain (1877) 235
V. Wright (1858) .... 140 V. Mahone (1874)
.
356, 358
Button 17. Waterloo Life (1859) . 300, V. Mosley (1869) . 929
331, 383, 873, 874 V. Mowry (1877) 189, 860
Hyde u. LeFaivre, [1902]. . . 905 V. Newton (1874) 878
Hyderabad (Deccan) Co. v. Wil- V. Norton (1877) 263, 266, 875
loughby, [1899] 210 V. Rupp (1858) . 913
V. Seaver (1873) 866, 942,
944, 947
I V. Slaughter (1870) 886 .
V. Stinson (1880) 139, 144

Ibbetson, Ex parte (1878) . . 587 V. Thompson (1877) 895 .
Ilfracombe Permanent Mutual, V. Tweed (1868) . 653, 666,

[1901] 10 881, 932
Imperial Bank v. Royal Insurance, Updegraft (1853) 130, 133, 749
[1906] 792, 900 Weides (1871) . 905, 906
Imperial Fire v. BuU (1889) . 745, 898 Wilkinson (1871) 356, 357
V. Coos County, [1893] 322, 324, 872
853, 891 Wisconsin Central, [1905] 892
V. Bunham (1888) 893, 896 Wolff (1877) 255, 266
. .
V. Home Insurance, [1895] . 918 Young (1874) 213, 218

. . .
xliv TABLE OF CASES.
PAGE
Insurance Co. of North America Jennings w. Hammond (1882) . 10
V. Evans, [1902] 170 ?). Jordan (1881) . ... 490
...
. . . .
V. Fidelity Co. (1889) 734 Job V. Banister (1857) 753

International Life, /rare (1876) .
. .
97 Joel V. Harvey (1857) .... 879

Ex paHe Blood (1870) . 68 . Joel V. Law Union and Ciown,
, M'lver's Claim (1870) . . 93 [1908] . 280, 286, 294, 302, 303,
International Life v. Franklin Fire 312, 313, 314, 317, 321, 326, 330,
(1876) 244 332, 336, 356, 359, 375, 376, 377,
International Trust v. Boardman 379, 394, 787, 790, 870, 873
(1889) 143 John Hancock Mutual v. Houpt,
lonides v. Pacific (1871) 279, 294, 374 [1901] 290, 343
V. Pender (1874) . 284, 307, 312 Johnson v. Baker (1821) ... 222
V. The" Universal Marine v. Berkshire Mutual Fire
(1863) 654 (1862) 664
Iowa Life v. Lewis, [1902] 206, 868, V. Dominion Grange, [1896] 369,
875, 878 890
Ireland v. Livingstone (1872) . 190 V. Lauder (1869) .... 567
Irving V. Manning (1847) . 107 V. London Guarantee, [1897] 944,
—— V. Richardson (1831)
.
130, 140, 945, 947, 949, 950

148 V. Maine, [1891] . 377
Isaacs Royal (1870)
V. . 196, 226. V. Mutual Benefit, [1906] 225
Isitt V. Railway Passengers (1889) 922, V. New Zealand Co. (1884) 145
924, 932, 935 V. Norwalk Fire, [1900] . 887
Islington Vestry v. Hornsey Urban V. Swire (1861) . . . 534
CounoO, [1900] 182 V. Union Fire (1884) 143
Izon V. Gorton (1839) .... 753 V. Union Marine (1879) . 170
V. Warwick (1856) . . 626
Johnston v. Dominion,
In- &c,
surance, [1908] 961, 963 . .
V. Lutton (1779) . 169, 172

.
Jacklin v. National, [1894] 872 V. West of Scotland (1828) 610,

....
. . .
Jackson, In re (1887) 507 611, 652, 653, 654, 656, 657, 659
Jackson v. Boylston Mutual Joliffe V. Baker (1883) ....
277
(1885) .... 310, 897 Jones, In re, [1893] ....
574
V.Colegrave (1695) ...
104 Jones V. Consolidated Investment
V.Commissioners, [1902] 841 . (1858) . 477, 478, 863, 965
V. Forster (1859) 176, 863, 865
. V. Festinoig Railway (1868) 760
V. North Eastern (1877) 591 . V. Gibbons (1804) 442, 510, 589
Jacob V. Gaviller, [1902] 984... V. Jones (1846) . 633, 634, 635,
Jacobs V. The Equitable (1860) 715, 636, 874
719, 899, 900 V. Keene (1841) 454, 455
. . .
Jacomb v. Harwood (1751) 628 . . V. Phoenix Insurance, [1896] 895

Jacques v. Golightly (1777) . . 170 V. Provincial (1857) . 294, 306,
Jaleska v. Iowa State, [1899] 336, 376, 382, 872
James v. Bydder (1841) 461... V. Scottish Accident (1886) 102 .
V. Institute of Chartered V. Southern Assurance (1889) 905

Accountants, [1907] 201 . V. U. S. Mutual Accident,
V. Lycoming (1874) 891... [1894] 942
Jameson v. Koyal (1873) 651, 664, 665
Janson
V. Waite (1842)
V. Winwood (1841)
.... 468
v. Driefontein Consoli- . . . 582
dated, [1902] . 172, 177, 178, 179 Jones' Manufacturing Co. v. Manu-
Jarnagin v. Travellers' Protec- facturers' Mutual Life and Fire
tive, [1904] 940 (1851) 367, 890
Jarrah Timber, &c., v. Samuel, Jordan v. Norton (1838) 213 ...
[1903] 485 V. Provincial, [1898] 279, 280
Jayne v. Hughes (1854) ... 219 Joseph Crosfield and Sons v. Man-
Jeffery v. Sayles, Bell, In re, chester Ship Canal, [1905] . . 906
[1896] 508 Jowett V. Progressive Assurance,
Jeflfery's Pohoy, In re (1872) . . 512 [1909] 54
Jeffries v. Life Insurance Co., Joyce V. Maine Insurance (1858) . 373,
[1874) 285, 331 887
Jenkins, In Goods of (1863) . . 618 V. Metropolitan Board of
Jenkins v. Row (1851) ... 495 Works (1881) ... 678
V. Vaughan (1856) 607, 610, 611 V. Swann (1864) 134, 137
. . .
Jennings v. Broughton (1853) . 277 Judge V. Connecticut Fire (1882) . 896

TABLE OF CASES. xlv
PAGE PAGE
Jukes, In [1902] re, 692 .... Kentucky Law and Accident
Franklin, [1897]
v.
939
Jull's Case (1872) 98
Justice V. Wynne (1860) 438, 440, . Kentucky Vermillion Co. v.
441, 443, 444, 460, 463 Norwich Union Fire, [1906]

Kentzler v. American Mutual,
[1894] . 957, 958, 961, 962,.963
Kenyon v. Berthon (1777) . . 327
K V. Knights Templar, [1890] 239
Kernochan v. New York Bowery
Kahn v. Travellers' Insurance, (1858) . 122, 141, 142, 311, 747
[1893] 908, 912 Kerr's Policy, In re (1869) . . 484
Kahnweiler v. Phoenix Assurance, Kerr v. Hastings Mutual (1877) . 336,
[1895] 908, 912 372, 884
Kaltenbaok v. Mackenzie (1878) . 675 V. Milwaukee Mechanics,
Kasten u. Intestate Casualty, [1902] 214
[1898] 954 V. Minnesota Mutual Benefit
Kavanagh v. Waldron (1846) . 639 (1888) . . 174, 865, 866
Kay Johnston (1856)
V. ... 801 V. Modern Woodmen, [1902] 862,
Kearley v. Thomson, [1890] . . 794 864
Kearney v. Whitehaven, [1893] . 374 Kettlewell v. Refuge, [1907],
Kearns v. Leaf (1864) ... 50, 54 [1908], [1909] 276, 278, 296, 572,
Keefer v. Pacific Mutual Life, 791, 795, 860
-^ [1902] .... 929 Key V. National Life, [1899] . 787, 797

Kiesel & Co. v. Sun Insurance,
V. Phoenix Insurance, [1898] 133
[1900] 133 [1898] 243, 882
^—
,
[1898] 145 KimbaU v. Aetna (1865) 292 ...

Keels
,
V. Mutual Reserve (1886) 863, V. Lion (1883) ....

210
.
864 V. Monarch, [1900] 887...

Keene v. New England Accident, King, Ex parte (1875) ....
614
463
King, In re (1879)
[1894]
New England
. . . 944, 947
Mutual, —— t). Accumulative Life (1857) 50
[1895]
ti.
948 v. Glover (1806) ....

139
Keeney v. Home Insurance (1877) 895 V. Phoenix, [1895] . 370 . .
Keevan v. Crawford (1877) 607, 611 . V. Prince Edward Mutual,

Keiffe v. National Accident, [1903] 903
[1896]
Keighley Maxsted v. Durant,
....
944, 947, 948 V. State Mutual (1850) 122, 734,
744
[1901] 150, 192 V. Travellers', [1987] 925, 927 .
Keith V. Gurney Mutual (1865) 887 . V. Victoria Insurance, [1896] 734,

V. Protection Marine (1882) 105, 735
116 Kingham, In re, [1897] ... 779
Kekewich v. Manning (1851) 461 .
Kingsley v. New England Mutual
KeUner v. Le Mesurier (1803) 177 Fire (1851) 667
Kelly V. London and Stafiordshire Kinnaird TroUope (1889)
v. . . 485
,230, 236 Kirkpatrick v. South Australian
-
Fire (1883)
V. Mutual, [1896] 329 . (1886) .... 242, 255, 262
472
-V. Selwyn, [1905] 453 . Kirkwoodi;. Gadd, [1910]. . .
V. Solari (1841) 264 Kirshner & Co. ;;. Truban, [1909] 909
V. Sun Eire, [1891]
. .
687, 689, Klein v. Insurance (1881) ... 259

905, 913 V. Union Fire (1883) 310, 311,
Larkin, [1910]
V. .... . 436
Knapp
719, 745, 884, 898
Homoeopathic Life
Kendall v. Marshall Stevens V.
135 (1885) 869

(1883)
Kennedy's Case (1871) ... 64 V. Preferred Mutual Accident,
.... 937,938,950
Kennedy De Traffard, [1897]
v. . 502 [1889)
McLean«. ... (1851). 404 Knecht v. Mutual Life (1879) 292, 867,
871, 874
Kenniston v. Mercantile County
Mutual (1843) 652 Knickerbocker Insurance v. Foley
874
Kenny v. Employers' Liability (1881)
Assurance, [1901] 774 .... Knickerbocker Life
....
v. Peters
862, 864
Kensington, Ex parte (1813) 478 . . (1875)
Kent V. Bird (1777) 108, 110 . . . V. Pendleton (1884) 239, 868, 878
V. Freehold Land Co. (1868) 77 «. Trefz (1881) . . .333,873
Kent Mutual, /)i re, Hummet's Knight V. Faith (1850) ... 670
260
Case (1871) 3 V. Rowe (1826) . .
xlvi TABLE OF CASES.
PAGE
Knights of Pythias v. Kalinski, Law, In re. See Beyer v. Adams.
263 Law V. George Newnes, Ltd.,
[1895]
Meyer, [1904]
V. .... 851 [1894]
Hand-in-Hand (1878) 346
211
Knights Templars v. Jacobus, V. .
... 255 V. London Indisputable Life
Jarman, [1900]
V.
[1897] . . .
... 857 (1885) .......

114,152
640
V. Masonic Life, [1897] . . 868 u. Warren (1843)
Knox V. Turner (1870) ... 639 Law Car and General, In re,
14
K.Wood (1808) .119,123 [1911]
....
. .
Knox's Case (1872) 67 Law Fire Assurance u. Oakley

Kohen v. Mutual Reserve (1886) 206 . (1888) 734, 741
Konrad v. Casualty, [1895] 957, 961, Law Guarantee Trust and Acci-
962, 963 dent Society, In re, [1910] . . 100
Krazenstein Western Assurance Law Guarantee Trust v. Munich
v.
853 Re-insuranoe, [1911] 979 ...
(1889)
Kronk Birmingham Fire 893 Lawder v. Lawder (1873) 972 ...
Krebs
v.
v.
(1879)
Security Trust, [1907] . 239, Lawe's Case (1852) ....
186
772
867 Lawley v. Hooper (1745) . . .
Krug V. German Fire, [1892] . 369 Lawrence D. Accidental (1881) 922, 924,
Kuntz V. Niagara District (1866) 368 933, 950, 952
Kuyper's Policy Trusts, In re, •
V. Galsworthy (1857) 457, 491
[1899] 565 V. Maggs (1759) . . .
633
Kymer Suwercropp (1807)
v. . . 136 V. St. Mark's Fire (1865) 122,
Kyte V. Commercial (1889) 274, 325 137
V. Commercial Union (1887) 344, Lazarus v. Commonwealth In
345 surance (1837) . . . 897
Le Fenore v. Sullivan (1855) 440
Lea V. Hinton (1854) . 640
Lead Co.'s Workmen's Fund,
Laberge v. Equitable Insurance, [1904] .... 71
587
[1895] 797 Learmonth, In re (1866)
Lady Rolfs Case (1873) ... 91 Leather Cloth Co. v. Bressey (1862) 755
Lake v. Bruttou (1856) ... 512 Lebanon Insurance v. Kepler
.... 281, 674, 901
Laing v. Provincial Homes Invest- (1884)
ment, [1909] 213 Lebanon Mutual v. Erb (1886) . 894
Laird v. Securities Insurance, Lebon v. Straits Insurance, [1894] 308
[1893] 979, 982 Le Cras v. Hughes (1782) . . . 118
Lamare v. Dixon (1873) ... 292 Ledward v. Hassells (1856) . 576
Lambe v. Orton (1859) ... 402 Lee V. Abdy (1886) 449,
. . 450
856
Lambourn v. McLeUan, [1903] . 856 V. Alexander (1883) . .
Lancashire Insurance v. Barnard, V. Brown

(1798) . . . 576
[1901] 689, 913 v. Jones (1864) . . . 302
Lancashire Insurance Co. v. Com- V. Sankey (1872) . . . 629
missioners of Inland Revenue, Leeds v. Cheetham (1829) . 703, 783,
[1899] 28, 806 755
Lancashire Plate Glass, In re, Lee's Case (1871) . . 51, 90
[1911] 87 Lees V. Whitely (1866) 703, 773
Lancaster's Case (1871) 94,95 Leete v. Wallace (1888) . 484
(No. 2) (1871) . . . 68 Le Feuvre v. Sullivan (1855) 442, 449,
Lancaster, Ex parte (1851) 639 450, 451, 613
...
.
Lancey's Case, (1872) . . . 51 Legge V. Croker (1811) 277

Landower v. Asser, [1905] . 772 Lehman u. Great Eastern Casualty,
Lane Fox, In re, [1900] 582, 609 [1896] 941, 945, 946, 947
Langan v. Aetna Insurance Leney and Evenden, Ex parte. Re
[1900] . . 689, 692 Barker (1864) 697
[1899]
. 913 Leori v. Metropolitan Life (1895) 873
Langelier v. Charlebois, [1903] 416, 782 Leo Steamship Co. v. Corderoy
Langhorn v. Cologan (1812) 792 . . (1896) 2
Langston, Bx parte (1810) 477 Le Pypre v. Farr (1716) ... 105
....
. .
Lanoy v. Athol (1742) 490 Leroux v. Brown (1852) ... 120

Larsen v. Sylvester (1908) . . 856 Leslie, In re (1883) . 532, 799, 801
Latimer u. Batson (1852) 611 . . . Knickerbocker Life (1875) 260,
V.
Laurie v. Drummond (1670) . 405 . 261
Lavender's Policy, In re, [1898] . 565, Lesure v. Lumber Insurance (1897)
566 707, 727, 908, 912
TABLE OF CASES. xlvii
PAGE PAGE
LethbrWge v. A.-G., [1907] 525 . . Liverpool, London and Globe v.
Lett V. Guardian Fire (1889) 310, 898 . Smither (1885) 368
Letts V. Hutohins (1871) 481 ... Liverpool Steam Co. v. Phoenix
Levy V. Baillie (1831) 906, 659 . . (1888) .... 733, 734, 757
....
.
V. Merchants' Assurance Livie V. Janson (1810) 670

(1885) 861 Livingstone v. Western Insurance
V. Scottish Employees' In- (1869) 745
surance, [1901] 360 Lloyd's Case (1872) .... 89
Lewis V. Commissioners, [1898] 842 Lloyd V.Banks (1868) ... 441
V. King (1875)
V. New England Kre (1886)
638 .... V. Pritohard, [1908] ... 538
893 «, Supreme Lodge, [1899] . 857
V. New York Life, [1909] 877 . Lobdill V. Labouring Men's
V. Phoenix (1872)
Read
164, 790, 793
.... Mutual, [1897]
Lockhart v. Cooper (1882)
.... 937, 938
V. (1845) 193 880
V. Rucker (1861) ....
V. Springfield Fire and Mutual
107 Lodge V. Capital Insurance, [1894] 894,
. .
896
(1857) ....
Lidderdale, In re, [1910] .
653, 659, 709 V. National Union, [1907] 473, 790
. 403, 404 Loesoh w. Union Casualty, [1903] 950
Liebrandt v. M'DoweU Stove Co. Lofft V. Dennis (1859) 755, 782 . . .
(1888) 901 Logan V. Commercial Union (1886) 904,

Life and Health Assurance, In 917
re, [1910] . . 33, 53, 65, 59 V. Bank of Scotland, [1904] 102
Life and Health v. Yule, [1904] 285, Logan V. Hall (1847) .... 755
357 London Assurance v. Drermen
Life Association of Scotland v. (1885) 895
Foster (1873) 294, 314, 332, V. Great Northern Transit Co.,
336, 379, 380, 385, 853, 854 [1899] 879
V. MoBlair (1875) . 272, 874 . V. Mansel (1879) 272, 282, 284, .
Life Insurance v. Francisco (1873) 285, 301, 308, 318, 331, 387,
872, 873, 878 787, 790, 874
V. Terry (1872) . . 862, 864 . V. Sainsbury (1783) . 735, 762 .
Life Insurance Clearing Co. v. London and County Assurance,

O'Neill, [1901] 163 ... In re (1861) 182
Life Interest and Hand in Hand, London and Lancashire Fire v.
[1898] 503 The Rome Railway (1894) . . 756
Light V. Countryman's Mutual London and Lancashire Life v.
Fire, [1895] 144 Fleming, [1897] 239, 240, 241, 868 .
Lightbody v. North American In- V. Honey 283, 345, 911

(1876)
....
.
surance (1840) 190, 201 London and Liverpool Fire v.

Limburg v. Ferman Fire, [1894] . 887 Fischer, [1899] 886, 893 ....
Lindenau v. Desborougli (1828), London and Midland Bank v.
301, 304, 306, 315, 316, 317, MitcheU, [1899] 514
322, 351, 874 London and North Western v.
Lindsay v. Niagara District (1869) 368, Glyn (1859) 103, 113, 117, 126, 129,
890 135, 139, 149, 894
Lines' Case (1874) 65 London and Provincial and Ashton
and Leah's Cases (1874) 61, 65 (1862) 7
Linford v. Provincial Horse and London and Southwark Insurance,
Cattle (1864), (1865) 189, 201, 205 In re (1880) 48
Lingley v. Queen Insurance (1868) 130, London and Westminster Bank /u.
131 Inland Revenue, [1900] . . 81
Lion Insurance v. Tucker (1883) . 3 London County Council v. A.-G.,
Lisene v. Lumber Insurance, [1902] 183
[1897] 901 London, Edinburgh, and Glasgow
Lishman v. Northern Maritime Assurance v. Partington (1903) 796
(1875) 296 London Freehold v. Suffield, [1897] 222
Liston V. New York Casualty, London Guarantee v. Fearnley
[1897] 937, 938 (1880) . . . 273, 393, 974, 976
Litchfield v. Dreyfus, [1906] . . 471 London Investment v. Monteflore
Liverpool, London and Globe v. (1864) 410
Agricultural, [1908] 898 . . London Wright (1880)
Life v. . 197
V. Kearney, [1900] 905 ... London, Liverpool and Globe v.
V. M'Fadden, [1909] 913 ... Wyld(1877) 859
V. M'Neill, [1898] 664, 756, 759, London Marine Insurance, In re
879, 894 I
(1869) 271
xlviii TABLE OF OASES.
FACra FAOX
London, &c. Trusts Co. v. Canada 5i|IH«»S McAllister v. New England
Fire, [1908] 890 Mutual Life (1869) ....Mutual
237
London Monetary Advance and McBride v. Gore Dist.
Life, In re (1858) 7 .... (1870) ....
329, 718, 900
Long V. Beeber (1884) 368, 888 . . MoCaU V. Phoenix Mutual
(1876) 796
Loomis V. Eagle Life and Health McCarthys. Travellers (1878) 920, 924,
(1856) 163 934, 936, 951, 953
Loraine v. Thomlinson (1781) . 787 M'Clain v. Provident Saving Lite,
Lord V. American Mutual Acci- [1901] 871
dent, [1894] 937, 939 McClure v. Girard Fire (1876) . 372
Lord V. Dall (1815) .... 163 McClure v. Watertown Fire (1879) 368
Lord Digby's Case (1873) ... 52 MoConnell v. Provident Savings,
Lothian v. Henderson (1803) . . 326 [1899] . . . 225, 228, 247, 263
Louck V. Orient, [1896] ... 345 M'Cormaok v. Illinois Commercial,
Lount V. London Mutual Fire, etc., [1907] .... 930, 952
[1905] ....
883, 890, 894 McCormicki). Ferrier (1832) . . 121
Lovelace v. Travellers' Protective, V. The Royal, [1894] . . 347
[1894] 923, 924 McCowah V. Baine, [1891] . . 864
Lovell V. Accident (1876) . 945, 947 . M'Crea v. Waterloo County (1871) 900
LoveU V. St. Louis Mutual Life (1876) 719
(1883) 869 M'Cuaig V. Independent Order,
Lovell and CoUards Contract, In [1909] 259
re, [1907] 828 M'Cue V. North Western Mutual
Lowell Manufacturing Co. v. Safe- Life, [1908] 172
guard Fire (1882) 709, 714, 717, 902 McCuUock V. Royal Exchange
Lowry v. Bourdieu (1780) 793, 795 (1813) 794
Lowson V. Canada Farmers' Fire Macdonald i>. Law Union
(1874) 331,
(1881) 718,900 335, 377, 385, 792, 859,
Lowther«. Carlton (1741) . . 442 871, 874
Lozano -u. Palatine Insurance, V. Refuge, [1980] 924, 929, 930,
[1896] 905 932
Lubbock V.Potts (1806)
.169, 793 . M'Donell v. Beacon (1858) 309 . .
Lucas V. Dicker (1880) 594 ... MacDonnell v. Carr (1833) 249, 251 .
V. JefEerson (1827) 729

Luce V. Dorchester Mutual (1872) 889
... Macdowall v. Eraser (1779) 279 . .
M'Elroy v. British American As-

Lucena v. Craufurd (1802), (1806) 105, surance, [1899] 859, 893, 899, 916,
108, 118, 119, 122, 123, 129, 917
130, 138 MoElroy v. Hancock Mutual Life,
Luckett Wake Co. v. Globe Fire, [1898] 803, 878
[1908] 344 McEwan v. Guthridge (1860) . 345,
Lumber Exchange Co. v. Ameri- 885
can Central, [1898] . 707, 714, 893, McFadden Jenkins (1842)
v. . . 460
901 MacFarlane's Claim (1880) . . 93
Lycoming County o. SchoUen- MoFarlane v. Royal London
berger (1863) 263 Friendly Society (1886) 153, 164,
LyeU V. Kennedy (1889)
Lynch v. Dalzell (1729)
... 398 166, 167, 168
. 113, 765
. MacGeachie v. North American
Dunsford (1811)
1). . . 349
. Life, [1894] . . . 238, 263, 868
Hamilton (1810)
V. 270, 301, 311 M'Givney v. Phoenix Fire (1828) . 133
Lynchburg Cotton Mills v. Travel- M'Glade v. Royal London Mutual,
,[1906]
lers, [1905] .... 915 [1910] 19
969 McGlinchey v. Fidelity and
Lynes, In re, [1893]
Lynn Gas and
.... 540 Casualty (1888) 927, 928 ....
Electric v. Meriden, McGlother v. Provident Mutual
[1893] 653, 656 Accident, Philadelphia, [1898] 954
Lyon
Lyon
V. Globe (1877)
Railway Passengers' As-
.... 264 MacGregor v. MacGregor (1888) 195 .
V. MaoGugan v. Manufacturers
surance (1877) . . 937, 938, 961 (1879) 237
M'Intyre v. National Insurance
(1880) . 908, 911, 913
. .
V. East Williams Mutual

M (1889) 719, 900, 903
MoAlIaster v. Niagara Fire, [1898] 689,

Mack V. Rochester (1887)
McKay v. Norwich Union, [1895] 345,
891 ...
913 367, 375, 890
TABLE OP CASES. xlix
PAGE PAGE
MoKeciuue's Trustees Scottish
v. Manchester and London Lite,
Accident (1889) .... 951, 953 Bartlett's Case (1870)
Manchester Bonded Warehouse
... 65
MacKenzie v. Whitworth (1875) 121, v.
126, 310 Carr (1880) 755
Mackenzie's Case (1873) ... 88 Manchester Pire Assurance v.
MacKie v. European (1869) . . 199 Abrams, [1898] 893
McKimmie's Trustees v. Inland Mandego v. Centenniel (1884) 263 .
Revenue, [1895] 836 Mangles v. Dixon (1852) 438 ...

McKinley v. Bankers' Accident, Manhattan Life v. Carder, [1897] 872
[1898] 937, 938 V. Broughton (1883) 862, 864 . .
Mackintosh Marshall (1843)

v. 289 V. Hennessy, [1900] 158 ...
....
.
V. Pogose, [1895] ... 602 V. WiHis, [1894] 874

M'Kissick v. Mill Owners' Mutual Manisty's Case (1873) ....
Manitoba Insurance v. Whitla,
52
(1878) 896
MaoLaws V. K. Temperance
v. [1903] .... 715, 899, 900
Manley v. The Insurance Co. of
and General Provident (1861) . 381
M'Laren v. Commercial Union North America (1869) 128, 367, .
(1885) 882 896, 897, 889

Maclean's Trust, In re (1874) . 645, Mannheim v. Hollander, [1901] 125 .
646 Manufacturers' Accident v. Dor-

McMahon, In re, [1900] ... 91 gan, [1893] 872, 947, 951, 952, 953
V. M'Elroy (1869) ... 400 V. Pudsey, [1897] 265 ...
V. Supreme Council O. of Manufacturers' Life v. Gordon,
C. F., [1893] .... 938 [1893] 246, 249, 263, 868
.
March v. Metropolitan, [1898]

. .
873
V. U.S. Life, [1904] 237, 867
....
. . .
MacMaster v. New York, [1899] 206, V. Pigot (1771) 104

214, 859 Marchesseau v. The Merchants
— V. New York Life, [1901]

V. North America (1873) .
226
717,
899, 962
. (1842)
Marcus v. St. Louis (1876)
Mardorf v. Accident, [1903]
672, 906
265, 267
933, 935,
Maomillan v. Accident Insurance, 952, 953
[1907] 356, 358 Markey v. Mutual Benefit (1879) 222
M'Millan v. Sun Life, [1896] . . 926 Marks v. Hamilton (1852) 130, 131 .
M'Murray v. Capital, [1893] 887 V. Hope Mutual (1875) 206, 222

...
. .
M'Naghten's Case (1843) 665 ... Marlow v. Pitfield (1719)

Mam
573
947
McNaUy v. The Phoenix, [1893] 345, V. Travellers' (1889) . .
346, 358, 905, 955 Marrie v. Stadacona Insurance

McNeilly v. Continental Life (1876) (1879) 898
235, 236, 239 Marsden v. City and County (1866) 654,
McNevin v. Canadian Railway 661, 666, 667, 882, 985
Accident. See Canadian Rail- Marshall v. Owners of S.S. Wild
way Accident. Rose, [1909] ... 930
M'Nicoll V. New York Life, [1907] 209, V.Schofield (1882) . 137, 754.
218 V. Scottish Employers, [1902] 284,
McPhillips V. London Mutual, 285, 289, 297

[1896] 768 Martin v. Capital, [1892] . . 366, 367,
MacQueen v. Phoenix Mutual(1879) 888
203, 895 V. Equitable Accident, [1891] 933,
MacRobbie v. Accident (1886) . 943 935, 951, 953, 959
McSwiney Royal Exchange V. Pishing Co. (1838) 127 . .
v.
123 V. Gladwin (1845) 753 ...
(1850)
MacVioar v. Poland, [1894] . . 980 V. Home (1870) 298 ....
Maddison v. Alderson (1883) . . 291 V. Manufacturers' Accident
Madeley v. Booth (1848) ... 278 Indemnity, [1896] 933, 935,

959, 961
Mahoney v. M'Carthy, [1892] . 567
Mahony v. East Holyford (1875) 186 V. Mutual Pire (1876) 369, 889
....
.
Maggison v. Poster (1843) . . 461 «. Sitwell (1691) 105

Maier v. Fidelity Mutual, [1897] . 357 V. Travellers (1859) 919, 925 . .
Mair v. Railway Passengers (1877) 333, V. West of England Life and

856, 943 Pire (1858) . . . 638, 639
Malhoit V. Metropolitan Life, V.Sedgwick (1846) ... 442
[1895] .... Insurance 790, 792, 874 Martineau v. Kitehing (1872) . 113,
771
MaUey v. Atlantic
896 Martinson v. Clowes (1882) . 502
(1883)
315, 929 Marvin v. Universal Life (1881) 266
MaUory v. TraveUers (1871) .
.
TABLE OF CASES.
PAGE PAGE
Marx TraveUers' (1889)
V. 942 Merchants' Fire v. Equity Fire,
Maryland Casualty v. Pinch,
. .
[1905] .... 879, 892, 915

[1906] 881, 986 Meredith, Ex Re
parte State Fire
V. Gehrmann, [1903] 935, 936 (1863) 183, 184
V. Owaha Electric, [1907] . 969, Merino v. Mutual Reserve Life,
970 [1905] 278, 792
Maryland Home Kimnell (1899) 674, Merrett Farmers' Insurance
v.
687, 913 (1875)
Merrick
v.
.......
Brainard (1860)
132
734
Maskelyne and Cook v. Smith, v. . .
[1903] 606 V. Germania Fire (1867) . 902

Mason v.
.
Andes Insurance (1873) 716, V. Provincial (1856) ... 366

717 899 Merserau v. Phoenix (1876) . . 264
V. Sainshury (1782) . . 735
.
'
Metcalfe v. Britannia Iron Works
Massey v. Nanney (1837) ... 828 (1877) 144
Master v. New York Law Insur- V. Parry (1814) ....
169
— ance, [1898]
V. Lefevre (1870)
Matheson Bros., Ltd., In re (1884)
...
...
250
676
72
Metropolitan Life v. McTague
(1887) . 330, 868, 872, 873
V. Montreal Coal Co., [1904] 874
Matlock V. Mutual, [1897] . . 243 Meux V. Bell (1841) ....
443
Matson v. Travellers, [1900] . . 941 Meyer v. Fidelity and Casualty,
Matthew v. Northern Assurance [1897] 952, 953
(1878) 421 Mercantile Credit Guarantee v.
Matthews v. Baxter (1873) . . 678 Wood, [1895] ....
980, 983
WaUwyn (1798) ... 509 Mercantile v. London, Liverpool
Matthewson
«;.
v. Western Assurance and Globe (1877) .... 733

(1859) 141, 679 Michigan Central Railway v.
Mattocks V. Des Moisies Insurance WeaUans, [1894]
Mickey v. Burlington (1872)
.... 760
(1888) 893 . 664 .
Maughan Ridley (1863)

v. 440, 477 Midland v. Smith (1881) . 172 662,
Maundrell v. Maundrell (1804) 487 . 744, 759
Maxfield v. Burton (1873) 443 . . Middleton v. Pollock (1876) . . 606
May V. Buckeye Mutual (1870) 355, . Mildmay v. Folgham (1797) . 765 .
356, 861, 884 Miles V. Connecticut Life, [1892] . 868

—— V. Christie (1815) ... 798 V. New Zealand Alf ord Estate
V. Standard Fire (1880) . . 895, Co. (1886) 196
897 Millaudon v. Western Marine
MayeU v. Mitford (1837) 332, 885 (1836) .... 674,705,901
.... 630
. .
Maynard v. Rhodes (1824) 351, 873 . Miller, In re (1877)

Mayor of New York v. The Brook- V. Fidelity Casualty, [1899] 923,
lyn Fire, The (1864) 885 ... 924, 934, 935, 955
Mead v. American Fire, [1897] 708, . V. Alliance (1881) ...
885
717 879 899 V. Life Insurance (1870) 234, 264,
'
Davidson (1835) 215 265, 267
—— V. .'
. .
Winchester (1875)
V. . . 209 V. Mutual Benefit (1871) . 286
Meadows v. Pacific Mutual Life, V. Union Central, [1895] . 791
[1895] . 929, 931, 946, 947, 948 '. V. Warre (1824) ...
120
Mechanicks v. Gore District Mutual Millerships v. Brookes (1860) . . 222
(1878) 896 Milligan v. Equitable (1857) . . 133
Mechanicks National Bank v. Milliken v. Kidd (1843) ...
640
Comius, [1903] 157, 168 .... Mills V. Albion Insurance (1826) 195 .
Medical Invalid and General Life, Millville Mutual v. Wilgus (1878) . 893
Griffith's Case (1871) 66 ... Milwaukee and St, Paul Railway v.
Spencer's Case (1871)
, 67 . . KeUogg(1876) 653
Meigs V. London Assurance, [1904] 727 Milwaukee Mechanics' Insurance
Meily & Co. v. London and Lanca- V. Rhee^[1903] 893
shire Fire, [1906] 662 .... MinshaU's Case (1872) ... 90
Mellor's Policy Trust (1877) 657 . . Minter v. Carr, [1894] ... 490
Meller i;. Stanley (1864) 637 ... Miskey v. Burlington Insurance
Menetone v. Athawes (1764) . 144 . (1872) 886
Menneiley v. Employers' Liability, Misselhorn v. Mutual (1887) . . 206
[1896] . . . 927, 928, 934, 955 Missouri Steamship Co., In re
Menzies v. North British Insur- (1889) 851
ance (1847) 124, 137, 671
. . . Missouri Trust v. German Bank,
Merchants and Tradesmen's As- [1896] 286, 330
surance (1870) 53 Mitcalfev. Hanson (1866) 616 . .
TABLE OP OASES. li
PAGE
Mitchell V. Potomac Insurance, Mortimore v. Inland Revenue
[1901] 881 (1864) 829
V. Union Life (1858) ... 163 Mortlock Buller (1804)
V. ... 277
V. City London Assurance Morton v. French, [1908] ... 647
(1888) . . 436, 855, 880,
. 898 Moseley v. Rendell (1871) . . 627
Mobile Railway
Co. i). Jurey Moses V. Pratt (1815) . 332, 378, 871,
(1883) 735, 739 873
Modern Woodmen of America v. Motien v. Moojen (1872) ... 590
Tevis, [1901] . . . 188, 256, 257 Motteux V. London Assurance
Moens v. Heyworth (1842) 298, 301 (1739) 859
....
.
Moffat V. Reliance (1881) ... 265 Mouat, In re, [1899] 605

Mohrstadt v. Mutual Life Insur- Moulor V. American Life (1884) 332,
ance Co., [1902]
Mollison V. Victoria (1883)
....
869, 870
143 Mowat Provincial Savings Life,
378, 871, 873
. 136, V.
MoUoy V. Mutual Reserve Life, [1900] 213, 787,
[1905] 278, 792 859
Money Gibbs (1837)
v. ... 801 Moxon V. Berkeley Mutual, [1890] 491
Monk V. Cooper (1727) ... 755 Muirhead v. Forth, etc., Insur-
Monteleone v. The Royal, [1895] 674, ance, [1894] 858
678, 690 Muller i;. Thompson (1811) 177 . .
Montgomery, Moore Synd., [1903] 76 Mulrey v. Shawmut Mutual (1862) 234

Montoya v. London Assurance Mulrooney v. Royal Insurance,
(1851) 653 [1908] 894, 917
Montreal Assurance Company v. Murdock v. Chenango Mutual
MacGillivray (1859) 182, 188, 198 (1849) 329, 368,
....
. . . .
Mooney's Case (1872) 69 889

Moore v. Citizen's Fire (1888) 308, 719, V. Heath, [1899] . , 979, 982
885 Murgatroyd's Case (1873) 90, 92
V. Connecticut (1878) 872, 873 Murphy v. BeU
(1828) .... 107
....
.
....
.
-i>. Half ey( 1883) 236 V. Taylor (1850) 485

....
.
V. Moore (1874)
V. Wildey Casualty, [1900]
459
960
.... Musket's Case (1874)
Mussbaum v. Northern Insurance
. 90
.
V. Woolsey (1854) 174, 863 . . (1889) 895

Moran Galloway & Co. u. Uzielli, Mutchmoor v. Waterloo
Insur-
[1905] 143 ance, [1902] 875, 900
More V. New York Bowery, [1892] 191, Mutual V. Gerard Life (1882) 243, 258
211 D. Home Beneet, [1897] 248
....
.
Morgan, Ex parte (1849) 89 ... V. Kave (1876)

Accident v. Barry (1888) 920,
161
, In re, [1895] 594 Mutual
V. Jeffreys, [1910] 479 ... 924, 928
V. MaUeson (1870) 458 ... V.
Mutual
Tuggle, [1891] .
Benefit v. Robison, [1893]
922, 924
356
. .
;;. Pebrer (1837) 110, 654

....
. . .
V. Pike (1854) 224 V. Wise (1871) 285, 331, 872 .
Mork V. Abel (1802) 793 .... Mutual Fire v. Alvord, [1894] 898, 912
Frey (1880) 905 ....
Morland v. Isaac (1855) . 638, 639 V.
Morley, In re, [1895] 534 ....

.
V. MiUer (1882) 243 ....

Morrell v. Irving Fire Co. (1865) 692, Mutual Life v. Cohen, [1900] . 851 .
.
913 V. Hamlin, [1890] 867 ...

V. Trenton Mutual Life V. Heidel, [1908] . . 233, 867 .
(1852) . ....
. . 158
439
V. Kean, [1905] .
Kelly, [1902]
869, 870
864 ....
. .
Wootten (1852) V.
V.
Morrison v. Muspratt (1827)
. .
313, 315, V. Lane, [1907] 168 ....

351 V. Sigufere, [1902] . 223, 867 .
V. Universal Marine (1872) . 271, Mutual Life v. Langley (1886) 443, 444,
311, 317 492
Morrison and Mason v. Scottish V.Leubrio, [1896] 862, . . 864
Employer's Liability and Acci- V. Logan, [1898] 235, . . . 265
967, 968, 969 V. Phinney, [1899] ... 851
dent (1888) . .
Morriston Tinplate Co. v. Brodker,

.
1). Selby, [1896] .... 356

Dore & Co., [1908] 910 .... V. Tuckfield, [1908] 239, 867,
Mutual Reserve v. Austin, [1905]
870
876
Morrow v. Lancashire Insurance,
[1898] ....
709,714,899,906 V. Beatty, [1896] ... 263
Mortgage Insurance Corporation V. Cleveland Woollen Mills,
V. Commissioners of Inland [1897] 261, 266, 267,. 875

Revenue (1888) 806 V. Dobler, [1905] . 873, . 874
lii TABLE OF CASES.
PAQB PAGE
Mutual Reserve v. Foster, [1904] 3,276 New Amsterdam Casualty v. East
V. Simmons, [1901] 265 Tennessee, etc., [1905] . 970
...
. .
Mutual Relief v. Webster (1889) 286, V. Shields, [1907] 935

871 Newbigging v. Adam (1886) . . 278
Myers v. Liverpool, London and Newbold Friendly Society v. Bar-
Globe (1876) 222 low, [1893] 27
Myers v. United Guarantee (1855) 438, Newcastle Fire v. Macmorran &
803 Co. (1815) 207, 240, 274, 323, 325,
V. Watson (1851) ... 292 327, 331, 356, 361, 365,
856, 878, 882, 906
New Jersey Mutual v. Baker
(1876) 356
Newhampshire Fire v. National
N Life, [1901] 897
Newman v. Maxwell, [1899] . . 754
Nail V. Punter (1832) .... 629 V. Newman (1885) 410, 429, 442,
Nash V. Nash (1817) .... 637
V. Oughton, [1911]
432, 440, 486
. 470, 471
National Association v. Scott, .
[1907] 935 Newport v. House Insurance,

National Assurance v. Best (1857) 482, [1900] 891
National Bank v. Fidelity and Newton v. Chorlton (1853) 512 . .
Casualty, [1898] . . 972, 975 V. Metropolitan Railway

V. Hartford (1877) 884, 885 (1861) 626
V.
.
Insurance Co. (1877)

.
332, 336, V. Pyke, [1909]

New York v. Statham (1876)
.... 470
853 246, 249
National Bank's Case (1873) . . 93 New York Accident v. Clayton,
National Benefit Trust v. Coulter, [1893] 949
[1911] 213 New York Bowery Fire v. New
National Filtering Oil Co. v. The York Fire (1837) . 126, 307, 308
Citizens (1887) 521 New York Breweries Co. v. A.-6.,
National Fire v. McLaren (1886) . 739 [1899] 630
National Funds Assurance (1876) 74 New York Central v. National
National Insurance, Ex parte, Protection (1854)
New York Life v. Baker, [1897]
....
192
[1894] 91 342 .
National Masonic Accident v. V. Fletcher (1886) 356, 357, 358,

Shryock, [1896] 929, 934, 935, 936, 787, 790, 874
950, 953 V. M' Master, [1898] 206 ...
National Provincial Bank (1886) 219 V. RusseU, [1896] 356 ...
National Provincial Life, In re New York Mutual v. Armstrong
(1870) 70 (1885) 163
National Provincial Life, Flem- Newley v. Reed (1762) ... 706
ing's Case (1871)
National Union v. Fitzpatrick,
67 .... Niagara Fire v. Fidelity Co. (1888) 734,
915
[1904] 862, 864 Nicholas v. Ridley, [1904] . . 512
Naylor, In re, [1893] . . 600, 601 . Nichols & Co. V. Scottish Union
Naughter v. Ottawa Agricultural (1885) 709, 712
(1878) ....
306, 358, 889 Nichol's Case (1871) ...
90, 901
Neakin v. Morris (1889) 568 ... Nicholson v. Colonial (1887) . . 888
Neale v. Molineux (1847) 444, 446 i;. Phoenix (1880) 320...
....
. .
!). Reid (1823) 134 Niools V. London and Provincial

Nederland Life v. Meinhert, [1905] 246 (1884) 717, 901
Nedrow v. Farmers' Insurance Nigel Gold Mining Co. v. Hoade,
(1876) 883 [1901] 178
Neil V. Order of United Friends, Nightingale v. Lawson (1785) 632 .
[1896] 937, 938 Nixon V. The Queen, [1893] . . 904

Neill V. TraveUers (1882), (1880), Noad V. Provincial (1859) 719, 899 .
(1885) 944, 946, 947

. . Noakes v. Rice, [1902] 485 ...
V. Union Mutual Life (1881) 237, Noble V. Keunoway (1780) . . 319
239 Nordenfelt v. Maxim Nordenfelt
Nelson &
In re, [1905]
,
Co., Ltd., In re, [1907] 97
79
Co., Ltd., [1894]
Nolan V. Ocean Accident, [1903] 908,
....
20
V. Board of Trade, [1901] 28 910

....
.
Nepean v. Doe (1837) 399 Norris v. Caledonian (1869) 802, 803

New Amsterdam Casualty v. Cum- V. Harrison (1817) ... 778
berland Telephone Co., [1907] . 970 j
V. Wilkinson (1806) ... 477
TABLE OF CASES. I 111
PAGE PAGE
North American Life and Accident Ocean Wave, The (1873) ... 758
V. Burroughs (1871) 920, 924, 930, Ochs V. Ochs Bros., [1909] . . 910
931, 962 O'ConneU v. Russell (1864) . . 104
North American Life v. Craigen Oddfellows Fraternal Accident v.
(1886) 166 Earl, [1895] 958, 961
V. Elson, [1903] 225, 228, 875, Official Receiver, Ex
parte (1886) 502
876 877 Ogden V. East River (1872) 707, 728,
'
North British v. Hallett (1861) 588 . 901
V. Lloyd (1854) 279, 302 . . O'Ferrall O'Ferrall (1834) .
v. . 632
North British v. London, Liverpool Old Battersea Society i'. Inland
and Globe (1877) 113, 706, 710, Revenue, [1898] 844
731, 756, 878, 901 Oldfield V. Price (1860) . . . 67G
•
t>. Moffat (1871) . . .149,879 Oldham v. Anchor Eire, [1894] . 895
V. TourviUe, [1895] ... 275 V. Stringer (1884) ... 498
North of England Oil Cake v. V. Bewicke (1786) ... 905
Archangel (1875)
Northern Assurance v. Grand View
766 .... Oldham Burial Society v. Taylor
(1887) 2
Building Co., [1902] 342, 344, Oldrey v. Union Works, [1895] . 495
860, 899, 916, 917 Oliver v. Greene (1807) ... 137
V. Grand View Building Co., Olmsted v. Keyes (1881) ... 166
[1900] 916 Omberg v. U. S. Mutual Accident,
V. Standard Leather Co., [1897] 954
[1908] 892, 904 One and All, &o., Assurance, In
Northern Counties of England re, [1909] 9
Eire, Macfarlane's Claim (1880) 93 O'Neill V. Ottawa Agricultural
Northrup v. Bailway Passengers (1879) 324, 893
(1871) 926 O'Niel V. Buffalo Fire (1849) 373, 887
North Western Bank v. Poynter, Oom V. Bruce (1810) . . . 793, 794
[1895] 449, 452 Opitz V. Kard, [1903]
O'Reilly v. Corporation (1886)
.... 163
North Western Benevolent v. . 256
Dudley, [1901] 941 V. The Guardian Mutual
North Western Insurance v. Life (1875) 878
Muskegou Bank (1887) 867 ... Ormes
Osborne
v. Beadel (1860)
v. Amalgamated Society,
. . . 456
North Western Railway v. Whin-
rag (1854) 973 [1911] 21
Norwich Equitable Fire, In re O'Shea's Settlement, In re, [1895] 594
(1887) . . . 183. 184, 185 Osser V. Provincial (1862) . . 718
(1888) 7 Oswell V. Vigne (1812) . 173, 660
.
Norwich Equitable Eire v. Royal Ottawa Agricultural Insurance

(1887) 28 V. Sheridan (1879)
Ottley V. Gray (1847) .
.... 133
Norwich Provident Insurance, . 414, 505 .
Bath's Case (1878) 51, 53, 183. Over V. Lake Erie, [1894] 733 . .
184 Owen, In re, [1894] . .494 .
, Hesketh's Case (1880) . . 88

Norwich Union Fire v. Le Bell,
[1899] 884
Notman v. The Anchor (1858) . 332,
339, 853
Nottingham Building Society Pacific Mutual Life v. Snowden,
Thurston, [1903] ....
v.
572 [1893] .... 944, 947, 949
Nutt V. Easton, [1899] ... 502 Packer v. Gibbins
(1841) ...
756
Padstow Total Loss Association
(1882) 9, 10, 71
Page V. Fry (1800) 108, 136, 140, 148
Page V. Sun Insurance, [1896] 707, 728,
901
Oakeleyi). Ooddeen (1861) . . 317 Paine v. Mellor (1801) . . . 132, 767
Oakman v. Dorchester Mutual V. Pacific Mutual, [1892] 206, 211,
(1867) 122, 129 265, 867
O'Brien v. Prescott Insurance, Palatine Insurance v. McElroy,
[1892] 344 [1900] 899
V. Union (1884)
233, 265, 267 V.Ewing, [1899] . . 719, 899
O'Callaghan v. Thomond (1810) .
.
449 Palmer v. Locke (1881) ... 596

Ocean Accident v. Eowlie, [1902] 963 V. Caledonian Railway Co.,
Ocean Insurance v. Francis (1828) 664 [1892] 102
I.L.
liv TABLE OF OASES.
PAGE PAGE
Palmer v. Commercial Association Pearl Life v. Johnson, [1909] . 348
(1889) 211 Pearson v. The Amicable (1859) . 460,
V. Gorm (1856) .... 768
Union
461
V. Metropolitan Life, [1897] 790, Pearson v. Commercial
792 796 (1876) 371, 854
V. Phoenix (1881) 234, 239,' 263 Pearson's Case (1835) .... 665
ij. Pratt (1824)
Palyart v. Leokie (1817)

.... 123 Peck V. Agricultural, [1890]
Equitable Accident (1889)
. . 344
933
794, 795 . . V.
Panton v. Joham (1694) 751 ... Phoenix Mutual (1881) 366, 368,
V.
Paquin v. Beauolerk .... 548 890
Paris V. Gilham (1813) 701, 705 . Pedder v. Mosely (1862) 530 ...
Park V. Phoenix Insurance (1859) 714, Peden Iron and Steel Co. v. Ocean
899, 906 Accident, [1907] 983 ....
Parken v. Royal Exchange Insur- Peek V. Agricultural Insurance,
ance (1846) 138, 851 [1890] 358
V. Eagle Fire (1857) 692, 913, 914 Equitable Accident (1889) 929,
V.
Parker v. Marquess of Anglesea 931, 936
(1871) 513 V. Gurney (1873) 282 ....
V. South Eastern (1877) 190 . Peele v. Provident Fund, [1897] 924
Parker's Policies, In re, [1906] 557 PeUy V. Royal Exchange Insurance
....
.
Parkes v. Bott (1838) 528 (1757) 853,854

Parkin v. Dick (1809)
Parkinson v. Francis (1846)
.... 169 Pelton V. Westchester Fire (1879) 893
394 Pelzer Manufacturing Co. v. St.
....
. .
Parlby's Case (1871) 96 Paul, [1890] 310, 880

Parmelee v. Hoffman (1873) 373, 887 . Penchen v. City Mutual, [1891] . 895
Parr's Bank v. Albert Mines Syndi PenhaU v. Elwin (1853) 607 ...
cate
Parry v. Ashley (1829)
768 Penley v. Beacon (1859) 191 ...
129, 780
. . PenneU v. Millar (1856) 638, 640, 641,
Parry, In re, [1904] . 600, 601
. . 802
V. Hopkin, [1900] 751, 776 Penniall v. Harbome (1848) 753
....
. . . .
V. Smith (1879) 758 Pennington v. Pacific Mutual

Parsons v. Citizens' Insurance Life, [1892] . . . 928, 938, 961
(1878) 884 Pennsylvania Casualty v. Bacon,
V. Standard Insurance (1879) 718, [1904] 875
719 Pennsylvania Fire v. Dougherty
V. Standard Insurance (1880) 883, (1883) 893
886, 900 Pennsylvania Fire Insurance v.
V. Bignold (1846) 156, 311, 358 Hughes, [1901] 894
V. Citizens (1878) 308, 309, 885 Pennsylvania Mutual v. Mechanics,
V. Queen Insurance (1878) 143, [1896] 282, 285, 303, 306, 307, 308,
198, 204 315, 872, 874
Partington v. A.-G. (1869) 624 . . Pense v. Northern Life, [1907] . 869
Pasley v. Freeman (1789) ...
348 Pentalta Exploration Co., [1898] 76
Paterson's Case (1873) ...
90 People V. Globe Mutual (1884) 262
Paterson v. Harris (1861) ...
124
.
People's Accident v. Smith (1889) 958,

V. Powell (1832) .110, 170, 793 961, 962
Patrick, In [1891] .
re, . 460, 464 Perdew v. Jackson (1824) . 535, 536
Patrick Eames (1813)
v. ... 120 Perkins v. Washington (1825) . 213
V. Excelsior Life (1875) 865, 866 Perrins v. Marine and General
w. Farmers (1862) ... 959 Travellers (1859) . . . 282, 871
Patterson v. Royal (1867) 191, 200, Perry v. London Assurance, [1909] 894,
202, 205 896
Patton
(1887)
V. Employers' Liability
958, 962
V. Holt (1860)
Mechanics Mutual (1882)
.... 514
V. 662,
Paul V. Travellers (1889) 922, 923, 924, 674
928, 954, 955 Petapsco Insurance v. Coulter
Pawson V. Barnevelt (1779) . 326, 857 (1830) 123
V. Watson (1778) 275, 293, 331 Petit V. German Insurance, [1898] 879,
Payne v. Mutual Life, [1905] . . 265 904
V. Payne, [1908] .... 772 Petrie V. Bury (1824) .... 224
Peacock i). Monk (1748) ...610 Pettigrew v. The Grand River
V. New York Life (1859) 872 . Farmer's Mutual (1877) 119, 129,
Pearce v. Brooks (1866) ...169 139, 170
Pearce, In re, [1909] . 615, 618
. Phadenhauer v. Germania Life
Pearce v. Gardner, [1897] ...327 (1872) 862,864
TABLE OP CASES. Iv
PAGE PAGE
Phene Trusts (1870) ... 402 PoUock V. United States Mutual
Philipp's Insurance, In re (1883) 644, Accident (1883) 954
645 Ponsford Baker v. Union of Lon-
Philipps V. Knox Country Insur- don and Smith's Bank, [1906] 595
ance (1870) 125 Pontypool Union v. Buck, [1906] 542
PhUlip's Case (1874) .... 90 Poole V. Adams (1864) 132, 767
PhiUips V. Poxall (1872) ... 972 Poor V. Hudson Insurance (1880) 888
. .
Philpott V. Swann (1861) ... 654 V. Humboldt (1878) 888 ...

Phipps V. Lovegrove (1873) . . 410 Pope, In re, [1908] 600, 601, 759
.
Phoenix Assurance v. Spooner, Pope V. St. Leger (1694) 104 ...

[1905] 738, 743 Popular Life Assurance, In re,
Phoenix Doster (1882)
v. 257, 261 . . [1909] 33, 34
V. Eric Transportation (1886) Port Glasgow Sailcloth Co. o.
310, 664, 741, 743, 756 Caledonian Railway, [1892] 734 .
V. Flemming, [1898] 345, 346, 854, Portuguese Consolidated Mines,

886 In re, [1890] 193
V. Lloyd (1879) 746, 898 . . . Post V. Aetna Insurance (1864) 191,
...
.
V. Schultz, [1897] 210 198, 256, 266

Phoenix Insurance v. Charleston
Bridge Co., [1895] 986 .... Potomac, The (1881)
Potter V. Phoenix, [1894]
.... 733
189, 242
....
. .
V. Guarantee Co., [1902] 338, 974, Potts V. BeU (1800) 171

975 Pottsville Mutual v. Fromm (1882) 345,
V. Kerr, [1904] 893 .... 357
V. Warttemberg, [1897] 356 . . Pottsville Mutual Fire v. Horan
.
V. Wilcox, [1895] 899 ... (1879) 367, 889
Phoenix Life (1862) . 183, 787 . . PoweU V.Dewey, [1898] . 157
Phoenix Life v. Raddin (1887) 283, 286, Pott V. Todhunter (1845 . 601
331, 346, 378, 871, 874 Powell V. Brodhurst, [1901] 507
Phoenix Life v. Sheridan (1860) 245, . V. Lee, [1908] . . 211
257, 853 V. Marshall Parkes and Co.
Phosphate of Lime Co. v. Green [1899] 595
(1871) 188, 193 Powell's Trust, In re (1852) 406
Pickering u. Ilfracombe Railway Power?;. Butcher (1829) . 232
(1868) 374 Power's Case (1872) . . C9
Pickett V. Pacific Mutual, [1891] 923, Powers Policies, In re, [1899] 800,
924, 955 803
Piedmont and Arlington Life v. Powis Ontario Accident, [1901] 925,
V.
Ewing (1875) 214, 296, 303, 322
. 926
Pierce Travellers' Life Insur-
v. Powles V. Innes (1843) 106, 108, 766
ance Co. (1874) ....
862, 864 Pownall's Case (1872) ....
51
Pigott V. The Eastern Counties Pratt V. Dwelling House Mutual,
Railway (1846) 759 [1891] 192^ 197
Pim V. Lewis (1862) 316 .... Preferred Accident v. Barker,
Pim V. Reid (1843) 298, 340, 364, 884 [1899] 930
Pinfolds. ShiUingford (1877) 778 . V. Muir, [1904] 926, 947, 952, 953
Pink V. Fleming, [1890] 654 ... Prentice v. Knickerbocker Life
Pinnockt). Bailey (1883) 444 ... (1879) 877, 878
Piper V. Mercantile Mutual Acci- Preoria Sugar Co. v. Canada Fire
dent, [1894] 948 (1885) 915
Pipon V. Cope (1808) 665 .... V. People's Fire (1885) 369, 889
559
.
Pitman v. Universal Marine (1882) 672 Prescott V. Prescott, [1906] . .
Pitt V. Berkshire Life (1868) 239, 868 Preston v. Neile (1879) ...
639
...
.
V. Laming (1814) 753, 766 . . Price V. Macaulay (1852) 277

«. Shewin (1811) 753 ... V. Easton (1833) 408
....
. . . .
Pittsburgh Storage Co. v. Insur- ?;. Price (1847) 238

ance Co., [1895] 122, 127, 139, 879 , Ex parte (1875) .... 96
Planch6 v. Fletcher (1779) 171 . . Priest V. Symons, [1903] ...
53
Planters' Mutual v. Rowland Prince of Wales Association v.
(1886) . 709, 891, 896, 899
. . Palmer (1858) 172, 174, 272, 789, 862
Pledge V. White, [1896] 488, 489, 490 Prince of Wales Life v. Harding
Plinsky v. Germania Fire (1887) 369, (1857) .185, 186, 241, 242, 867
.
Princess Clementine, [1897] 46 . .
Plummer, In re, [1900] . . 599 Pritchards v. The Merchants' Life

Pocock's Policy, In re (1871) 645, (1858) 245, 249, 254, 255, 270, 341,
646 7§7
Ivi TABLE OP OASES.
PAGE
Proctor Coal Co. v. U. S. Fidelity, Radley v. L. & N. W. Railway
[1903]
etc., 973, 976 (1876) 758
Professional Life, In re (1867) . 97 Railton Mathews (1844)
v. . . 302
Progress Assurance, Ex 'parte Railway Officials and Employers
Bates (1870) 96 Accident v. Drummond, [1898] 923,
Propeller MonticeUo, The (1854) 734 . 924
Proudfoot V. Montefiore (1867) 215, 349 Rainbow Howkins, [1904] .
v. 189
Providence Life v. Martin (1869) 945, Ralli V. Universal Marine (1862) . 772
947, 961 Ramsay Cloth Co. v. Mutual Fire
Providence Washington v. Adler of Johnstown (1854) . 899
707, .
(1885) 660 Ramsay v. Phoenix (1880) .311,893

Provident Savings Life v. Bellew, Ramsgate v. Montefiore (1866) , 214
[1904] .... 786 Randal v. Cockran (1748) . . 733
V. Duncan, [1902] . . 262 Rankin v. Potter (1873) 674 ...
•
V. Exchange Bank, [1904] 874 Rann v. Home Insurance (1874) . 891
V. Hadley, [1900] . . 874 RashdaU v. Ford (1866) 194, 294 . .
—- V. Mowat, [1902]
V. Taylor, [1906] . .
860
250, 868
Rawles v. American Mutual (1863) 303,
408
Provincial Insurance v Reesor Rawlins v. Desborough (1840) 157, 305,
(1874) .... ... 748
311, 744,
„.., 315, 351, 352, 874
Prudential Insurance v. Edmonds V. Wickham (1858) ... 277
(1877) 400, 401 Rawls V. American Mutual (1863) 121,
Prudential Insurance v. Inland 158, 166, 306, 351
Revenue, [1904] 27, 556, 810 Rayner Preston (1881) .
v. 130, 767
....
.
V. Jenkins, [1896] 161 ... Read's Case (1872) 90

V. Thomas (1867) 423 ... Reconstruction Case (1872) . . 79
Pugh V. Duke of Leeds (1777) 225 . Reddick v. Saugeen (1888) 290, 310,
V. London, Brighton, [1896] 923, 311, 345, 883, 906
Puller
924 Redding, In re, [1897] ... 779
V. Glover (1810) . . . 124 Redford v. Mutual Fire (1876) . 294,
V. Staniforth (1809) . . . 124 883 885
Pulsford V. Richards (1853) 277, 282, Redgrave v. Kurd (1881) 278, 289, 290
287 Redmayne v. Foster (1866) . . 494
Putman v. Mercantile Marine Redmond v. Canada Mut. Aid
(1843) 138 Ass., [1891] .... 258
Putnam v. The Commonwealth V. Smith (1844) .... 170
(1880) 274, 886 Reed v. Cole (1764) .... 135
Pybus V.Gibb (1856) .... 973 V. Williamsburg City Fire
Pym V. Blackburn (1796) ... 752 (1883) .... 135
Reed v. Royal Exchange (1795) 152,
153
Reese River v. Smith (1869) . . 277
Reese River Co. v. Atwell (1869) 604,
Queen Insurance v. Union Bank, 609
[1901] 290 Reeve Jennings, [1910]
v. 196
«. Vey(1867)
Quieke's Trusts, In
.... 693 Reeves v. Creswick (1839)
.
634, 635,
re, [1908] 696, 699, 636
778, 782 Regina v. National Insurance
Quin V. National (1839) 284, 285, 315, (1887) 338, 974
329, 362, 372 Reid, In Goods of, [1896] 627
....
. .
Quinlan v. Union Fire Insurance Reid V. Clarke (1798) 762

(1883) 884
Reid
V. Gore (1853)
& Co. v. Employers' Acci-
.... 366
dent, [1899] 299, 357

R Reis, In re, [1904] . . 602, 607, 608
Reis V. Scottish Equitable (1857) 859,
R V. Eastern Archipeliho Co. 866
(1853) 180 Reischer v. Borwiok, [1894] . . 654
V. Justices of Berkshire (1878) 959 Relief Fire v. Shaw (1876) . . 195
J). Moore (1852) 665
. .
Renter v. Electric Telegraph
V. Rand (1880) 159
.
(1856) . 193
V. Rhodes (1742) . .
397 Reynard v. Arnold (1875) 701, 776, 769
V. Thomas (1837)
V. Tolson (1889) . .
665
402
Reyner v. Hall (1813) 798
Reynolds v. Accidental (1870) 922, 924,
....
1). Vann (1851) . .
182 925
TABLE OP CASES. Ivii
PAGE PAGE
Rhind's Trustee Bell (1878) 404, 405
v. Rockingham Mutual Fire v.
Rhind v. WUkinson (1810) 107, 117, Bosher (1855) 735
129 Rodey v. Travellers (1886) 920, 924 .
Rhodes v. Dawson (1886) ... 580 Roe V. Dwelling House, [1892] 887 .
I). Railway Passengers (1871) 198 Roebuck v. Hammerton (1778) 104, .
Riach V. Niagara District (1871) . 294, 110, 170

330, 883, 885 Roehner v. Knickerbocker (1875) 238
Rice v. Fidelity and Deposit Co., Rogers v. Bolton (1880) ... 538
[1900] 338, 975 V. Davis (1777) .... 706
V. Grand Lodge, [1894] 263 . . ('. Equitable Mutual, [1897] 210
v. New England (1888) 255 . . Rohrbach i'. Germania Fire (1875) 144,
Richards v. Delbridge (1874) 459 372
....
. .
V. Easto (1846) 761 Rohrschneider v. Knickerbocker

v. Maine Benefit, [1892] 872 . Life (1879) 790
V. TraveUers, [1891] . 923, 924, Ronald v. Mutual Reserve Fund
941 Life, [1892] . . 255, 347, 868, 870
Richardson v. Richardson (1867) 458 Root V. London Guarantee and
V. Rowntree, [1894] ... 190 Accident, [1904] 927, 928, 931, 932,
V. Travellers, [1891] ... 954 959, 961
V. Williamson (1871) . . 194 Rorick v. Railway Officials and
Riche V. Ashbury Railway Employees' Accident, [1902] 935, 936,
Carriage Co. (1873), (1875) 180, 181 958, 961
Richmond Coal Co. v. Commercial Rose V. Medical Invalid (1848) 210 .
Union, [1908] 881 «;. Poulton (1831) 224 ...

Riddler, In re (1882) .... 008 V. Rose (1756) 259 ....
Riddlesburger v. Hartford (1868) 914 Rosenbaum v. Council Bluffs
Rider v. Ocean Insurance (1838) . 134 (1889) I 915
V. WombweU
(1868) ... 568 Rosmead v. Norwich Union, [1898] 877
Rigbyjj. Connol (1880) ... 20 Ross V. Bradshaw (1760) 320, 871 .
Riggs V. Commercial Mutual, Roth V. Mutual Reserve, [1908] 346, .
[1890] 125 867

Ring Phoenix (1888)
i;. ... 887 Rourke v. Short (1856) . . 116, 148
Riseley v. Shepherd (1873) . . 394 Routh V. Thompson (1809) 118, 119,
Ritter v.Mutual Life (1879) . . 172 130, 794
V. Preferred Masonic Mutual V. Thompson (2nd case)
Accident, [1898] 935, 936 (1811) 151, 793
....
. . .
Rivaz's Case (1872) 67 Routledge v. Burrell (1789) 326, 856,

Rivaz V. Gerussi (1880) 307 ... 905
Rivington's Case (1873) 49, 52 . . Roux?;. Salvador (1836) ... 675
Robb V. Watson, [1910] 559, 560 Rowlls V. Bebb, [1900] ... 534
....
.
Robin V. Clay, [1898] 924 Roxborough v. Cox (1881) . . 410

Robbins v. Fireman's Fund (1879) 149, Royal Arcanum v. Brashears,
709, 901 [1899] 330
Roberts v. Edwards (1863) 528 . . Royal British Bank u. Turquand
V. Firemen's, [1894] 127, 139, (1856) 181
148, 879 Royal Exchange Ass. v. Sjoforsa-
V. Havelook (1832) 144 ... kruigs, [1902] 104
Roberts v. Security Co., [1897] 217, 220, Royal Insurance v. Martin, [1903] 881,
221, 223, 229, 230, 243, 894
798 D. Roedel (1875) .707,901
....
. .
Robertson v. French (1803) . 852, 854 V. Wight, [1893] 892

?;. Hamilton (1811) . .138,148 Royal Liver Friendly Society, In
V. Majoribanks (1819) . . 860 re (1870) 844
Metropolitan (1882)
«. . . 264 Royal Naval and Military Society's
Robinson, In re, [1911] . . 472, 473 Case (1872) 98
, In re (No. 2), [1911] . . 473 Royal Naval Society's Indemnity
«. Buccleugh (1886) . . . 397 Case (1874) 61
Robinson v. Morris (1814) . . 171 Ruben v. Great FingaU Consoli-
V. New York Insurance dated, [1006] 191

(1805) 139 Rugglcs ('. American Central (1889) 189,
V. U. S. Mutual Accident, 198
[1895] 923, 924 Rumble v. Citizen Insurance (1881) 895
Roby V. American Central, [1890] 895 Rummens v. Hare (1870) 447, 448, .
Rochester German Insurance v. 461

Schmidt, [1908] 893 Rumncy and Smith, In re, [1897] 510
Iviii TABLE OF OASES.
PAQE PAGE
Russ V. Mutual Benefit Life (1861) 105, Saunders v. Best (1864) ... 616
859 Saunders v. Dunman (1878) . . 802
V. Mutual Fire of Clinton Savage v. Corn Exchange (1867) . 139
(1869) 375 Savannah Fire v. Pelger Man. Co.,
EusseU, Ex parte (1882) ... 609 [1894] 741, 757
Russell u. Canada Life (1882), Saveland v. Fidelity and Casualty
(1883) .... 336, 342 (1886)
SawteUe The Railway Passen-
937, 938
«). Cedar Rapids (1889) . . 366 v.
•
V. Fidelity Fire, [1891] 717, 899, gers (1878) 947
905 Sawyer v. Equitable Accident,
V. Grigsby, [1909] ... 168 [1890] 357
Union (1806)
V. . . . 121, 138 Scanlan Sceales (1849), (1843)
v. 285 .
Russell Hunting Record Co., In Scarf V. Soulby (1849) 608 ...

[1910]
re, 77 Scarisbrick's Case (1873) 92 ...
Russell's Policy Trusts, In re Scarr v. General Accident Assur-
(1872) .589 ance, [1905] 919, 924
Russo-Chinese Bank v. Li Yau Sceales v. Scanlan (1843) 322, 326, 328,
Sam, [1910] 191 329, 335, 857
Rustin V. Standard Life and Acci- Scear v. Lawson (1880) 590 ...
dent, [1899] 948 Schaefer v. Anchor Mutual, [1901] 137
Ruthin Guardian's Case (1872) . 98 Schaffer v. Spangler, [1891] . . 157
Ryan v. Agricultural, [1905] . . 135 Schauberg v. Fidelity and Casualty,
Ryder v. Commonwealth Fire [1907] 919, 924
(1868) 691, 913 Schmertz v. U. S. Life Insurance
Rylands v. Fletcher (1868) . 759, 760 Co., [1902] . . . 258, 876, 877
Schneider v. Provident Life (1869) 944,
947
Schondler v. Waoe
(1808) . . 612, 800
S Sohreiderer v. Travellers (1883) . 948
Schroedal D.Humboldt Fire, [1893] 893
Schultz V. Hawkeye Insurance
Sadd Aetna, [1893]
V. .... 888 (1875) 883
Sadler Worley, [1894]
v. ... 495 V. Insurance (1883) 862, 864
Sadler's Case (1872) .... 3 Schultze V. Schultze (1887)
. .
561, 562,
Sadler's Company v. Badcock 565
(1743) . Ill, 113, 134, 765, 897 Schumaker v. Security Life,
Saint John v. American Mutual
Fire and Marine (1854) ... 881
[1907] .... 868, 869, 877
Schumann v. Scottish Widow's
Saint Louis Railway v. Commer- Fund (1886) 659, 562, 564
. . .
cial Insurance, [1890] 735, . . 743 Schuster v. Butchers County In-

Saint Paul Fire v. Kidd, [1893]
V. Penman, [1907] 886, 916,
. 915
917
surance (1886)
Schwabe v. Clift. See Clift v.
....
883, 906
Salt V. Marquess of Northampton, Schwabe.

[1892] ....
479, 638, 639
Salterio u. City of London Fire,
Scott's Case (1873) .... 96
Scott V. Avery (1856), . 906, 907, 911
[1893] 897 Scott V. Coulson, [1903] 454, 455
Saltus V. U. S. Co. (1818) 179 ... V. Mercantile Accident,
. .
Salvin v. James (1805) 249, 250, 257, [1892] ....

907, 910
Samuel v. Newbold, [1906]

859
472
V. Porcher (1817) 439 ...
. . V. Roose (1841) . 105, 115, 166
Samuels v. Tompson, [1910] 966 - .
V. Scottish Accident (1889) 937,
Sanderson v. Aston (1873) 972, 973 .
938
Sands v. Tenents (1678) 405 ... Scottish Amicable v. Fuller (1867) 427
Sanford v. Orient, [1899] 189, 197, 198 Scottish Amicable v. Northern As-
Sangster's Trustees v. General surance (1883) 709, 711, 682, 687,
Accident, [1896] 943, 944, 947 .
901, 914
Sanguinetti v. Stuckey's Banking Scottish Economic Life, In re,
Co., [1895] 600 [1890] 33
Saqui and Lawrence v. Stearns, Scottish Equitable Buist (1877),
v.
[1911] 965 (1876) . 289, 342,
. . 386
Sargent v. Central Accident, V. Inland Revenue, [1894] . 828
[1901] 944, 947 Scottish Life v. Donald, [1901]
Sartoris,
Satterthwaite
In re, [1892] ....
Mutual (1850)
580 Scottish Marine v. Turner (1863)
. 565
654
v. . 319 Scottish National v. Encampment
Saumarcz, In re, [1907] . . . 474 Smelting Co., [1908] . 916, 971
TABLE OP CASES. lix
PAGE PAGE
Scottish Provident v. Boddam, Slieldonw. Atlantic Fire (1863) 230, 233
[1893] . . 282, 299, 306, 377, 388 Shepherd?;. Beeclier( 1725) 971 . .
Scottish Provident v. Cohen (1886) 440, Shera v. Ocean Accident, [1900] 935,
449, 451 958, 901
Scottish Union v. Encampment Sherbonean v. Beaver Mutual
Co., [1908] 888 .... (1870) 131
V. Hagan, [1900]
Scottish Union and National v.
895 .... Sherwood
ance (1878)
v. Agricultural Insur-
895
Alfred Pawsey &
Co., [1908] 666, Slieva V. Ocean Accident, [1900] . 936
668, 881 Shield's Marine Association (1867) 78
Scripture v. Lowell Mutual (1852) 653, Sliiells V. Scottish Assurance
655 Corporation (1889) ....
984
Sea, Ki-eand Life, In re (1850) . 6 ShiUing v. Accidental Death (1857) 105,
Seagrave v. Union Marine (1866) 138 152, 153, 159, 161, 162, 164,
Seaman v. Enterprise Fire and 165, 166, 873
Marine (1884) 125 Shindene v. Travellers' (1883) 948 .
Seaman's v. N. W. Mutual (1880) 261 Ship's Case (1865) 277

Sears v. Agricultural Insurance Shirley w. Wilkinson (1781) 311 . .
Co. (1882) 860 Shirt V. Calico Printers' Associa-

Seaton v. Heath, [1899] 302, 303, 315, tion, [1909] 936
Shropshire Union Queen
Seaton (1888)
V.
977 978
'
538 . . . . (1875) ....The v.
440, 441, 444
Shuttuck V. Mutual Life (1878) . 222
Security MutualLife,Inre(1858) 89, 185
Seddon v. North Eastern, [1905] 278 Sibbald v. HiU (1814) . . 284, 308
.
Seigrist V. Schmoltz (1886) 161 Sickness and Accident v. General

Seliq V. Lion, [1891]
Selvage u. Hancocli (1882)
591 .... . .
Accident, [1892] 207, 208, 217, 225,

226, 229, 706
261 . .
Selwyn v. Garfit (1888) 500, 503 . . Sieverts v. The National Benevo-

Sewell V. Burdick (1884) 143 ... lent, [1895] 857, 872
Seymour v. London and Pro- Siggers V. Evans (1855) 224 ...
vincialMarine (1872) ... 320 SiUem v. Thornton (1854) 326, 340,
Seymour v. Vernon (1852) . 777
. 361, 362, 363, 372
Seyton, In re (1887) . . . 557, 558 Simcocli V. Scottish Imperial,
Shanks v. Sun Life, [1896] . 211, 926 [1902] 154, 155
Shannon v. Gore District Mutual Simons v. Iowa State Travelling
(1878) 346, 357, 719, 879, 900 Men's, [1897] ....959, 961
Hastings (1875)
V. 294, 883, 885 Simpson u. Accidental Death (1857) 244,
Sharland v. Washington Life, 249, 250, 252, 260
[1900] 862, 864 Simpson v. Scottish Union (1863) 137,
Sharp V. Jackson, [1899] 612 ... 145, 697, 699, 702, 703
...
V. Milligan (1857) 756 ... j;. Thomson (1877) 744
V. Rickards, [1909] 490 ... V. Walker (1833) . . 638, 639
.
...
90
Sharpe v. Commercial Travellers' Simpson's Case (1873)
Mutual Accident, [1893] 951, Sims V. Castighone, [1905] . . 753
953 Sinclair v. Bowles (1829) ...
144
V. Poy
(1868) . 486 V. Canadian Mutual (1876) 883, .
Shaw, Ex parte (1800) 641 .

893
Shaw V. Benson (1883) 10 V. Maritime Passengers
V. Poster (1872)
.
476, 477
. (1861) .... ... 921, 924, 923
467
V. Phcenix (1869) . 120 Skarf i;. Soulby (1849)
«;.RepubUc Life (1877) . 237 SJiillett V. Fletcher (1867) . . 973
Shavir V. Bobberds (1837) 173, 363, 369, SkiUings v. Royal Insurance,
372, 664, 884, 888 [1903] 892
V. Royce, Limited, [1911] . 977, Skinner v. Uzielli & Co., [1908] 909,
978, 979 910
•
V. Simmons (1883) 10 ... Skipper and Tucker v. Holloway,
Shear v. Goddard, [1896] 593 ... [1910] 431
94....
Shearman v. British Empire Slater's Case (1871)
Mutual Life (1872) 799, 802 . Slim V. Croucher (1860) 277, 675 . .
V. Pacific Mutual, [1890] 937, 939 Sloat V. Royal Insurance (1865) 707, .
SheffieldNiokelCo.t;.Unwin(1877) 275 901

Sheifield, Rotherham Fire, In re Slobodinsky, In re, [1903] 594 .
(1847) 6 Sly V. Ottawa (1879) . 294, 884, 885

Shelbourne v. Law Investment, SmaU V. Smith (1884) 185 ...
[1898] 071 V. TraveUers', [1903] . 944, 947
Ix TABLE OF CASES.
PAGE PAGE
Small V. Westchester Fire, [1892] 895, South Staffordshire Tramways v.
897 Sickness and Accident, [1891] 226 .
Smart v. Tranter, [1899] 624 South Wales Atlantic Steamship

Smidmore v. Australian Gas Light
. . .
Co., In re (1876) 10, 71 ...

Co. (1881) 743 Southall V. British Mutual Life
Smiley v. Citizen's Insurance (1871) 56
(1878) 881 Southard v. Railway Passengers
Smith, Ex parte. In re Bakewell (1868) 920, 924
(1818) 589 Southcombet). Merriman (1842) 323, 874
Smith V. Aetna (1872) ... 315 Sovereign Fire Insurance v. Moir
V. Accident (1870) 852, 853, 933, (1887) 885
935, 951, 952 V. Peters (1886) 895 ....
r. Bank of Scotland (1813) 971 Sovereign Life, In re (1889) 48, 49, 57,
....
.
—- V.
V.
Bolton (1816)
Chadvvick (1882) 281, 285, 288
762
V. Dodd, [1892]
76
57, 96, 99 . .
V. Charter Oak Life (1876) . 179 Soward v. Palmer (1818) 238 ...
V. Cherrill (1867) 607 ... Sowden v. Standard Fire (1880) 357,
V. Colonial Mutual Fire 916, 917
(1880) 682, 691 Sowerbyu. Brooks (1821) . . 596
V. Columbia Insurance Co. Spalding v. Thompson (1868) . 487
(1851) 140, 142 Spare v. Home Mutual (1883) . 104
V. Everitt (1859) . . 629
. . Sparenborg v. Bdinbui'gh Life,
V. Grand Orange Lodge, [1911] 790
[1903] 273 Sparkes v. MarshaU (1836) . . 106
V. Kay (1859) 277, 287, 288, 289 Spencer v. Clarke (1878) . 428, 443,
V. Lascelles (1788) ... 139 486
V. Mechanics' Fire (1865) 340, 373 Speyer Bros. v. Inland Revenue,
V. Mutual Insurance (1877) . 264 [1908] 848
V. New England Mutual, Spoeri v. Massachusetts (1889) 268 .
[1894]. . . 257,258,265 Springfield v. Allen (1871) 128, 139,

V. Provident Savings, [1895] 214, 143, 896
265, 867 Springfield Fire and Marine v.
V. The HuU Glass Co. (1849) 181, Fowler, [1902] 170
185 Spurrier v. La Cloche, [1902] 450, 852,
V. The Eoyal Insurance 907, 910
(1867) 139 S.S. Knutsford (Ltd.) v. Till-
V. Smith, [1891] .... 481 manns, [1908] 866
V. Smith (1833) .... 588 Staffordshire Financial Co.
....
v.
V. Tatton (1879) .... 610 Valentine, [1910] 472

Smith's Case (1867) .... 277 Stainbank v. Fenning (1861) .
«. Shepard (1853) ...
. 143
143
Smith's Policy Trusts, In re, [1898] 564,
565 Stamford v. Imperial Guarantee,
Smith's Trust, In re, [1890] . . 674 &o., [1908] 949
Smith's Trustees v: Irvine, [1903] 10 Stamford Banking Co. v. BaU
Sneck v. TraveUers', [1895] . 937, 939 (1862) 495
Snow, Ex parte (1872) ... 594 Standard Life v. Trudeau, (1900) 176
Snow V. Mercantile Mutual (1874) 321 V. Weems. See Thomson v.
Snowden v. Kittaning Insurance Weems.
(1888) 903, 906 Standard Life and Accident v.
Sohier Norwich Fire (1865)
v. 667, 882 Fraser, [1896] 356
Solicitors and General Life v. V. Thornton, [1900] . 929, 948 .
Lamb (1864) . . 175, 733, 863, 865 V. Schmaltz, [1899] 920, 924, 948,
Solvency Mutual v. Freeman 962
(1861). . . 981,982,983 Standard Life, &c. v. McNulty,
V. Froame (1861) 981, 982, 983 [1907] 854
Somers v. Athenaeum (1858) .
Somerset Mutual Fire v. Usaw
357 . V. Sale, [1903] .... 871
Stanley v. Western Insurance
(1886) 373, 887 (1868) . . . 654, 666, 669, 864,
Sottenberg v. Continental, [1898] 887 881
South African Supply Co., In re, Star Fire and Burglary v. David-
[1904] 46 son, [1902] . . . 211, 213, 785
South Australian v. EandeU (1869) 127, State Fire Insurance, In re (1863) 97
894 State Life v. Murray, [1908] 234, 867
South of Ireland Colliery Co. d. Statham v. New York Life (1871) 179
WadcUo (1868) 197 Stedall V. Stedall, [1902] ... 568
TABLE OF CASES. Ixi
PAGE PAGE
Steel V. Cammell Laird & Co., Sulphite Pulp Co. v. Faber, [1895] 853,
[1905] ....
921, 924
Phoenix Insurance, [1892] 765,
855
V. Summerfield v. Phoenix Insurance,
914 915 [1894] 891
'
Steele v. Mart (1825) . 219 Summers v. Commercial Union
....
. . .
Steen v. Peebles, [1890] 533 ... Insurance (1881) 192

Steinbach r. Insurance Co. (1871) 885 Sumpter v. Hedges, [1898] 144 . .
Steinle «.New York Life Insurance Sun Fire Office v. Hart (1889) 244, 245,
Co., [1897] 869, 870 856, 891, 892
Stephens v. The Australasian V. Wright (1834) 671 ...
(1872) 139 Sun Mutual v. Ocean (1882) 308, 317 .
Stetson V. Massachusetts Mutual Supple V. Cann (1858) 262, 346 . . .
Fire (1808) 127 Supreme Council v. Fidelity,

Stevens v. People's Mutual Acci- [1894] 303
dent, [1892] 937, 938 . . . w. Garrigas (1885) .923,924 .
V. Trevor Garrick, [1893] 551 . V. Lippincote, [1904] . 273 .
Stevenson v. London and Lanca- Supreme Court v. Taylor, [1903] 264
—-v. Snow shire Fire (1866)

(1761) . .
,
,
120, 131
94, 786
V. Turner, [1901] 937, 938
Supreme Tent v. King, [1906] 862, 864
. .
Steward Greaves (1842)

v. 100 Surman v. Wharton, [1891] 536, 540,
—
, .
Stewart Alliston (1815)

v. . . 278 567, 624
V. Hay (1760) . . , . 405 Surplice v. Farmsworth (1844) . 755
V. Hadge, [1901] . . . . 554 Sutherland v. Pratt (1843) 107, 138,
.
ExpaHe{18e5)
, . . , 588
. 143, 151
In re, [1908]
, . . . 466
. Sutherland v. Sun Fire (1852) 687, 914
Stirling v. Vaughan (1809) 119, 130 Swaine v. Wilson (1889) ... 21
....
.
Stock V. Inglis (1884) . . . 104

. Swan V. Swan (1819) 801
Stockdale v. Dunlop (1840) 118, 119, Swanley Coal Co. v. Denton,
120, 123 [1906] 474
Stocks V. Dobson (1853) 410, 414
. Swarzschild v. Phoenix Insurance,
Stokes V. Cox (1856) 332, 362, 365, [1903] 891, 892
890 Swayne v. Swayne (1848) . . . 444
Stokoe V. Cowan (1861) ... 605 Sweeney v. Franklin Fire (1853) . 131
Stone, In re, [1893] .... 396 V, Promoters of L. A. C.
290
Stone V. Marine Insurance (1876) 215, (1863)
786, 787 Swete V. Fairlie (1833) 156, 313, 315,
V. Theed (1787) .... 636
...
351
65
Stoneham v. Ocean, Railway and Swift's Case (1873)
General Accident (1887) 274, 335, Syers v. Bridge (1780) ... 861
926, 927, 956 Sykes v. Perry (1859) . . . 368, 890
Stonor's Trusts, In re (1883) . . 551 Syndicate Insurance Bohm,
Storie's Trusts, In re (1859) . 638, 639 [1894] 893, 898
Stormont v. Waterloo Life and
Casualty (1858) ....
862, 864
739
Stoughton V. Gas Co., [1895] . .
Stott V. London and Lancashire T

Fire, [1891] . . . 286, 330, 884
Stout V. City Fire (1861) . . 373, 887 Tabbut V. American Insurance,
Stribley v. Imperial Marine (1876) 307, [1904] 135
350 Taff Vale Railway v. Amalga-
Strickland v. Turner (1852) . . 270 mated Society of Railway Ser-
Stright, Ex parte (1832) ... 588 vants, [1901] 101
65, 68 ...
Strong V. Manufacturers (1830) 127, Talbot's Case (1874)
.
129, 896 Talbot V. Frere (1878) 488 ...

Strutt V. Tippett, [1890] 803 . . Talbott V. Metropolitan Life,
Stuart V. Columbia (1823) 135 . [1906] 234
Stuart V. Freeman, [1903] 245, 249, 253, Taliaferro v. Travellers' Protec-
256 861, 867 tive, [1897] 923, 924
Styles V. Wardle (1825) 219 . . . Tancred v. Delagoa Bay Railway
Suarez, In Goods of, [1897] . 628 . (1889) 431
Suffolk Fire v. Boyden (1864) 744 Tancred, Arrol &
Co. v. Steel Co.
Sugden v. Fireman's Fund (1859) 887
.
of Scotland, [1890] .... 909

632
Sullivan's Case (1872) 93 . . . Tanner v. Elworthy (1841) . .
Sullivan v. Metropolitan Life, Tannerct v. Merchants' Mutual

[1899] 797 (1882) S81
Ixii TABLE OF OASES.
PAGE PAGE
Tappendoii Randall, [1901]
v. 795 . Thornton v. Knight (1849) . . 272
Tarleton v. Stanltorth (1794), V. Travellers', [1902] 934, 936,
(1796) 249, 250 950, 951, 953, 962
Tasker v. Scott (1815) 108 Thurstan v. Nottingham Building
TasseU v. Smith (1858) 488
. Society, [1902] 573
Tate V. Hyslop (1885) . 309
. ThurteU v. Beaumont (1823),
Taunton v. The Royal (1864) 183, 184, (1824) . . . 174, 662, 667, 882
881 Tibbitsi;. George (1836) ... 388
Taylor, Ex parte (1850) 572 Mercantile Credit Guaran-
V.
Taylor v. Bowers (1876) 795

. tee, [1896] 978, 983
V. CaldweU (1863) 756
. . . Tidswell v. Ankerstein (1792) 154, 155
V. Dunbar (1869) 653
. . . Tiedemaur and Ledermann, [1899] 192
V. G. E. Railway Co., [1901] 120 Tieman v. People's Life, [1896] 265, 867
V. Merchants', etc. Insurance, Tillon V. Kingston Mutual (1851) 128,
[1891] 896 896
V. Merchants' Fire (1850)212, 239, Times In re (1861)
Fire, ... 75
265 Times Fire v. Hawke (1859),
V. State Insurance, [1899] 716, 899 (1858) 692, 693
Teasdale v. Sanderson (1864) 801 Times Life Assurance, In re (1870) 64
Teeter v. United Law, [1899] 235 Titley v. Davies (1743) ... 492
Tennant v. Travellers (1887) 256. 265, Todd V. Liverpool and Globe In-
267 surance (1868) 143, 366, 890
Tennyson, .Ba; yarie (1832) 588 V. Moorhouse (1874) . . 532, 803
Terwillizer v. National Masonic Tolman v. Manufacturers (1848) . 913
Accident, [1902] .... 948 Toogood's Legacy (1889) ... 512
Teutonia Insurance v. Ewing, Tootal BroadhuTst v. London and
[1898] 190 Lancashire, [1908] 666, 669, 881, 882
Thames and Mersey Insurance Torricans v. Young (1833) . . 751
V. Hamilton (1887) .... 856 Torrop v. Imperial Fire, [1896] . 895
Tharp, In re (1852) . . . 799, 804 Toulmin v. Anderson (1808) 169, . 172
Thayer v. Standard Life and Towle V. The National Guardian
Accident, [1896] 927, 928, 936, 937, (1861) 337, 974
938 Town Life v. Lewis, [1902] . . 239
TheUusson v. Fletcher (1780) . 108 Townsend v. North Western (1858) 369,
Theobald v. Railway Passengers 889
(1854) 925, 926,939 V. Westacott (1840) ... 608
Thomas, In re (1884) .... 10 Traders' Insurance, [1894] . . 880
Thomas v. Brown, [1899] ... 757 Traders v. Pacaud, [1894] 126, 139,
V. Mason's Fraternal Acci- 709, 894, 901
dent, [1901] 944, 947, 948, 950 V. Robert (1832) .... 900
Thompson v. Adams (1889) 195, 202, Traders and TraveUera' Accident
207, 208, 217, 230 V. Wagley, [1896] 944, 947, 948
.
V. Hopper (1858) . . . 173, 662 Traill v. Baring (1864)272, 280, 284,

V. Equity Fire, [1907] . . 900 288, 292, 294, 297, 312, 313
V. Insurance Oo. (1850) . . 882 V. Hibblewhite (1847) . . 394
V. Insurance Co. (1881) 237, 238, Train v. Holland (1875) . . 210, 240
258, 259, 260, 868 Transatlantic Fire v. Dorsey (1880) 881

V. Kjiiokerbooker Life Insur- Travellers' v. Robbins, [1894] 933, 935,
ance (1881) 860 940, 941
Thompson v. Lambert (1868) 454, 455 Travellers', &c. Insurance v,
V. Montreal (1848) . 657, 655
. Austin, [1902] . . 925, 926
V. Phoenix Insurance (1889) 130, V. Clark, [1900] . . . 945, 947
332, 853, 859, 895, 914 V. Dunlop, [1896] 954 ...
f. Phoenix Insurance, [1893] 915 V. Edwards (1886) 878 ...
V. Speirs (1845) .... 589 V. Jones (1888) ....947
V. HaU (1852) .... 618 V. Langholz, [1898] . . 940, 941
V. Tomkins (1862) ... 688 V. McCarthy, [1890] . 940, 941
Thomson v. Hopper (1858) . 363 . V. MoConkey (1887) 853, 928, 929,
Thomson v. Weems (1884) 280, 300, 931, 940, 941
322, 325, 328, 332, 334, V. MeKck, [1894] 935, 940, 952
346, 347, 375, 376, 378, V. Murray, [1891] 951, 953, 954,
379, 381, 387, 790, 792, 955
857, 871, 874 - V. Nax, [1905] . . . 960, 961
Thormau o. Dowgate, [1909] . . 856 V. Randolph, [1897] 942, 944,
Thornton v. Enterprise (1872) . 898 947, 948
TABLE OF CASES. Ixiii
PAGE PAGE
Traveller's, &c., Insurance, v. Union Mutual Life v. Payne,
Sheldon, [1897] 951, 953
. . . [1900] .... 862, 863, 864
Travis v. Nederland Life, [1900] 209, Union National v. German In-
214 surance, [1896] . . 360, 719, 899
Tredegar v. Windus (1875) 260 Unitarian Congregation v. Western
Trench v. St. George (1838) 635 .
. .
. (1866) .... 707, 728, 901

Trew V. Railway Passengers (1861) 853, United Brethren v. White (1882) 871
924, 925, 930, 931, 935, 947 United Brethren Mutual Aid v.
Trinder Anderson v. Thames and McDonald (1888) .... 103
Mersey Marine, [1898] 662, 664, 065, United Firemen's v. Thomas,
854 [1897] 719, 899
Trippe v. Provident Fund, [1893] 957, United Ports and General, Beck's
960, 961 Case (1874) .... 50
Tristont). Hardy (1851) 410 ... Ewen's Claim (1873)
, . . 70
Trott V. Waolwioh Mutual, [1891] 119, Wynne's Case (1873)
, . . 50
132 United Providence Insurance, In
Trull V. Roxbury Mutual Fire re, [1910] 99
(1849) 674 United Shoe Co. Brunei, [1909] 271
;•.
Trustees of Baptist Church v. Upfill V. Wright, [1911] 170 . . .
Brooklyn Fire (1859) 196, 233, 256 U. S. Fidelity v. Bes Moines

Tuberville v. Stamp (1697) . 758, 760 National Bank, [1906] 973, .
Tuck V. Insurance Co. (1876) 709, 901 976

Tucker v. Mutual Benefit (1888) 945, V. Egg Shippers' Co., [1906] 973,
947 948 976
Turcan, In re (1888) .
'
627. . . U. S. Fire v. Kimberly (1870) . 373
Turnbull, In re, [1897] 563... U. S. Life V. Smith, [1899] . . 357
TurnbuU v. Scottish Provident U. S. Mutual Accident v. Hubbell,
(1876) .... 152, 155, 309 [1897] 924
938
Turner v. Fidelity and Casualty, V. Millard, [1892] 937, . .
[1897] .... 962, 963 U. S. Shipping Co. v. Empress

«. Harvey (1821) ... 454 Assurance Corporation, [1907] . 107
V. Smith, [1901] .... 509 Universal Life, /» re, [1901]
Universal Non-Tariff Fire, In re
. 47
Turquaudw.BoardofTrade(1886) 590
Tutten V. Owners of S.8. Majestic, (1875) . 285, 357, 365, 878, 883
[1909] 936 Universe v. Merchants' Marine,
'
Tuttle V. Travellers' (1883) 946, 947 [1897] 232
Tweddle v. Atkinson (1861) 408, 415 Urquhart v. Buttertteld (1887) 664, 645,
....
.
Tyler, In re, [1907] 800 799

Tyler v. Home (1785)
Tyree v. Insurance Co., [1904]
.... 788 Usparichat). Noble (1811) . . 179
132 . Utter V. Travellers (1887) 928, 931,
Tyrie v. Fletcher (1777) . 786, 793. 940, 941, 942
Tyser v. Shipowners' Syndicate,
[1896] 2
U Valentini v. Canali (1889) 572

....
. .
Vallance, In re (1884) 468

Ulrich V. Reinochl, [1891] . 157 . Valton V. National (1859) Fund . 290
Ulster Co. Savings v. Leake (1878) 746, Van Bokkelen v. Travellers', [1898] 925,
898 927
Underwood v. Farmers' Joint Vance v. Forster (1841) 674 ...
Stock (1874)
Greenwich, [1900]
.... 959 Vancouver National Bank v. Land
V. . . 203 Union, [1907] 895
Union Bank v. Ingram (1882)
Union Casualty v. HarroU, [1897]
. 498 Vandezee v. Willis (1789) 477 ...
923, Vandycku. Whitmore (1801) 171 .
924, 945, 947 Vansittart, In re, [1893] 599 . . .
Union Casualty and Surety v. Van Valkenburgh v. American

Mondy,
Union Central
[1903] .... 927, 928 Popular Life (1877) .... 874
Berlin, [1898] .
v. 264 Van Werden v. Assurance, [1896] 796
V. Phillipps, [1900] 191, 204, 222 Van Zandt v. Mutual Benefit Life
V. Pottken (1878) ... 261 (1873) 862, 864
V. Robinson, [1906] 265, 870
. . Vaughan Menlove (1837)
v. 758 . .
Union Mutual v. Mowry (1877) 257, 261 u. Vanderstegen (1854) 478

....
. .
Union Mutual Accident iJ.Frohard, Vautin, In re, [1900] 612

[1890] 949 Vavasseur v, Vavasseur, [1909] 400, 466
Ixiv TABLE OF CASES.
PAGE PAGE
Vawclry v. Simpson, [1906] . . 810 Walton V. Agricultural Insurance
Venner v. Sun Life, [1890] 350, 354, (1889) 895
790 Walton William's Case (1873) . 90
Vernon v. Smith (1821) 702, 754 . . Wankfordv. Wankford(1799) . 626,
Vezina v. New York Life (1881) 168 . 627
Vickers v. Scott (1837) 533 ... Wanless v. Lancashire Insurance,
Victoria Montreal Fire v. Home [1896] 903
Insurance, [1904] 918 .... Want V. Blunt (1810) . 250, 251, 331
Vilas V. New York (1878) 329 ... Warburg v. Tucker (1858) 616 . .
Viney v. Bignold (1887) 907, 908, . . Ward V. Audland (1845) 459, 460 . .
911 V. Buncombe, [1893] 441 . .
Von Lindenau v. Desborough V. National Bank of New

(1828) 157 Zealand (1883) ... 978
Voyse V. Wakefield (1840) . . 532 V. Turner (1751) .... 467
Waider v. Horton (1812) ... 134
Ware v. Gardner (1869) ... 609
Waring v. Indemnity Fire (1871) 880
W. Warneken v. R. Moreland and
Son, [1909] 936
Wager v. Providence Insurance,
...... Warne's Case (1872) .... 67
[1893] 743, 756 Warner, Ex parte (1870) ... 94
Wainer v. Milford Mutual Fire, Warner v. Couchman, [1911] 923
[1891] .... 210, 133, 158, 222, Warnock v. Davies (1881)
. .
163, 164,
325 168
Wainwrlght v. Bland (1835) 152, 153, Warren v. The Davenport Fire
164, 165, 166, 285, 862, (1871) 125
864 Warshawkey v. Anchor Fire,
Waite V. Morland (1888) ... 567 [1896] 360
Waithman, Ex parte (1835) 589 Warwicker v. Bretnall (1882) 777
....
. . . .
Wake «. Atty( 1812) 321 Washburn v. Farmers' Insurance

Wakelin v. L. and S. W. Railway (1880) 881
(1886) 930 Washington Fire v. KeUy (1870) 749,
Wakeman v. Metropolitan Life, 750, 894, 896, 897
[1899] . 161, 168, 790, 792, 874 Washington Mills v. Commercial
Walcott ii. Metropolitan Life, Fire (1882) 672, 893
[1891] 862 Washington Mutual Fire v. Rosen-
V. United Life and Accident berger (1877) 259
(1889) 938 Washoe Tool Co. v. Hibernia Fire
Waldron, In re, [1904] 779 ... (1876) 233
Wale V. Inland Revenue (1879) . 836 Watehorn v. Langford (1813) . 879
Walker, In re, [1893] . 800, 803 Waterloo Life, In re (1862) 9
....
. . . .
, In re, [1905] 579 Waterloo Life, Carr's Case (1864) 53

Walker v. Linom, [1907] 444 ... Waters v. Merchants' Louisville
V. London and Provincial (1837) 653
(1888)
V. Railway Passengers' As-
....
567, 882 Waters v. Monarch Life (1856) 103,. 110,
113, 117, 126, 127, 139, 140,
surance, [1910] . . 944, 946, 947 148
Walkerville Match Co. t. Scottish V.Towers (1853) .... 120
Union, [1903] 192 Watertown Fire v. (Simons (1880) 893
WaU V. East River Mutual (1852) 372, Watkins v. Nash, [1895] ... 222
Home Insurance (1867)

887
263
V. BymiU (1883) 190 ....
V. . V. Scottish Imperial (1889) . 102
Wallace v. Insurance Co. (1832) 674, Watson, In re, [1890] 536 ...
682, 854 Watson V. Mainwaring (1813) . 872
Wallberg's Case (1872) . 93, 95, 96 1;. England (1844) 401 ...
Waller v. Northern Insurance
(1884) 792
V. Swann (1862)
Watt V. Union (1884) . . . 305, 308
151 ....
V. Northern Insurance (1881)
Walmsley v. White, [1892]
893 Watt's Case (1872) 93, 95 ...
909 . . Waugh's Trustees, In re (1877) . 801
Walradt v. Phoenix Insurance, Wauton V. Coppard, [1899] . . 278
[1893] 895 Way V. Abington Mutual, [1896] 651,
Walsh V.Hartford Fire (1878) . 345 653
V. London Assurance, [1892] 959 Wayne v. Henham (1851) 494
Walter v. James (1871) ... 193 ^Yayncsboro Mutual v.
.
Crcaton
.
V. Sun Fire, [1895] ... 893 (1881) 674

—
TABLE OP CASES. Ixv
PAGE PAGE
Wealleans v. Canada Southern, Western Assurance •0. Provincial
[1894] 734, 760 Insurance (1880) 230, 242, 264,
Webb, In
Webb Security
re (1867) ....
Mutual
588 882
V. Life, Western Commercial
Travellers
[1904] 874 V. Smith, [1898] 932, 935, 958, 961
«. Spicer (1849) .... 224 Westmacott v. Hanley (1875) 746
V. Whiffin (1872) ... 87 Westmeath v. Salisbury (1831) .
.
468
Webb's Policy, In re (1866) . . 612 Westminster Fire v. Glasgow
Weber :•. Metropolitan, [1895] 159, 315, Provident (1888) 140, 683, 684, 761
357 Westmoreland v. Preferred Acci-
Webster v. British Empire Mutual dent, [1896] 954, 955
Life (1880) . . 406, 508
. Wheeler v. Connectieut Mutual
V. Dwelling House Insur- Life (1880) . 243, 807, 808
ance, [1895] 132 «. Insurance Co. (1879) . . 774
Weed V. Mutual Benefit Life Waterton Eire (1881)
V. . 344
(1877) 862, 864 Wheelton v. Hardisty (1858) 157,
...
. .
Weeks v. Propert (1873) 193 279, 296, 301, 313, 330,

Weems v. Standard. See Thom- 348, 352, 356, 376, 377,
son V. Weems. 382, 856, 858, 859
Wehle V. Mutual, [1897] 924, 931,
U. S. Whitaker, In re (1887) ...
551
932 Whitaker v. Earmer's Union
Weinough v. Provincial (1870) 719, 900 (1859) 215
Weir V. Northern Counties (1879) 904 Whitbread, Ex •parte (18l2) 478
WeUs, In re, [1903] 533 .... White V.British Empire Mutual
. .
Wells V. New England Mutual Life (1868) 175, 862, 863, 864,
Life, [1899]
V. Supreme Court (1889)
942 .... Brown
865
255 . V. (1848) . . . 747
Welsh V. Continental (1888) 202, 213 . V. Connecticut (1876) 242
V. London Assurance, [1892] 126, V. White (1798) . . . 632
136, 145, 777, 960 V. Dobinson (1844) . 740
Welsh Insurance, In re, [1910] 34 . V. Home Insurance (1870) 126,
Wembley U. D. C. v. Poor Law, 133
etc.. Association, [1910] . . 973 V. Provincial Savings, [1895] 873
Weniger's Policy, In re, [1901] 429, 486 V. South London Tramway
Weminck's Case (1871) 67, 68 . . Co. (1889) 817
West «. Blakeway (1841) 260 Whitehaven Bank Case (1871) 64
.... . . .
1). Reid (1843) 804 Whitehead v. Price (1835) 332 885 .
V. Williams, [1899] 487 ... Whitehorn v. Canada Guardian

West Branch J). Halfenstein (1861) 895, Eire Insurance Co., [1909] - - 257
897 Whiteman v. Sadler, [1910] 469, 472
Westchester Eire v. Weaver (1889) 893 Whitfield V. Roberts (1859) 498
West End Hotel v. American Whiting's Settlement, [1905] 468
Eire, [1896] 344, 345 Whitlaw V. Phoenix (1877) 292, 373
West India Telegraph Co. v. Whittaker v. Earmera' Union
Home and Colonial (1880) . . 651 (1859) 229
West London Commercial Bank Whittingham o. Thornburgh
i;. Kitson.(1884) ....
194,295 (1690) 105, 287, 877
West England Bank v. Batchelor
of Whittington v.Seele-Hayn, [1900] 278
(1882) ....
430, 432, 447 Whyte V. Northern Heritable
....
Western Assurance v. Mohlman, Co., [1891] 687
— [1897]
V. Temple, [1901]
West of England Fire v. Isaacs,
882
715, 900 . .
V. The Western
(1875) .
Wicks V. Dowell, [1905] . . 922,
Wigan V. English and Scottish
. 904
924
(1897) 734, 736, 738, 740, 741, 743 Law Life, [1909] 608, 863, 865
West's Case (1873) ... 51, 61 Wight «. Brown (1849) ... 152
West V. Reid (1843) .... 588 WigseU V. School
Blind (1882)
for Indigent
„
752
Western v. Richardson (1882) . 414
Western Assurance v. Decker, Wilby V. Wiinamsburgh, [1890] . 236
[1899] 912 Wilde V. Gibson (1848) . . . 277
V. DouU (1886) . . . 720, 900 Wilder v. Continental Casualty,
V. Harrison, [1903] ... 886 [1907]
Pigott (1882) ....
949
538
V. Redding, [1895] . . 370, 905 u.
V. Temple, [1901] ... 893 Wiley V. Fidelity Casualty, [1897]

Wilkie V. King, [1911]
256
20
Western & Pipe Line v. Home, . . .
[1891] . . 122, 139, 148, 319, 894 Wilkins v. Germania Eire (1881) 336
Ixvi TABLE OF CASES.
PAGE PAGE
Wilkinson v. City of Glasgow Winn, In re ; Reed v. Winn
Friendly Society, [1911] 19 (1887) 537, 799
....
. .
Williams' Case (1873) 90 Winne v. Niagara Fire (1883) . 190,

Williams v. Atkyns (1845) . . 638 210
V. British Mutual Marine Winspear v. Accident (1880)
922, 924,
(1886) 244 930, 931, 933, 950, 953
V. Buffalo German Insurance Winter v. Easum (1864) . . 537, 641
(1883) 893 Winthrop i>. Murray (1850) 531
....
. .
V. Canada Farmers (1876) . 368, Witt V. Amis (1861) 467

369 Wolcott V. United Life and Acci-
V. Canton, [1901] ... 654 dent (1889) . . . . . .937
V. Carwardine (1833) . . 211 Wolfe J). Equitable Life, [1906] . 206,
V. Commercial Union (1876) 884, 214
885 Wolff V. Horncastle (1798) . 138
V. Queen Insurance (1889) 905 Wood, Ex paHe (1853) 186
....
. . .
V. Hays, [1892] 744 Wood V. American Fire, [1896] 893,

V. LasseU and Sharman, 895
[1906] 753 V. Birch 801
V. MarshaU (1817) ... 171 V. Brown's Claims. See
V. North China Insurance London and County As-
(1876) 151 surance, In re.
V. Roger Williams Insurance
.... 139
V. Dixie (1845) 611 ....
Co. (1871) V. Dwarris (1856) 295, 859
V. SorreU (1799) .... 410 V.
. .
General Accident, [1908] 925,

V. Thorp (1828) .... 588 926
V. U. S. Mutual Accident (1), Poughkeepsie (1865)
V. . . 234
[1892] 929 Woodhams v. The Anglo-Austra-
V. U. S. Mutual Accident (2), lian (1863) 7
[1894] 946 Woodmen Accidents. Pratt, [1901] 957,
Williams and Duchess of New- 961
castle's Contract, In re, [1897] . 504 Woodruff V. Imperial (1880) . 345, 372,
Williamsburgh City Fire v. Baker, 887
[1908]
Commercial Union
881 Woods, In re, [1904] .... 534
Williamson v. Wood's Case (1871) . . 52, 53, 66
(1876)
V. Gore
.
District
. 294, 335,
Mutual
856 Woods V. Pope (1835)
Wool Industries
....
Employers'
762
In-
(1866) 903 surance, In re, [1899] ... 34
V. Liverpool, London and Wordsworth v. Pettigrew (1799) 104
Globe, [1904] ... 912 Workman Belfast v. Harbour
V. WiUiamson (1886) 404, . 405 Commissioners, [1899] ... 909
Willock V. Noble (1875) ... 549 Worsley v. Wood (1796) 326, 856,
WiUs V. Wells (1818) .... 597
.
905
WiUyams v. Scottish Widows Worswick v. Canada Fire (1878) 374,
(1887) 400 888
Wilson's Case (1874) ....
Insurance
69 Worthington v. Curtis (1875) 161, 164,
Wilson V, Citizen's 414, 445
(1875) 143 Wright V. Pole (1834) 123, 124, 137,
V. Ducket (1762) .... 788 671
V. Jones (1867) 124, 143 V. Sun Mutual (1878), (1880)
....
. . .
V. Kearse (1800) 571 197, 928, 932

V. KeUand, [1910] ... 14 Wright, In re (1876) .... 594
V. Martin (1856) .... 143 Wycoming Fire v. Sohwenk (1880) 881
V. Rankin (1865) ... 169 Wyld V. Liverpool, etc.. Insurance
V. Wilson (1854) . . . 753, 768 (1876) 859
Wimbledon Park Golf Club, Wylie V. Times Fire (1860) . . 200
Limited v. The Imperial, [1902] 704 Wyman v. Imperial (1886) . . 898
Wimschenk v. Aetna Life, [1903] 948 Phoenix, [1890]
V. . . 266, 267
Winans v. The King, [1908] . . 450 Wynkoop v. Niagara Fire (1883) 692,
Winchelsea, Earl of. See Earl of 908, 911, 913
Winohelsea's Policy, In re.
Windus V. Lord Tredegar (1866) 183,
260
Wing V. Harvey (1854) 341, 343, 346, Xantho, The (1887) . . . . 757
866 Xenos V. Wickham (1867) 220, 221,
Winkfield, The, [1902] ... 131 222
TABLE OP CASES. Ixvii
PAQB
Young V. Travellers' (1888) 936, 937,
938, 961
Yancey v.Aetna Life, [1899] 948 V. Trustees' Assets Co., [1893] 979,
Yates V. Dunster (1855) . 762 982
Yeatman v. Yeatman
(1877) .
, . 626 17. Washington Mutual (1853) 363,
Yelland v. YeUand, [1898] . . 857 664
Yonge V. Equitable (1887) 222, 240,
734
Yost V. Dwelling House Insur-
ance, [1897] 893 Zalesky v. Iowa State, [1899] 913, 914,
Young, Ex parte (1813) ... 801 693
Young, In re, [1890] .... 590 Zancey v. Aetna Life, [1899] 948, 949
INSURANCE LAW
CHAPTER I
Insueance Companies (a)
Section I. —Hoiu Constituted
Insueance companies or associations may be primarily divided Mutual and

into those which are known as mutual and those which are known companies,
as proprietary. The mutual insurance company is established
and carried on solely or mainly for the purpose of insuring its
own members upon the most economical basis, and only incident-
ally for the purpose of earning profits by the insurance of non-
members, the surplus funds, if any, being ultimately returned to
the members by way of addition to the amount of their insurances
or otherwise. The proprietary insurance company is established

and carried on solely or mainly for the purpose of providing
profits to its shareholders by the insurance of others. At the
present day, however, most proprietary companies carrying on
ordinary {aa) life assurance business combine the mutual element
with the proprietary and divide their profits, apportioning part
rarely exceeding one-fifth to the shareholders as dividends on
their shares and the balance to the policy-holders.
(a) Bunyon on Life Assurance, 4th Friendly Societies, 3rd edition, by F.

edition,by PitzGerald, 1904. Buckley Baden Fuller, 1910. Trade Unions, by
on the Companies Act, 9th edition, by D. R. Chalmers Hunt, 1902. Trade
the Author, 1909. The New Law Begu- Union Law, by H. Cohen, 1907.
lating Assurance Companies, by Fitz- (aa) As distinguished from indus-
Gerald and Quin, 1910. The Assurance trial.
Companies Act, 1909, by Truelove, 1910.

. I.L. 1
—
INSURANCE COMPANIES
Constitution Before the passing of the various Acts relating to companies,

before the
Compajiiea an insurance company was constituted in one or other of the
Acts.
following ways :
(1) as an association of mutual insurers with individual

liabiKty only.
(2) as a common law partnership under a partnership

deed.
(3) as a corporation, either

(i) by royal charter,
(ii) by private act of parliament.
Mutual The association of mutual insurers is the oldest type of the

associations.
mutual insurance company. It consists of an association of
individuals who contract with one another, that each shall
contribute upon an agreed basis to the insurance claims of the
other members. Such an association is neither a partnership
nor a corporation, and the liability of each member is limited
to a several, or individual, liability for the agreed proportion of
each claim (6). The officers and agents of such an association
have no authority to make contracts on behalf of the association
as a collective entity, and therefore the association as such has
no creditors, and if it were wound up the sole duty of the
liquidator or the Court, after payment of the costs of the
liquidation, would be to adjust the rights of members
inter se(b). Although a mutual insurance company was some-
times formed as a common law partnership, the presumption
was that such a company was not a partnership, but was
an association of individual insurers with individual liability
only (c).
The liability of the members of such a mutual insurance

association to contribute towards the losses of or benefits payable
to the other members may be entirely unlimited or it may be
limited in various ways. The contributions to the claims of
other members may be by way of a fixed premium on their
insurance, or it may be by way of calls or assessments which
(b) Oreat Britain Mutual, In re (c) Tyser Shdôwners' Syndicate,

v.
(1880), 16 Ch. D. 246 London Ma/rine
; [1896] 1 Q. B. 185; Leo SteamsUp
Insurance, In re (1869), L. B. 8 Eq. Co. V. Corderoy (1896), 1 Com. Oas. 879,
176 ; Oldham Burial Society v. Taylor 381.
(1887), 3 T. L. B. 472.
,
HOW CONSTITUTED 3
will vary according to the number of claims which have to

be met; and the liability of a member to pay calls or assess-
ments may be unlimited, or more usually

it may be and is
limited by a table of maximum rates defining the maximum

sum which any member can be called upon to pay in. respect
of claims in any one year(cZ). The members may also be
divided into different classes, and the liability of each member
may be limited to meet the claims of other members in his own
class (e).
Both mutual and proprietary companies might be formed as Common law

^^"^ ^^^^ ^^^'
common law partnerships under a partnership deed or deed of
settlement. Where a mutual company was formed as a common
law partnership the liability of members to pay the insurance
claims was joint instead of several, and as members of the
partnership they might also be liable to outside creditors upon
contracts made by the officers or agents of the company (/).
Where a proprietary company was formed as a common law
partnership it took the form of a joint stock company, that is
to say, it had a share capital held by the members and the profits
were divided by way of dividends upon the shares. The claim of
a policy holder in such a company was usually limited to a right

to receive payment out of the property stock or funds of the
company, and therefore the liability of a shareholder to contribute
in respect of the claims of policy-holders was limited to the

amount unpaid upon his shares (^). Each shareholder, however,
was liable to be sued as a member of the partnership if there
were any funds of the partnership available to meet the claim,

notwithstanding that his own shares were fully paid up (A).
The liability of the shareholders to meet the claims of general

creditors was prima facie unlimited, and although the deed of
partnership might purport to limit their liability to the amount
of their shares the limitationwas only operative against creditors
who contracted with actual or constructive knowledge of the
terms of the deed (i). The policy holders in a proprietary common
(d) Mutual Reserve Life v. Foster (g) Accidental Death Insurance, In

(1904), 20 T. L. R. 713. re (1878), 7 Oh. D. 568.
(e) Lion Insurance V. Tucker (1883) (h) Hallett v. Dowdall (1852), 18
12 Q. B. D. 176. Q. B. 2.
Kent Mutual, In re, Hummel's (i) Sadler's Case (1872), Alb. Arb. 16
(/)
Case (1871), Alb. Arb. 16 Sol. J. 65. Sol. J. 571.
INSURANCE COMPANIES
law partnership might be entitled by their contracts to receive

a share in the profits of the company by way of bonus or addition
to their insurances and they might be so entitled without being
made members of the company or being in any way liable for
the debts or engagements of the partnership (/c). The sharing

in the profits of an undertaking does not in itself constitute a
person a partner in the undertaking {l).
Corporations Companies both mutual and proprietary were frequently in-

by royal
charter or corporated by royal charter or act of parliament. Such com-
act of
panies became corporations and had a separate legal entity apart
parliament.
from the individual members thereof. The funds and property
of the corporation alone were liable upon the contracts made on
its behalf, and there was no individual liability of members except
in so far as they had contracted to contribute to the funds of
the corporation or might be made liable under the provisions
of the incorporating act of parliament.
Chartered In 1825 the Chartered Companies Act of that year (m) enacted
Companies
Act, 1825. that in any charter thereafter to be granted for the incorporation
of any company or body of persons it should be lawful in and

by such charter to declare and provide that the members of such
corporation should be individually liable in their persons and
property.
Chartered The principal defect of the old common law partnership com-
Companies
Act, 1837, panies was that, owing to the very large number of members,
authorising
letters patent
actions by and against the companies be&ame very cumbersome.
to miinoor- It was difficult to know whom to sue or how to serve them, or to
porated
companies. ascertain who were in fact partners. The absolutely unlimited
liability of the partners for the engagements of the company was
also a serious defect in that it discouraged capitalists from invest-
ing in such enterprises. The Chartered Companies Act, 1837 (n),
was aimed at remedying these defects. It gave the Crown power

by letters patent to grant to any body or company, although
unincorporated, any privileges which might be granted by a
charter of incorporation (o). Letters patent might provide that
suits should be carried on in the name of one of the two officers of
the company registered in that behalf in the Enrolment Office of the
(k) English and Irish Church As- (m) 6 Geo. IV. ch, 91, see. 2.
surance, In re (1863), 1 Hem. & M. 85. (n) 7 Will. IV. and 1 Vict. ch. 73.
(I) Partnership Act, 1890; 53 &;54 (o) Sec. 2.
Vict. ch. 39, see. 2 (2).
— —
HOW CONSTITUTED i
Court of Chancery (p). The individual liability of members might

be limited to the amount of their shares (q). A deed of partner-
ship or association or other agreement in writing of that nature
had to be executed specifying the name and style of the company,
the business or purpose for which it was formed, its principal or
only place of business, and the total shares and liability on each
share (r). A return of the above particulars had to be made to
the Enrolment Office of the Court of Chancery together with the

names and addresses of the shareholders for registration (s). Share-
holders were to be deemed members until the transfer of their
shares should be registered. Any change in the name or place of

business was to be notified to the Enrolment Office (t), and service
of any process might be made by serving it on the clerk of the

company or leaving it at the registered office (zt). Companies
incorporated by charter might also be made subject to the provisions
of the Act (x).
Until 1844 there was no statutory prohibition against the Joint Stock
formation of unincorporated and unregistered common law Act, 1844.
partnerships or mutual associations, but in that year the first of
the Joint Stock Companies Acts (y) was passed. A joint stock
company is defined by the Act as meaning
(1) Every partnership with a transferable share capital.
(2) Every assurance company or association (including friendly

societies making insurances to an amount exceeding
£200), whether such companies, associations, or societies

be joint stock or mutual.
(3) Every partnership which at its formation or by subsequent
admission should consist of more than twenty-five
members.
The Act did not apply to
Companies incorporated by charter or act of parliament.

Companies authorised by letters patent under the Chartered
Companies Act, 1837, to sue and be sued in the name
of a registered officer or person.
The Act provided that it should not be lawful for a joint
(u) Sec. 26.

{p) Sec. 3.
(g) Sec. 4. (») Sec. 29.
(r) Sec. 5. (3/) 7 & 8 Vict. ch. 110 : amended
(s) Sec. 21. 10 & 11 Viot. ch. 78.
(0 Sec. 7.
INSURANCE COMPANIES
stock company as therein defined thereafter to be formed to act

until it should receive a certificate of registration from the
Eegistrar of Joint Stock Companies. A certificate of registration
was only granted upon the execution of a deed of settlement

specifying the name of the company, its business or purpose, its
principal office, the amount of its capital, the holders of shares, and
the mode of dissolution. Provision was made for half-yearly
returns of changes of membership and for a return of individual
transfers on the request of a shareholder, and it was provided that
the liability of a member should continue until the transfer of his
shares should be returned (z). Upon complete registration the
company became iucorporated, and as incidental to its incorpora-
tion acquired power to use the registered name, to have a common
seal, to sue and be sued in the registered name, and to perform all
acts necessary for carrying into effect the purposes of the com-
pany (a). The were declared valid and binding
acts of directors
on the company notwithstanding any defect or error in appoint-

ment (&). Contracts made on behalf of the company were required
to be in writing and signed by at least two directors and sealed
with the common seal, and in the absence of such requisites the
contract was void and ineffectual except as against the company
on whose behalf it was made(c). This did not apply to deeds
executed by another party creating unilateral obligations in
favour of the company (d). All joint stock companies as defined
by the Act existing before the date of the Act were enjoined to
register theirname, objects, and priucipal place of business, but
such registration did not carry with it the privileges of incorpora-
tion or any other privileges conferred by the Act («). Companies
{z) Shares not fully paid up were not name (Sea, Fire and Life, In re (1850),
transferable unless such transfer was 14 Jur. 348), and it was also held that
expressly sanctioned by the Deed oi the company could not after complete
Settlement. registration change its name (Sheffield,
(a) Sec. 25 Companies registering Botherham
: Pi/re, In re (1847), 10 Q. B.
under this Act were first provisionally 839). Consequently no company regis-
registered and did not receive complete tered under this Act could assume the
registration until they had satisfied word 'Corporation' as part of its
the registrar that all the provisions of registered name,
the Act had been complied with. As Sec. 30.
(6)
the company did not become inoorpo- (c) Sec. 44.
rated until there was complete registra- BriUsh
(d) Empire Assurance v.
tion, it was held that a company could Browne (1852), 12 C. B. 728.
not be provisionally registered with (e) Sec. 58.
'Corporation as part of the registered
'
;
HOW CONSTITUTED 7
existing at the date of the Act (other than assurance companies)

might, if fulfilling the necessary conditions, be completely regis-
tered under this Act and obtain the privileges thereof including
incorporation (/). Judgments obtained against a company incor-
porated under the Act might, after due diligence had been used
to obtain satisfaction from the property and effects of the company,
be enforced against the property, person, and effects of any share-
holder who was a shareholder at the time of the contract upon
which the judgment had been obtained, provided such shareholder
had not ceased to be a shareholder, and had his shares transferred,
three years before the enforcement of such judgment (g). The
liability of each shareholder upon such a judgment was un-
limited (^), but when a shareholder was made liable he was
entitled to be re-imbursed by contribution from the other
shareholders (i).
In the same year, 1844, a supplementary Act was passed, pro-

viding for the winding up of companies incorporated under the
first-mentioned Act (j).
In 1855 an Act was passed which enabled a company to
register under the Act of 1844, with the liability of shareholders
limited to the amount of their shares in the company (k).

In 1856 an Act was passed which for the first time intro- Joint Stock
duced the method of registration with a memorandum and Act, 1856, did
articles of association instead of a deed of settlement i^gurance*° (/). The

Act did not apply to persons associated together for the purpose companies
of banking or insurance (m), but, at the same time, it repealed the tê Act of
1844.
Act of 1844, and the subsequent amending Acts, the repeal not to
take effect as regards any company completely registered under
the Act of 1844 until it should be registered under the new
Act (n). The Act provided for the formation of an incorporated
(/) Sec. 59. {m} Sec. 2. The exemption only

{g^ See. 66. Woodhams v. The Anglo- applied when the company was formed
Australian (1863), 9 Jur. 1276. for the sole purpose of insurance or
(h) Norwich Equitable Fire, In re banking and not to companies which
(1888), 58 L. T. 35. carried on such business in conjunction
(i) Sec. 67. with some other business, London
& 9 Vict. Monetary Advance and Life, In re
U) 7 & 8 Vict. ch. Ill ; 8
oh. 98; 11 Viot. ch. 45 ; 12 & 13 Vict. (1858), 27 L. T. Ex. 479; London and
oh. 108. Provincial and Ashton (1862), 12 0. B.,
(k) 18 & 19 Viot. ch. 133. N. S. 709.
Jomt Stock Companies Act, 1856 (n) J. S. 0. Act, 1856, sec. 107 ;
1857,
(0
19 & 20 Viot. ch. 47, amended 1857, 20 seo. 23.
& 21 Vict. ch. 14.

INSURANCE COMPANIES
company by seven or more persons subscribing their names to a
memorandum of association and registering the company with or

•without limited liability of members. It made provision for the
winding-up of companies registered under the Act. It also pro-
vided that not more than twenty persons should, after November 3,
1856, carry on trade for gain unless registered as a company
under the Act or authorised by act of parliament, royal charter,
or letters patent, and that if any persons should do so contrary to
the provisions of the Act, they should be severally liable for the
whole debts of the partnership (o). Every company completely
registered under the Act of 1844 was enjoined to register under
the new Act on or before November 3, 1856, and any other com-
pany duly constituted by law was permitted to register itself
under the Act with or without limited liability {p).
Position of The fact that this Act did not apply to insurance companies
companies
formed after and yet repealed the Act of 1844, gave rise to considerable doubt
the passing
of the Act
as to the position of insurance companies formed after the date of
of 1856. the Act. The Eegistrar took the view that, by the Act of 1856,
the Act of 1844 had been repealed as to all classes of companies,
and that no insurance company could thereafter be registered
under either Act. Promoters of new insurance companies were
thus placed in a position of some difficulty. If they did not
obtain an act of parliament, charter, or letters patent, they could
only form the new company as a common law partnership or
association in the same manner as such companies had been
formed before 1844. In the view of the Eegistrar the formation
of common law partnerships and associations had again become
legal, but there was, nevertheless, sufficient doubt expressed in
other quarters as to make the promoters of a company pause
before they embarked
on what might prove to be an illegal
it
enterprise. A number of new companies, however, were

certain
Amending formed in this manner. On August 25, 1857, a short Act was
Act, August
25, 1857. passed {q) to clear up the difficulty, which it did by enacting that
the Joint Stock Companies Acts, 1856, 1857, should not be
deemed have repealed the Act of 1844 as respects companies
to
carrying on the business of insurance and registered thereunder or
" as respects companies hereafter to be formed for the said purpose."
(o) J. S. C. Act, 1856, sec. 4 ; 1857, (p) J. S. 0. Act, 1856, see. 110.
sec. 3.
(g) 20 & 21 Vict. ch. 80.
HOW CONSTITUTED 9
On and after August

was therefore again com- Companies
25, 1857, it
pulsory to form new insurance companies under the Act of 1844 between ;
but the Act of 1857 did not affect the validity of insurance
and'Auû^st,
companies formed as common law partnerships or associations 1857.
during the interval between July 14, 1856, and August 25, 1857,
and the court subsequently adopted the view which the Eegistrar
took at the time, and held that such companies were lawfully
formed, and could be wound up under the Companies Act, 1862,
as unregistered companies (r).
In 1862 the Companies Act of that year was passed (s). The Companies
Act applied to all companieSjincluding insurance companies (^). The

Act of 1844 was repealed and every insurance company completely
registered thereunder was required to register itself under the new
Act within thirty-one days from the passing thereof (ti), and any
company which did not so register itself was debarred from suing
in any court of law or from being wound up on its own petition
until registered and the officers of the company became liable to
The Act of 1862 enacted that no company,

penalties (x).
tion or partnership consisting of
... more than twenty associa-
persons should
, . ,
illegality of
unregistered
partnerships
thereafter be formed for the purpose of carrying on any business assoolations.

that had for its by the company
object the acquisition of gain
association or partnership, or hj the individual members thereof
unless registered as a company under the Act or formed in

pursuance of some other act of parliament or letters patent (y).
This enactment applied to all insurance companies including purely

mutual associations. A mutual insurance society, the members
of which paid a deposit of 25s. per cent, on the amount of their
insurance, and became severally liable to contribute rateably
to losses, was held to be an association carrying on a business
which had for its object the acquisition of gain to the individual
members thereof («). A mutual association is deemed to be formed
(r) Bank of London and National the Companies Acts, European As-
Provincial, In re (1871), L. E. 6 Oh. 421. surance, In re, Ramsay's Case (1876),
(s) 25 & 26 Viot. oh. 89. 3 Ch. D. 388.
(0 Oomp. Act, 1862, sec. 176 ; 1900, (y) Comp. Act, 1862, sec, i ; 1908,
sec. 31 ; 1908, sec. 245. sec. 1.
(u) Comp. Act, 1862, sec. 209. (z) Padstow Total Loss, In re (1882),
(x) Ibid., 210

sec.Waterloo Life,
; 20 Oh. D. 187 Arthur Average Associa-
;
In re (1862), 32 L. J. Oh. 870. A com- tion, In re (1875), L. E. 10 Oh. 542.
p any registered compulsorily under this But see One and All, etc.. Assurance
provision is in the same position as a In re (1909), 25 T. L. E. 674.
company voluntarily registered under
:
10 mSUEANOE COMPANIES
when the association is first constituted. If the basis of association

remains the same the addition after 1862 of a large number of
members does not render illegal a society which was lawfully-
constituted before 1862 with a membership of more than twenty

members (a). But if a society constituted before 1862 with
less than twenty members increases its membership to more than
twenty after 1862 it becomes an illegal association unless and
until it registers (b). A society lawfully constituted under some
act of parliament does not necessarily become illegal when such
act of parliament is repealed (c).
What Since the passing of the Companies Act, 1862, a company,

insurance
companies
or association consisting of more than twenty members and
can legally carrying on insurance business must be constituted in one or
^ tj
carry on
business since other of the following ways, and if constituted otherwise will
be an illegal company incapable of suing ; its contracts cannot
be enforced against it by persons having knowledge of the
illegality, and it cannot be wound up on its own petition or
on the petition of any one who knowingly took part in the
illegal enterprise (d) —
(1) Incorporated by charter.
(2) Incorporated by special act of parliament.
(3) Unincorporated but authorised by letters patent under

7 Will. IV. and 1 Vict. ch. 73.
(4) Formed before 1844 as a common law partnership
or mutual association and formally registered under
sec. 58 of the Act of that year.
(5) Formed between July 14, 1856, and August 25, 1857, as
a common law partnership or association.
(6) Formed under the Act of 1844 and re-registered under the
Companies Act, 1862.
(7) Formed as a friendly society and registered under the
Friendly Societies Act.
(a) Shaw V. Simmons (1883), 12 20 Ch. D. 137 Jennings v. Hammond

;
Q. B. D. 117. (1882), 9 Q. B. T>. 225 Shaw v. Benson

;
(6) Thomas, In re (1884), 14 Q. B. D. (1883), 11 Q. B. D. S63; Ilfracombe

879. Permanent Mutual, In re, [1901] 1 Ch.
(c) Smith's Trustees v. Irvine (1903), 102; South Wales Atlantic S.S. Co.,
6 P. 99. In re (1876), 2 Ch. D. 763.
(d) Padstow Total Loss, In re (1882),
HOW CONSTITUTED 11
(8) Formed as a trade union, whether registered or un-

registered.
(9) Formed after 1862 under the Companies Acts.
The Companies Act, 1862, and various amending Acts are now Companies -
consolidated in the Companies (Consolidation) Act, 1908 (e). Any tioi^Âot,^"

^^^^'
seven or more persons may be incorporated under the Companies
Acts as a company limited by shares or limited by guarantee or
with unlimited liability (/).
The company is formed by at least seven members subscribing Memoran-
the memorandum of association (/). In the case of a company association.
limited by shares, the memorandum must state (i) the name of
the company with the word " Limited " as the last word in the name;
(ii) the part of the United Kingdom in which the registered office
is to be situated, (iii) the objects of the company, (iv) that the
liability of the members is limited, (v) the amount of share
capital with which the company proposes to be registered and
the division thereof into shares of a iixed amount (gr). In the
case of a company limited by guarantee, the memorandum must
state the first four of the items above mentioned, and in place
of the fifth the amoimt which each member undertakes to con-
tribute in the event of the company being wound up (A). In the

case of an unlimited company the memorandum must state the
first three of the items above mentioned (i).
In the case of a company limited by shares, there may, Articles of
and in the case of other companies there must, be registered

with the memorandum articles of association containing the
rules and regulations for the management of the company's
affairs (Jc). In the case of a company limited by shares, if articles
are not registered or if articles are registered in so far as they
do not exclude or modify the regulations in Table A in the First
Schedule of the Companies Act, those regulations shall be the

regulations of the company (I).
The memorandum and articles are binding on the company Incorporation
1.0^ company,
and on all members thereof (m). They are to be delivered to
(e) 8 Edw. VII. ch. 69.

12 INSURANCE COMPANIES
the Eegistrar of Companies in that part of the United Kingdom

in which the registered office is situated, who shall register
thein(7i), and upon registration shall grant a certificate of

incorporation, whereupon the company becomes incorporated (o).
Eegister of Subscribers of the memorandum and every other person who
members.
agrees to become a member and is entered in its register of
members aremembers of the company {'p). Every company must

keep a register of members and in the case of a company with
a share capital, a statement of the shares held by each member
distinguishing each share by its number, the amount paid or
agreed to be considered as paid on each share, the date on which

each member was entered, and the date when any person ceased
to be a member (g).
The share register of the company is open to inspection by
members gratis, and by others on payment of a sum not exceed-
ing one shilling (r).
Transfer of The shares of each member are personal estate and transferable
shares.
in manner provided by the articles of association {rr).
Reserve A limited company may have a reserve capital to be called
capital.
up only in the event of the company beiag wound up (s).
Application A company in distributing profits may by special resolution
of profits to
reduce paid return the same or any part thereof to the shareholders in
capital.
reduction of paid-up capital, the unpaid capital being thereby
increased to a similar amount (t).
Increase or A company limited by shares may, if so authorised by the

readjustment
of share articles, alter its memorandum of association by a special resolution
capital.
so as to increase its share capital by the issue of new shares, or
it may consolidate or divide its share capital into shares of larger

amount, subdivide its shares or cancel unissued shares (m).
Reduction of A company limited by shares may, by special resolution con-
share capital.
firmed by an order of the Court, reorganise its share capital by
consolidation of shares of different classes or by division of its
shares into different classes (x) or reduce its share capital, and in
particular extinguish or reduce liability on unpaid-up share capital,
cancel paid-up share capital not represented by available assets or
(») Sec. 15. (rr) Sec. 22.

(o) Sec. 16. (s) Sec. 59.
(p) Sec. 24. (t) Sec. 40.
(2) Sec. 25. (u) Sec. 41.
(r) Sec. 30. (x) Sec. 45.
HOW CONSTITUTED 13
pay off any paid-up share capital {y). When capital is reduced the
words " and reduced " mvist be added to the name of the company
until such time as the court may fix (z). Creditors of a company
are entitled to object to a reduction of capital, and reduction will
not be confirmed by the court until they are paid off, or consent,
or their debt has been secured {a). When the capital has been
reduced there is no further liability in respect of the shares
extinguished or reduced, except to such creditors of the company
as can prove that they were ignorant of the reduction or of
the nature thereof and had no opportunity of objecting to the
reduction (6).
A company registered as unlimited may subsequently register Unlimited

as a limited company, but debts previously contracted may be suSequeiitly^
^^
enforced against the shareholders as if the company were still
[fîj*^"^
unlimited (c).
Every company^ registered under the Companies Act must Registered
have a registered office to which all communications and notices

may be addressed, and notice of the situation of the registered
office, and of any change therein, must be given to the Eegistrar {d).
Every limited company must paint or affix, and keep painted Name of
or affixed, its name on the outside of every office or place in which

its business is carried on. The name of a limited company
must also be engraven on its seal and mentioned on all notices,
advertisements, bills, cheques, receipts, and other documents

issued by the company (e). The word " Limited " must form
the last word in the name of every company in which the liability
of the members is limited either by shares or guarantee, except

in special cases where exemption has been obtained by licence
from the Board of Trade (/ ).
Every company registered under the Companies Act is bound Registers of
°
to keep a register of mortgages, in which every mortgage or
charge on the company's capital or other assets must be entered (g),
and the register of mortgages and copies of the instruments
creating any mortgage or charge shall be open to inspection by all
shareholders and creditors of the company gratis, and by any other
(y) Sec. 46. (d) Seo. 62.

\z) Seo. 48. (e) Seo. 63.
(a) Seo. 49. (/) Sees. 3, 4, 20.
(6) Seo. 50. (g) Seo. 100.

(c) Seo. 57.
INSURANCE COMPANIES
person on payment of a fee not exceeding one shilling Qi). The

Eegistrar of Joint Stock Companies also keeps a register of mort-
gages with respect to each company, and every mortgage or charge
on the company's capital or other assets is void against the
liquidator, and any creditor of the company, unless particulars
thereof are delivered to the Eegistrar of Companies for registration
in manner required by the Act within twenty-one days after the
date of its execution (i). The register of mortgages kept by the
Registrar is open to inspection by any person on payment of a fee
of one shilling (i). The entry of the required particulars in the
register of mortgages is constructive notice of the mortgage or
charge to subsequent incumbrancers. But the entry of the
particulars of a floating charge, although constructive notice of
the charge is not constructive notice of a restriction in the charge
prohibiting the creation of any subsequent charge or mortgage
ranking in priority or pari passu with the floating charge (y).
If any person obtains an order for the appointment of a receiver
or manager of the company's property or business, or appoints
such receiver or manager under any power contained in any
instrument, he must within seven days notify the fact to the
Eegistrar, who will enter the fact in the register of mortgages (A).
'
Registration The Companies Acts contain provisions for the registration
under
Companies of companies not formed thereunder. Any company consisting
Acts of
companies of seven or more members which was in existence on November 2,
not formed 1862, and any company formed after the date aforesaid in
thereunder.
pursuance of any act of parliament, charter or letters patent, or
otherwise duly constituted according to law, may, at any time,

register under the Companies Act(^). A company with the
liability of members limited by act of parliament, charter or letters
patent, and not being a joint stock company, cannot be registered
under these provisions (m). The assent of a majority of members
at a general meeting is necessary before any company can be
(h) See. 101. insured company, and that the agree-

(i) Sec. 93. Where by a re-insuianoe ment was valid against the liquidation,
agreement the monthly balances of although not registered Lom Car and
:
premiums over losses were to be paid General, In re (1911), 55 Sol. J. 407.

by the brokers to trustees on trust to (/) Wilson V. Kelland, [1910] 2 Ch.
recoup further losses and ultimately to 306.
pay the ascertained profit to the re- (k) Sec. 94.
insurers, it was held that there was no {I) Sec. 249.
charge on the book debts of the re- (m) Sec. 249.
HOW CONSTITUTED 15
SO registered (n), and when it is proposed to register an unlimited

company as a company with limited liability the consent of
three-quarters of the members is necessary (o). When a company
not formed under the Companies Acts is registered in accordance
with the above provisions, all the provisions of the act of parlia-
ment, deed of settlement, or other instrument constituting or
regulating the company, have the same effect as if inserted in a
memorandum and articles of association, and all the provisions of
the Companies Acts apply with certain specified exceptions (p).
Table A does not apply unless adopted by special resolution (q).
The provisions for the numbering of shares does not apply where
the shares have not previously been numbered (r). The company
has no power to alter any provision contained in an act of
parliament (s) ; it has no power to alter any provision in a royal
charter or letters patent with respect to the objects of the com-
pany (t) ; and it has no power to alter any provision contained
in letters patent without the consent of the Board of Trade (u).
In the winding-up of any such company every person shall be a
contributory in respect of debts and liabilities contracted before
registration to the same extent as if the company had not been
registered (as). Provisions in the Companies Act relating to the
registration of an unlimited company as limited, or to the power
of a limited company to determine that a portion of the share
capital shall not be called up except in the event of winding up,
apply to such a company notwithstanding any provision to the
contrary in the act of parliament incorporating the same (y) but ;
nothing in the Companies Acts derogates from the power of such

company to alter its constitution or regulations which may be
vested in it by act of parliament (s). Where the instrument
constituting or regulating such company is a deed of settlement,
contract of copartnery or other instrument not being an act of
parliament, royal charter, or letters patent, the company may by
special resolution alter the form of its constitution by substi-
tuting a memorandum and articles of association (a).
Some of the provisions of the Companies Acts relating to Insurance

•"^
. companies
companies in general are applied to insurance companies not not formed
(n) See. 249 (2) (d). (r) Sec. 263 (ii) (b). {x) Sec. 263 (ii) (f).
(o) Sec. 249 (2) (e). (s) Sec. 263 (ii) (o). (y) Sec. 263 (iii).
Sec. 263 Sec. 263 (v).

(p) Sec. 263 (i). (t) (ii) (e). (2)
(«) Sec. 263 {a) Sec. 264.

(2) Sec. 263 (ii) (a). (ii) (d).
16 INSUEANOE COMPANIES
or registered registered under the Companies Act by the Assurance Companies

Companies Act, 1909, which is dealt with fully in Section II. of this chapter,
Acts.
Friendly A large volume of insurance in small amounts is effected with

Societies Act,
1896. friendly societies, Such societies have long been controlled by
statutory provisions. The earliest Friendly Societies Act was
passed in 1793 (b), and was followed by numerous amending Acts
during the nineteenth century. These enactments were consoli-
dated in 1875 (c) and again in 1896. The Friendly Societies Act,
1896, as amended by the Act of 1908, contains the present statutory

provisions (d).
Registrars of The affairs of all societies registered under the Act are con-
Friendly
Societies. trolled by the Chief Eegistrar and Assistant Eegistrars, who
together constitute the Central Office (e). An Assistant Eegistrar
is appointed for Scotland and Ireland respectively, and the
Assistant Eegistrars exercise in those countries most of the
functions of the Chief Eegistrar in England (/).
Societies Societies which may be registered under the Act are, friendly
which may be
registered. societies, cattle insurance societies, benevolent societies, working
men's clubs, and certain specially authorised societies (^). Of
these friendly societies and cattle insurance societies alone may
be considered as companies carrying on insurance business.
Friendly Friendly societies are defined in the Act (A) as societies for
societies
defined. the purpose of providing by voluntary subscriptions of the members
thereof, with or without the aid of donations, for
(a) the relief or maintenance of members and relations during
sickness, old age, widowhood, etc.
(&) insuring money to be paid on the birth of a member's child,
or on the death of a member, or for the funeral expenses
of the husband, wife, or child of a member (M), or of
the widow of a deceased member, or, as respects persons

of the Jewish persuasion, for the payment of a sum of
money during the period of confined mourning.
(b) 33 Geo. III. oh. 54. (?) Sec. 8 (1).

(c) 38 & 39 Viot. oh. 60. (h) Sec. 8 (2).
{d) 59 & 60 Viot. oh. 25; amended {hh) Such insurances are accordingly
8 Edw. VII. ch. 32. authorised by law although made with-
(e) F. S. Act, 1896, sees. 1, 2. out interest within the meaning of 14
{/) Sec. 8. Geo. III. ch. 48. Vide infra, pp. 159, 160.
HOW CONSTITUTED 17
(c) the relief or maintenance of members when on travel in

search of employment, or in case of shipwreck, or for loss
ordamage to boats or nets.
(d) the endowment of members or nominees of members.
(e) insurance against fire to any amount not exceeding £15
of the tools or implements of the trade or calling of
members.
A society which contracts with any person for the insurance Amount of
of an annuity exceeding £52 per annum, or of a gross sum f^mlted'^''

exceeding £300, cannot be registered (i).
Cattle insurance societies are defined (j) as societies for the Cattle
purpose of insurance to any amount against loss of neat cattle, gooieSes^
sheep, lambs, swine, horses, or other animals by death from disease defined,
or otherwise.
A society in order to be registered must consist of at least Conditions of
"^^Sisti"* ôn.
seven members (Jc). The application for registration must be
signed by seven members and the secretary, and must be accom-
panied by a copy of the rules of the society, and a list of the
names of the secretary, and of every trustee or other officer
appointed under the rules to sue and be sued on behalf of the

society (Jc).
The rules shall state the name and place of office of the Rules.
society, the objects of the society and conditions of membership,
and shall contain provisions as to the mode of holding meetings

and altering the rules, the appointment of a committee of manage-
ment and other officers, the relative powers of the central body and
any branches of the society, the investment of funds, the keeping and
auditing of accounts, annual returns to the Eegistrar of the society's
affairs, the inspection of the society's books and the manner of settling
disputes (Jc). The rules of every friendly or cattle insurance society
shall also contain provisions for the keeping of separate accounts in
respect of the separate classes of benefits assured, and of the expenses
of management, for the voluntary dissolution of the society by
consent of not less than five-sixths in value, (or in the case of a
cattle insurance society three-fourths in number) of the members,
(i) The Act by sec. 8 (1) says £50 annuity and £300 lump sum, and pre-
and £200, but this is inconsistent with sumably sec. 8 (1) ought to be read as
sec. 41, where the maximum amount amended accordingly,
payable to a member is now (as (j) Sec. 9.
amended by the Act of 1908) £52 (k) Schedule I.
18 INSUEANCB COMPANIES
and of every person entitled to benefit, whose claim is not satisfied

or provided for, and for the right of the members to apply to the
Eegistrar for an investigation of the society's affairs or winding up
the same (Jc). The rules of every friendly society shall also provide
for a quinquennial valuation of the assets and liabilities of the
society (Jc). No alteration of the rules is valid iintil the alteration
is registered (I). Every registered society or branch shall deliver
to any person on demand on payment of a sum not exceeding one

shilling a copy of the rules of the society or branch (m).
List of When the society has branches, a list of such branches and of
branches.
the place of office of each branch must be sent to the Eegistrar (n).
Trustees. Every registered society or branch must have one or more

trustees (o).
Annuity
tables to be
A society assuring a certain annuity shall not be entitled to
certified. registration unless the tables of contributions are certified by the
actuary of the National Debt Commissioners, or by some other
actuary approved by the Treasury (p).
Subscriptions The subscriptions of members of a registered friendly society
not
recoverable are not recoverable at law (q), but the subscriptions of members of
at law.
a registered cattle society are recoverable (r).
Limitation of The Act contains special provisions limiting the amount of

amounts
recoverable. benefit which any member is entitled to receive to £52 annuity
or £300 lump sum from any friendly society or societies (s), and
in the case of children limiting the amount payable on the death
of any child to £6 where the child is under 5 years of age and to
£10 where the child is over 5 but under 10 years of age (t):
Nomination. The Act enables a member to dispose, by nomination, of sums

payable on his death not exceeding £100 (u).
Proof of The Act provides for the proof of claims and the payment
claims.
thereof to or on behalf of the persons entitled (x) and in particular
for the distribution without administration of a fund payable on
the death of a member who has made no nomination and has died
intestate (y) and for the payment of estate duty when death benefits
are paid without probate or administration (2).
(&) Schedule I. (r) Sec. 31.

(0 Sec. 13. (s) Sec. 4:1.
(m) Sec. 38. (t) Sees. 62, 67, 84 (f).
(n) See. 17. (u) Sec, 56.
(0) Sec. 25. (x) Sees. 56, 60, 61, 63, 6i, 67.
(p) Sec. 16. (2/) Sec. 58.

(2) Sec. 28. (z) Sec. 59.
.
HOW CONSTITUTED 19
Disputed claims must be decided by arbitration or otherwise Arbitration,

as directed by the rules of the society or branch (a).
The Act also provides for and regulates the making of advances Loans to
members.
or loans to members (6)
The and certain other documents issued by a Exemption

policies, receipts,
registered society are exempt from stamp duties (c). ^**™^

dut^
The Eegistrar may cancel the registration of a society on the CanoeUation
request of the society; or with the approval of the Treasury on registration.
proof to his satisfaction that registration has been obtained by
fraud or mistake, or that the society exists for an illegal purpose,
or has wilfully violated the provisions of the Act, or has ceased to
exist (d). The Eegistrar may also suspend the registration instead
of cancelling it(d). On cancellation or suspension the society
shall cease to enjoy the privileges of the Act but without pre-
judice to the claims of members against the society (d).
The Act also contains provisions enabling a registered society Amalgama-
by special resolution to make an agreement for an amalgamation or oonversioni
or transfer of its engagements (e) or to convert itself into a

company under the Companies Act (/). After having been con-
verted into a company it can, like any other registered company,
apply to the court for an extension of its objects (g). Where a
society was in fact registered with larger objects than those defined
by its constitution as a friendly society, the Court held that, as the
certificate of registration was conclusive, the fact that it ought not
to have been so registered was not material, and that it must be
deemed to possess the extended powers (h). A registered society
may, by special resolution, convert itself into a branch of any

other registered society (i), or may by special resolution and the
approval in writing of the Chief Eegistrar change its name (j).
A registered society or branch may contribute to the funds and Society's
, . contributions
m
.
take part the government or another registered society or to funds of
branch (7c). When a society contributes to the funds of a medical ^'^"i^^';
society the society shall not withdraw from contributing to the
(a) Seo. 68. Catt V.Wood, \1910] A. 0. Glasgow Friendly Society, [1911] 1
404. S. L. T. 86.
(g) Blythe V. Birtley, [1910] 1 Oh. 228

(0) oeos. 40, 40.
^^j M'OladeY. BoyalLondmi Mutual,
(c) Sec. 83.
|-]^g;^Qj 2 Oh. 169.
(d) Sec. 77. (i) Sec. 73.
(e) Sec. 70. (j ) Sec. 69.
Wilkinson v. City of (k) Sec. 22.
(/) Sec. 71.
;
funds of such medical society except on three months' notice and

payment of all contributions accrued or accruing due to the date
of the expiration of the notice {h).
Trade Union A very large amount of small insurance is also effected with
^'
°
Trade Union Societies. At common law the majority of such
societies were illegal as being formed for purposes which were
held to be in restraint of trade {l). All contracts made with such
societies were accordingly void and unenforceable, and the members
were probably liable to be prosecuted for conspiracy. The Trade
Unions Acts, 1871 (m) and 1876 (w) were passed to protect the
members of such societies from criminal proceedings and to provide
machinery for controlling their affairs.
Agreements The Act of 1871 provides that the purposes of any trade union
benefits are shall not by reason merely that they are in restraint of trade be
unenforceable deemed to be unlawful so as to render any member liable to
where the _
•'
_
union is in Criminal prosecution (o), or so as to render void or voidable any

restraint of
tra,de. agreement or trust (^), but nothing
/ \ , -,••,
m the Act t •
is to
, i
enable any
court to entertain any legal proceeding in respect of {inter alia)
any agreement for the payment by any person of any subscription
or penalty to a trade union or for the application of the funds of a
trade union to provide benefits for members or any agreement
made between one trade union and another (g-). The result of
those provisions is that the acts of the trustees and officers of a
union in the administration of the funds in accordance with the
rules thereof are rendered legal notwithstanding that the purposes
of the union may be in restraint of trade. As regards the contracts
of members to pay contributions, or of the union or of the trustees
thereof to pay benefits, such contracts are left in the same position
as they were before the Act was passed, that is to say, if they
would have been unenforceable at common law because the purposes
of the trade union are illegal, as being in restraint of trade or
(h) Sec. 22. •

(g) Sec. An agreement by a
4.
(I) Nordenfelt y. Maxim Nordenfelt member torefund a benefit in the
Co., Ltd., [1894] A. 0. 535. event of his resuming work is not an
(to) 34 & 35 Vict. oh. 31. agreement covered by this section
{n) 39 & 40 Vict. ch. 22. (Baker v. Ingall, [1911] 2 K. B. 132
(o) T. U. Act, 1871, sec. 2. WilJcie v. King, [1911] 2 S. L. T.
(p) Sec. 3. 206).
HOW CONSTITUTED 21
Otherwise they remain unenforceable (r), but if the purposes of the

trade union are not in restraint of trade and are otherwise legal
they are enforceable as before (s).
The Trade Union Acts provide for the registration of trade Eegistration
unions under those Acts and the Eegistrars are the Eegistrars unioM^
under the Friendly Societies Aot(i). The provisions of the
Friendly Societies Act (except as hereinafter mentioned), the
Industrial and Provident Societies Acts and the Companies Acts
do not apply to a trade union, and any registration of a trade
union under any of those Acts is void (u).
Any seven or more members of a trade union may by sub- Conditions of
''®^^*'^^'^°°'
scribing their names to the rules of the union register under the
Acts, but if any purposes of the trade union be unlawful the
registration is void (x). Printed copies of the rules of the union
together with a list of the titles and names of the officers must
be sent to the Eegistrar with the application to register (y).
The rules shall state the name of the trade union and the place Rules,
of meeting for the business of the trade union, the objects of the
union and conditions of membership, and shall contain provisions
as to the manner of altering the rules, the appointment of a
committee of management and other ofiQcers, the investment of
funds, the periodical auditing of accounts, the inspection of the
books of the trade union and the manner in which the union may
be dissolved (2). The union must have a registered office to which
all communications and notices may be addressed and notice must
be given to the Eegistrar of any change (a). All the funds and pro-
perty of the union are vested in the trustees for the time being, and
the trustees or any other officer authorised thereto by the rules are
empowered to bring or defend any action or proceeding (6) ; but the
trustees are only liable in respect of the money received by them (c).
The Eegistrar may cancel the registration of a union at the Cancellation
request of the trade union, or on proof to his satisfaction that a tion.
(r) Bigby v. Connol (1880), 14 Gh. D. sec. 6. A copy of all alterations in the
482. rules must be sent to the Registrar
(s) Swame Wilson (1889), 24
v. each year with the annual accounts
Q. B. D. 252 Osborne y. Amalgamated
; of the Union, 1871, sec. 16.
Society, [1911] 1 Ch. 640. {z) T. U. Act, 1871, sec. 14, Sched. I.
(t) T. U. Act, 1871, sec. 17. {a) Sec. 13.

(m) Sec. 5. (6) Sec. 9.
(X) Sec. 6. (c) Sec. 10.
{y) T. U. Act, 1871, sec. 13 ; 1876,
22 INSUEANCE COMPANIES
certificate of registration has been obtained by fraud or mistake

or that any of the purposes of the tmion are illegal or that such
trade union has wilfully violated the provisions of the Acts or
has ceased to exist. On cancellation the union shall cease to
enjoy the privileges of a registered trade union but without
prejudice to claims which may be enforced against it {d).
DispoBition The Act also contains provisions enabling a member to

of benefits by
nomination. nominate any person to whom any sum payable at his death not
exceeding £100 may be paid (e).
Payments on The provisions of the Friendly Societies Act relating to the
the death of
ohildren. payment" of money upon the death of any child apply to any
trade union registered or unregistered which insures or pays
money on the death of a child under the age of 10 years (/),
Amalgama- The Acts also contain provisions for the amalgamation of
tion,
trade unions (g).
Contributions The provisions of sect. 22 of the Friendly Societies Act as to
to funds of
medical the withdrawal of contributions to a medical society apply to
society.
trade unions {h).
Collecting Collecting societies and industrial assurance companies are

societies and
industrial made the subject of special statutory provision designed for the
assurance
companies. protection of the insurers who being mainly persons in humble
circumstances are easily imposed upon by unscrupulous agents.
Those provisions are now consolidated in the Collecting Societies
and Industrial Assurance Companies Act, 1896 (i). The Act
applies to every friendly society or branch whether registered or
unregistered (referred to as a collecting society) and to every
person or body of persons granting assurance on any one life for
a less sum than £20 (k) (referred to as an industrial assurance

company) which in either case receives contributions or premiums
by means of collectors at a greater distance than ten miles from
the registered of&ce or principal place of business of the society
or company and in the case of an industrial assurance company
at less periodical intervals than two months (Z),
{d) T. tr. Act, 1876, sec. 8, (i) 59 & 60 Vict, oh. 26.
(e) Sec. 10 ; 46 & 47 Vict, ch, 47. (k) See Cowling v. Toppimg, [1906]
(/) Sec. 2. Vide supra, p. 18. 1 K. B. 466,
(g) Sec, 13. (I) Coll, Soe. Act, 1896, sec. 1,
(h) P, S. Act, 1896, sec. 22.
:
HOW CONSTITUTED 23
The societies or companies to which the Act applies must ObUgationto

IT,
deliver to every person
, .
on becoming a member or insuring a copy

, . . deliver rules
with policy.
of the rules and a printed policy signed by two of the committee
of management and by the secretary (m). In the case of a family
enrolled on one book or card one copy of the rules and one family
policy is sufficient for the family (to). Every collecting society
registered after December 1, 1895, must have the words " Collect-
ing Society " as the last words in the name (o).
N"o policy issued by a collecting society or industrial insurance Non-forfei-
company can be payment

any contribu- ^ôut^"^^"^
forfeited for default in of
tion until after notice has been sent to the member that the amount notice of
default in
is due and that in default of payment within a reasonable time payment of
P"^®"^'"™*
(not less than fourteen days) his interest or benefit will be for-
feited and default has been made in accordance with the notice (j)).
No member insured with a collecting or industrial assurance insurance
company may be made a member of any other such society transferred to
or company without his written consent except in the case of ™^'^^^

an amalgamation or transfer of the business of the society or without
. . . . . written
company under the provisions of the Friendly Societies Act or consent.
the Assurance Companies Act(2'). Any society or company to
which an insurance is sought to be transferred shall within seven

days give notice in writing to the society or company from which
it is sought to be transferred (r).
The provisions of the Act, sees. 1 to 9 inclusive, must be set Provisions of

„,.,
forth in the rules
,
of
„
every
n.-
collecting
,
society and
TO of every
Act to be set
forth in rules.
industrial assurance company so far as they are applicable (s).
Provision is made for the settlement of disputes by the Arbitration.
County Court or a court of summary jurisdiction, anything in

the society's rules to the contrary notwithstanding (i).
The Chief Eegistrar of Friendly Societies, upon the application Certificate of
may orsôwty"
of a collecting society registered or applying for registration,
with the approval of the Treasury grant a certificate exempting ^ °Q^jg^^°'^^
such society from the necessity of complying with the provisions
of sees. 1 to 10 inclusive of the Act (u).
(m) See. 2 (1). (t) Sec. 7. The jurisdiction in respect
(») Sec. 2 (2). of policies issued by an industrial insur-

(o) Sec. 9. anoe company is limited to policies
{p) Sec. 3.
granted for a less sum than £20
(2) See. 4 (1). CowUng v. Topping, [1906] 1 K. B. 466.
(r) Sec. 4 (2). («) Sec. 11.
(s) Sec. 10.
Payments on The provisions of the Friendly Societies Act relating to pay-

the death of , , t ,, ji
children. ments on the death of children under 10 years oi age apply
to all friendly societies whether registered or unregistered and
are by this Act extended to all industrial assurance companies

without reference to whether or not they receive premiums by
means of collectors or at short periodical intervals {x). An insur-
ance effected on the life of a child with an industrial assurance
company which would have been valid if effected by a registered
friendly society is not to be deemed invalid by reason of being
made without interest or otherwise contrary to 14 Geo. III. ch.
48 (a).
Conversion of By the Assurance Companies Act, 1909 (&), it is provided that

society into the Committee of management of any collecting society having
mid^rThe more than 100,000 members may petition the Court for its con-
Companies version into a mutual company under the Companies Act. Notice
of the intention to present the petition must be published in the
Gazette and in such newspapers as the Court thinks fit, and before
making the order the Court must be satisfied on a poll being taken
that at least 55 per cent, of the members consent to the conversion.
Section II. —Deposit and Accounts

Albert Life About the year 1868, the confidence of the insuring public was
and European
Liquidations, very considerably shaken by the failure of two large insurance
companies, the Albert Life Assurance Company and the European
Assurance Society. Each of these companies had previously
absorbed the businesses of a very large number of smaller offices.
The investigation and winding-up of their affairs was consequently

a matter of enormous complication, and the then state of the law
and the machinery provided by the Courts were wholly inadequate
to cope with the unprecedented situation. A special Act of
Parliament was passed in respect of each company, providing for
the appointment of an arbitrator with wide discretionary power to
adjudicate upon all questions arising in the course of the winding-
up, and to decide them either according to law or in such manner
as he should think fit, equitable, and expedient (c). The arbitrator
(x) Sec. 13 (1). Vide supra, p. 18. (c) Albert Arbitration Act, 1871, 34 &
(o) Sec. 13 Vide supra, p. 16.

(2). 35 Viot. oh. xxxi. European Arbitra-
(b) Ass. Comp. Act, 1909, sec. 36 (4). tion Act, 18T2, 85 & 36 Vict. oh. cxlv.
DEPOSIT AND ACCOUNTS 25
was given power to state a case for the opinion of the Court of
Appeal in Chancery, but he was not compellable to do so, and
otherwise no appeal lay from his decisions. Lord Cairns was
appointed arbitrator in the Albert arbitration. Lord Westbury
was appointed arbitrator in the European arbitration, and on his
death Lord EomUly was appointed arbitrator. The decisions of
those arbitrators are reported in Eeilly's reports of the arbitration
proceedings, and also in the Law Times and Solicitors' Journal.
The decisions are not binding on the Court as judicial decisions,
but they will, nevertheless, be regarded by all Courts with con-

siderable deference as the decisions of very eminent judges, in
whose capacity the Legislature had so great confidence as to
give them authority paramount to all the Courts of law and
equity {d).
More or less as a direct consequence of the Albert and Life
European liquidations the Life Assurance Companies Act of companies
1870 (e) was passed and was followed by amending Acts in igyi'andîsTa
1871 if) and 1872 (g). In order to prevent a repetition of such
gigantic failures and of the misery and loss involved thereby,
every company which might thereafter establish a life assurance
business in the United Kingdom was compelled to deposit a sum
of £20,000 in the Court of Chancery as a security for policy-
holders, such sum to remain deposited until the company should
have accumulated a life assurance fund of £40,000 Qi), Upon
proof that it had accumulated such a fund, it was entitled to with-
draw the deposit Qi). Every life assurance company not registered
under the Companies Acts was required to keep a shareholders'
address-book pursuant to sec. 10 of the Companies Consolidation
Act, 1845, and to furnish a copy to each shareholder or policy-
holder on application. Every such company was required to keep
printed copies of its deed of settlement, and to furnish a copy to
any shareholder or policy-holder on application. Provision was
also made for the preparation and audit of accounts and for
of&cial investigation into the affairs of any life assurance company.

Amalgamation of life assurance companies or the transfer of their
business and engagements from one company to another was made
(d) Blakely Ordncmce, In re, Brett's (g) 35 & 36 Vict. ch. 41.
Case (1873), L. E. 8 Oh. 800. (h) Life Assurance Companies Act,
(e) 33 & U
Vict. ch. 61. 1870, sec. 3.
(/) 84 & 35 Vict. oh. 58.

—
subject to the sanction of the Court. The Acts also provided
specially for the winding-up of insurance companies, and where

one company had absorbed one or more other companies, provided
that the principal and subsidiary companies might be wound up
together.
Extended to By the Employers' Liability Insurance Companies Act,
employers'
liability. 1907 (i), now repealed but substantially re-enacted in the
Assurance Companies Act, 1909, the provisions of the Life
Assurance Companies Acts, 1870 to 1872 were applied mutatis
mutandis to companies carrying on the business of employers'
liability insurance.
Assurance By the Assurance Companies Act, 1909 (k) the Life Assurance
Companies
Act, 1909. Companies Acts, 1870 to 1872 are consolidated, and the principal
provisions thereof are applied to practically all insurers other
Classes of than companies and individuals insuring only marine risks. The
business to
which it Act specifies five classes of insurance business, viz. (1) life assur-
applies.
ance, (2) fire insurance, (3) accident insurance, (4) employers'
liability insurance, and (5) bond investment business. Subject
to the undermentioned exceptions the general provisions of the
Act, with certain modifications and additions in respect of each
class, are applied to every individual insurer or company carrying
on any one or more of such classes of business within the United
Kingdom and to any company registered under the Companies
Acts carrying on such business in any part of the world (I), The
Act does not apply to the following individuals, companies, and
associations :
Companies (1) Friendly Society registered under the Friendly Societies

and indivi-
duals exempt Acts (m).
from the Friendly Society to which the
(2) Unregistered Board of
general pro-
visions Trade has given special exemption (n).
thereof.
(3) Trade Union registered under the Trade Union Acts (o).
(4) Unregistered Trade Union established more than twenty

years before the passing of the Assurance Companies
Act, 1909, to which the Board of Trade has given
special exemption (p).
(i) 7 Edw. VII. oh. 46. {n) See. 35.

{k) 9 Edw. VII. oh. 49. (o) Sec. 1 ; Trade Union Act, 1876,
(I) Ass. Comp. Act, 1909, sec. 1. sec. 7.
(m) Sees. 1, 2. (p) Ass. Comp. Act, 1909, sec. 35.
—
(5) National Debt Commissioners or the Postmaster-General

acting under the Government Annuities Acts or the
Post Office Savings Banks Acts (q).
(6) Member of Lloyd's or any other association of under-
writers approved by the Board of Trade, who complies
with the requirements of Schedule VIII. of the Act (r).
The five classes of insurance business to which the Act applies
are specially defined as follows :
Life assurance business is defined as the issue of or the under- Life assur-
taking of liability under policies of assurance upon human life, or defined!^^^^^^

the granting of annuities upon human life (s). Policy on human life
means any instrument by which the payment of money is assured
on death (except death by accident only), or the happening of any
contingency dependent on human life, or any instrument evidenc-

ing a contract which is subject to payment of premiums for a
term dependent on human life (t). An endowment policy assuring

a sum payable in the event of the assured attaining a specified age
is a policy of assurance upon human life whether or not any
sum is payable in the event of earlier death (u). An ordinary policy
against sickness or accident does not, however, become a life
policy merely because there is an incidental provision that in the

event of the policy continuing in force without any claim having
been made until the assured attains a specified age, the company
wiU return a certain proportion of the annual premiums (v).
There is human life unless the money is

no policy of assurance on
assured by some written document. Where a friendly society
collected contributions through collectors who entered the names
of the contributorsand the amounts collected on a card, and there
was no other record of the transaction, except such card and the
corresponding entries in the society's books, it was held that the
society did not issue policies, and was not therefore a life insur-
ance company within the meaning of the Life Assurance Com-

panies Act, 1870 (x). A tea company undertaking to give pensions
(q) See. 28 (1). (t) See. 30 (a).
(»•) Sec. 28 (2). At present no asso- (u) Prudential Insurance v. Inland

oiation underwriters other than
of Bevenue, [1904] 2 K. B. 658.
Lloyd's has been approved by the (v) General Accident v. Inland
Board of Trade so as to entitle its Bevenue (1906), 43 S. L. E. 367.
members to the benefit of this exemp- (x) Neiohold Friendly Society v.
tion. Barlow, [1893] 2 Q. B. 128.

(s) Sec. 1 (a).
to their customers during their widowhood was held, under the

Act of 1870, to be liable to make a deposit as a company granting
annuities upon human But the expression "annuities
life(y).
on human life " does not include superannuation allowances and

annuities payable out of any fund applicable solely to the relief
and maintenance of persons engaged, or who have been engaged in

any particular profession, trade, or employment, or of the dependents
of such persons («). Any business, however, carried on by an
assurance company which, under the provisions of any special Act
relating to that company, is to be treated as life assurance busi-
ness, shall continue to be so treated, and shall not be deemed to be
other business, or a separate class of insurance business (a).
Fire insur- Pire insurance business is defined as the issue of or under-
ance business
defined. taking liability under policies of insurance against loss by or
incidental to fire (6). A policy includes any document which
evidences a contract to insure against such risks (c) ; but a policy
shall not be deemed to be a policy of fire insurance by reason only
that loss by fire is one of the various risks covered by the
policy {d). The object of this saving clause is to exclude from the
operation of the Act such policies as marine insurance policies,
which merely insure against fire as an incident of a much wider
risk.
Accident Accident insurance business is defined as the issue of or the

insurance
business undertaking of liability under policies of insurance upon the
defined.
happening of personal accidents, whether fatal or not, disease,
or sickness, or any class of personal accidents, disease, or sick-
ness («). An insurance policy indemnifying third parties against

liability for accident is not an accident policy (/).
Employers' Employers' liability insurance business is defined as the under-
liability
insurance taking of liability under policies insuring employers against
business
pay compensation or damages
liability to to workmen in their
defined.
employments^), but the Act does not apply to such business when
carried on by an association of employers which satisfies the Board
of Trade that it is established wholly or mainly for mutual insur-
{y) Nelson & Co. v. Board of Trade (d) Sec. 23 (3).
(1901), 17 T. L. B. 456.
(e) Seo. 1 (o).
(«) Ass. Oomp. Act, 1909, seo. 29,
(a) Seo. 30 (/) Lancashire Ins. Co. v. Inland
(g).
Seo. 1 (b).
Revenue, [1899] 1 Q. B. 353.
(6)
(c) Norwich Equitable Fire v. Boyal (g) Ass. Oomp. Act, 1909, sec. 1 (d).
(1887), 57 L. T. 241.
;
ance against employers' liability or other risks incident to their

trade or industry (h), nor to such business when carried on as in-
cidental only to the business of marine insurance by issuing
marine policies or policies in the form of marine policies covering
employers' liability risks as well as the ordinary marine risks (i),
nor to such business when carried on outside the United

Kingdom (k).
Bond investment business is defined as the business of issuing Bond invest-
bonds or endowment certificates by which the company in retiirn de&ied"^^'^^^^

for subscriptions payable at periodical intervals of two months
or less contract to pay the bond holder a sum at a future date, and
not being life assurance business as hereinbefore defined_(0.
Subject to the exceptions and modifications mentioned below, Obligation

1 1 A ,-1 to make and
, • 1 ,
every insurance company or insurer to which the Assurance Oom- jêep a deposit
°£*20,ooo.
panics Act applies is rec[uired to make and keep a deposit of
£20,000 with the Paymaster-General for and on behalf of the
Supreme Court in respect of each of the five classes of insurance
business to which the Act applies which is carried on by such

company or insurer (m). Companies carrying on a life business
which having commenced life business before 1870 had never
made a deposit, or which had made a deposit, and, on accumulating
an assurance fund of £40,000, had withdrawn it under the pro-
visions of the old Acts, are required to make or renew the deposit (n).
No company is required to make a deposit in respect of fire,
accident or bond-investment business where such business has

been established in the United Kingdom before December 3,
1909 (o), or in respect of employers' liability business where such

business has been established in the United Kingdom before
August 28, 1907 (p). N"o company is required to make a deposit
in respect of fire or accident business where such company has
already made a deposit in respect of any other class of insurance
business (q), and where a deposit has been made in respect of fire
(h) Sec. 33 I^îsli companies with tlie High Court

(1) (a).
(i) See. 83 (1) (b). of Justice in Ireland.
(fc) Sec. 33 (1) (i). W

(o)
Sec. 30
Sees. 31 (b), 32
(c).
(b), 84 (b).
{Tj Sec. 1 (e).
(m) Sec. 2 English and Scottish

(1) ; {p) Sec. 33 (1) (d).
companies make the deposit with the (?) Sees. 31 (d), 32
(c).
High Court of Justice in England

or accident business, it may be transferred to the account of any-

life or employers' liability business which the company may there-
after establish (r). No deposit is required to be made in respect
of fire insurance business where the company is an association of
owners or occupiers of property which satisfies the Board of Trade
that it is carrying on the business wholly or mainly for the pur-
pose of the mutual insurance of its members (s).
Where a life company established in 1866 found itself unable

to make the necessary deposit owing to the fact that it had
recently transferred the larger part of its business to another com-
pany the directors and officers of the company resigned. On the
motion of a policy-holder the Court appointed a receiver to collect
the premiums and receive the dividends on the life assurance trust
fund and gave liberty to apply with reference to the payment
of any policies which might mature (t).
Deposit in In the case of life insurance business, employers' liability in-

certain cases
to form part surance business, or bond investment business, if the company
of a separate
insurance
transacts any other business than the one class of insurance
fund. business in respect of which it was deposited, the deposit shall
form part of a separate insurance fund which must be kept as the
security of the policy-holders in that class (m).

Manner of The deposit is made either by the company required to make
making the
deposit. the deposit or by the subscribers of the memorandum of associa-
tion of a company in process of formation (x). The depositors

must make an application to the Board of Trade for a warrant
them to make the deposit (2/).
authorising The waiTant shall
authorise the lodgment of the money either in cash or in the
option of the depositors in any stocks, funds or securities in which
cash under the control of the Court may for the time being be
invested (z). The warrant shall also in the case of a deposit made
in respect of life insurance business, employers' liability business,
or bond investment business by a company which transacts any
(r) Ass. Comp. Act, 1909, sees. 31 (d), (x) Sec. 2 (3); no certificate of
32 (c)Rules 1910, A. 6 (a).
; incorporation of a new insurance
(s) Sec. 31 (0). company formed under the Com-
{t) Cryer v. Universal Insurance panies Acts will be granted until the
(1910), The Times Newspaper, July 8. necessary deposit has been made.
(m) Sees. 2 (4), 3, 31(e), 32(d). There Sec. 2 (3).
is, however, apparently no method of {y) Sec. 2 (5).
realising the security except in a wind- {z) Sec. 2 (6) ; Eules, 1910, A. 2.
ing-up.
: : — : : :
other business specify the particular insurance business in respect

of which the deposit is made (a). When the depositor has obtained
the necessary warrant the deposit is made in accordance with the
terms thereof at the Bank of England (Law Courts Branch) and
the cash or securities are placed to the account of the Paymaster-
General for and on behalf of the Court and to the credit of the
company, and when the deposit is made in respect of life insurance
business, employers' liability business, or bond investment busi-
ness by a company carrying on any other business it is marked
accordingly to a special ledger credit (6).
When a deposit of cash or securities has been made the Application
company may apply to the Court for an order as to the invest- order as to
ment thereof or as to the payment of the interest, dividends, or
aepTO\™and°*
income accruing due thereon. Upon such application the Court payments of
interest.
may order any deposit to be invested in such stocks, funds, or
securities in which cash under the control of or subject to the
order of the Court may for the time being be invested as the
applicants desire or the Court thinks fit either by way of original
investment or by way of variation of investment, and may order
payment to the company of the interest, dividends, or income (c).
The rules under the old Life Assurance Companies Acts Investment
provided that the deposit might be invested "as the applicants securities
desire and the Court thinks Under those rules it was

fit."
those autho-
decided that an investment might be made in a security "sed by the
° •'
rules of Court.
authorised by the Trust Investment Act, 1889, although such
security was not among the securities authorised by the rules of
Court for the investment of cash under the control or subject to
the order of the Court {d). By the rules under the present Act
the scope of investment is confined to the securities authorised
by the rules of Court. These are
Two and Three-quarters per Cent. Consolidated Stock (to be called after Authorised
Two and a Half per Cent. Consolidated Stock) securities
the 5th of April, 1903,
Consolidated Three Pounds per Gent. Annuities :
Reduced Three Pounds per Cent. Annuities :
Two Pounds Fifteen Shillings per Cent. Annuities

Two Pounds Ten Shillings per Cent. Annuities :
Local Loans Stock under the National Debt and Local Loans Act, 1887
Exchequer Bills
Bank Stock
(a) Rules, 1910, A. 3. [3) Blue Ribbon Life, In re (1889),
(6) Eules, 1910, A. 1, 2, 3. 59 L. J. Oh. 276.

(c) See. 2 (2) Rules, 1910, A.
; i.
: :: : : :: : :
India Three and a Half per Cent. Stock :
India Three per Cent. Stock :
India Two and a Half per Cent. Stock :
Indian guaranteed railway stocks or shares, provided in each case that such
stocks or shares shall not be liable to be redeemed within a period of fifteen
years from the date of investment
Stocks of Colonial Governments guaranteed by the Imperial Government;
or in respect of which the provisions of the Colonial Stock Act, 1900, and of
section 2 (2) of the Trustee Act, 1893, are for the time being complied with
Mortgage of freehold and copyhold estates respectively in England and Wales
Metropolitan Consolidated Stock, Three Pounds Ten Shillings per Cent.
Three per Cent. Metropolitan Consolidated Stock
Two and a Half per Cent. Metropolitan Consolidated Stock :
Two and a Half per Cent. London County Consolidated Stock :
Three per Cent. London County Consolidated Stock :
London County Council 3J per Cent. Stock :
Inscribed 2^ per Cent. Debenture Stock issued by the Corporation of London,

and secured by a trust deed dated 24th of June, 1897 ;
Inscribed 3 per Cent. Debenture Stock issued by the Corporation of London,

and secured by a supplemental trust deed dated 1st June, 1905
Debenture, preference, guaranteed, or rentcharge stocks of railways in Great
Britain or Ireland having for ten years next before the date of investment paid
a dividend on ordinary stock or shares :
Debenture, preference, guaranteed, or rentcharge stocks of railways in Great

Britain or Ireland guaranteed by Eailway Companies owning railways in Great
Britain or Ireland which have for ten years next before the date of investment
paid a dividend on ordinary stock or shares
Nominal debentures nominal debenture Stock under the Local Loans
or
Act, 1875, or under the Isle of Man Loans Act, 1880, provided in each case
that such debentures or stock shall not be liable to be redeemed within a period
of fifteen years from the date of investment
Guaranteed Land Stock issued under the Act 54 & 55 Vict. ch. 48 :
Guaranteed 2| per Cent. Stock issued under the Act 3 Edw. VII. ch. 37
Guaranteed 3 per Cent. Stock issued under the Act 9 Edw. VII. ch. 42.
Depreciation There is no specific provision in the Assurance Companies

of securities
deposited.
Act for any additional deposit in the event of depreciation in the
value of the securities deposited. It may be said that the
provision that the company shall make and keep a deposit of
£20,000 implies an obligation to keep the deposit at the actual
value of £20,000. It is submitted that on the true construction
of the Act a company is not required to supplement its deposit
in the event of depreciation. The absence of machinery for
doing so is significant and the obligation to " keep " a deposit
merely means that the deposit which has been made in accordance
with the provisions of the Act must be kept deposited and cannot
be withdrawn except when specially provided by the Act {dd).
{dd) The Board of Trade has officially correct interpretation of the Act ; J, I. A.
expressed the opinion that this is the vol. xlv. p. 335.
Every assurance company which is required to make a Witlidrawai

°^
deposit must always keep at least one sum of £20,000 in deposit, deposit^^"'
A deposit made in respect of life assurance business forms a per-
manent part of the life assurance fund and can never be withdrawn
or transferred to the credit of any other class of insurance business.
A deposit made in respect of employers' liability insurance or bond

investment business may be withdrawn by the depositor when an
insurance fund of £40,000 has been accumulated in respect of that
business, and a deposit has been made by the company in respect
of some other class of business (e) ; or, when an insurance fund of
£40,000 has been accumulated in either of the classes of business

just mentioned, and the company intends to commence another class
of insurance business, the deposit may be transferred to the credit

of such new business, or apparently where the new business is fire
or accident business the deposit may be transferred to the general

credit of the company (/). Where a foreign company makes a
deposit for the purpose of transacting employers' liability insur-
ance or bond investment business in the United Kingdom, the
company may obtain repayment or transfer of the deposit by
showing that the assurance fund of the company appropriated to
the particular class of business in respect of which the deposit is
made amounts to £40,000, notwithstanding that the fund consists

of accumulations already existing abroad and arising from the
original business of the company {g). Upon an amalgamation and
transfer of an employers' liability or bond investment business
together with all the assets of the company the deposit will not be
paid out to the transferee company so long as any claims against
the transferor company remain undischarged, or until the trans-
feree company have since the amalgamation accumulated a
separate assurance fund of £40,000 in respect of the transferred
business (h). But where all policy holders in the transferor com-
pany have consented to the transfer, or their claims have otherwise
been discharged, the deposit will be paid out to the transferee
company although the transferor company never accumulated an
assurance fund (i).
(«) Ass. Comp. Act, 1909, sees. 33 {h) Scottish Economic Life, In re
(1) (e), 34 (c). (1890), 45 Ch. Life and Health

D. 220 ;
if) Rules, 1910, 1. 6 (b). Assurance, In re, [1910] 1 Ch. 458.

Colonial Mutual Life, In re (i) Popular Life Assurance, In re,
(g)
(1882), 46 L. T. 282. [1909] 1 Ch. 80.
I.L. 3
Any deposit may be paid out to the company or its transferee
when the company has ceased to transact business and all claims
against it have been transferred or discharged (k). A deposit
may also be paid out when it has been paid in by mistake under a
misapprehension of the requirements of the statute (l), and in
any case where a fund deposited is standing to the credit of the
company and is not required to be kept deposited by the Act it
may be paid out to the company (m).

Petition for Applications to the Court as to investment, payment of interest,
pr™ent°out transfer or payment out should be made by which in the
petition
*°
^ case of an application for the transfer or payment out of a
^^'^P^
Trade. deposited fund must be served on the Board of Trade (n).
Accounts
'^^^ obligation placed upon insurance companies of making
statements of
g^ ^.g^gj^ deposit of £20,000 as a security for their policy holders
investigation affords a great protection to the insuring public against mushroom
companies ; but the provision in itself would be of comparatively
little value if it were not for the further obligation which is placed
upon every company of rendering public accounts and state-
ments The Companies Act requires every company
of affairs.
registered thereunder to comply with the statutory provisions
for periodical accounts and statements of affairs and when neces-
sary to submit to an investigation of by inspectors

its affairs
appointed by the Board of Trade. The Assurance Companies Act

contains provisions for periodical accounts and statements of
affairswhich on the whole are more stringent than those contained
in the Companies Act, and every company or individual to which
the Assurance Companies Act applies is bound to comply with
them. The Assurance Companies Act does not contain any pro-
vision for investigation of the companies' affairs by inspectors, and
the liability to such inspection under the Companies Acts only
applies to assurance companies which are formed or registered
thereunder. The Priendly Societies Act, Collecting Societies and
Industrial Assurance Companies Act and Trade Union Acts,
contain special provisions with regard to the accounts and
(k) 'Ru[6s,1910, A.7 (5) ; Popular Life (to) Rules, 1910, A. 7; Welsh Insur-
Assurance, In re, [1909] 1 Ch. 80. ance. In re (1910), The Times News-
Wool Industries Employers' In-
{l) paper, July 21.
surance. In re, [1899] W. N. 259. (n) Rules, 1910, A. 9.
iuvestigation of the affairs of the societies to which they

respectively apply. All foreign insurance companies carryinf^
on husiness in this country are required to file an annual balance
sheet with the Eegistrar of Companies as well as to make returns
under the Assurance Companies Act to the Board of Trade.
Every company registered under the Companies Act with a Provisions of

share capital make at least annually a list of all ^g™^*'^'®^
is required to
persons who are members (nn) or who have ceased to be members ^'^' °^
„ , - , members, and
smce tne date ot the last return together with a summary of the summary of
^"^'
company's affairs showing among other things the amount called ^
up on each share, the total amount of calls received, the total
amount of shares forfeited, the names and addresses of the
directors for the time being, and the total amount due from the
company in respect of all mortgages and charges (o). The sum-
mary must also include a statement in the form of a balance
sheet audited by the company's auditors and containing a
summary of its share capital, its liabilities and its assets (p). A
copy of the above list and summary signed by the manager or
secretary must be forwarded to the Eegistrar of Companies (^).
Where a registered company is an assurance company to which
the provisions of the Assurance Companies Act, 1909, apply and
copies of the accounts and balance sheet required by that Act
to be prepared and deposited at the Board of Trade are sent to
the Eegistrar it is not necessary to send any other statement in
the form of a balance sheet as required by the Companies Act (r).
Every company registered under the Companies Act being Half-yearly
, . . .
T , T . .
T . statement of
a nmited banking company or an insurance company or a deposit share capital,
^^^
provident or benefit society (except as hereinafter mentioned) is
^s^^j^s*^^^
required before it commences business and also on the first
Monday in February and first Tuesday in August in every year

tomake a statement giving particulars of the share capital and
specifying the liabilities and assets of the company on the pre-
ceding first of January or first of July(.s). A copy of such state-
ment must be put up in a conspicuous place in the registered
{nn) That is shareholders, as these (p) Sec. 26 (3).
returns are not rec[uired in the case of (g) Sec. 26 (4).

a mutual office. (»•) Ass.Comp. Act, 1909, see. 7 (4). '
(o) Comp. Act, 1908, sec. 26 (1), (2). (s) Comp. Act, 1908, sec. 108 (1).
.^••^-
office of the company and in every branch office or place of

business where the business of the company is carried on(^).
Assurance companies to which the Assurance Oompanies Act

applies and which comply with the provisions thereof as to the
annual statements to be made by such a company are not re-

quired to make the above statement (u).
Investigation The Board of Trade may on the application of members hold-
of affairs
under ing not less than one-tenth of the shares issued, or in the case
provisions of
Oompanies of a company having no share capital on the application of not
Act.
less than one-fifth of the members, appoint one or more competent
inspectors to investigate the affairs of any company registered
under the Act. The inspectors will report their opinion to the
Board of Trade and a copy of the report must be sent to the
registered office of the company and a further copy delivered to

the applicants for investigation at their request. The expenses
of the application will be paid by the applicants, unless the
Board of Trade directs the same to be paid by the company (a;).
A company registered under the Companies Acts may by special
resolution appoint inspectors to investigate its affairs and such in-
spectors shall have the same powers as inspectors appointed by the
Board of Trade except that they will report to the Company {y).
Annual Every company registered under the Companies Acts must at
appointment
of an auditor each annual general meeting appoint an auditor or auditors
under the for the current year, and in default the Board of Trade may on
Companies
Act. the application of any member of the company appoint an
auditor (s). A director or officer of the company cannot be
appointed auditor of the company (a). Every auditor of a com-
pany has a right of access at all times to the books and accounts
and vouchers of the company, and is entitled to require any
necessary information or explanation from the directors or officers
[t] Gomp. Act, 1908, sec. 108 (2). Companies Act. It will be observed
(m) Sec. 108 (6). The annual state- that this is so even in the case of
ments referred to in this subsection companies carrying on a purely fire
are the revenue account and balance business and which are not required by
sheet which vfere the only annual the Assurance Companies Act to sub-
statments required by the Life As- mit to any periodical investigation or
surance Oompanies Act, 1870. Every make any periodical statement of their
assurance company to which the As- business.
surance Companies Act applies is now (x) Gomp. Act, 1908, sec. 109.
bound to prepare an annual account ly) Sec. 110.
and balance sheet, and if it complies is \z) Sec. 112 (1), (2).
apparently relieved from the obligation (o) Sec. 112 (3).
of complying with this section of the
of the company (J). The auditors must make a report to the

members on the accounts examined by them and on every balance
sheet laid before the company (c).
The Assurance Companies Act, 1909, imposes upon all assurance Provisions of
companies to which the Act applies the following provisions with companies
regard
° to accounts, statements, and investisfation
o of affairs. ^°^- ^^^^^'^^s
' '
accounts to
When any notice, advertisement, or other official publication of and state-
ments of
an assurance company contams a statement of the amount of affairs.
authorised company
capital of the
the ±publication shall also Statements
J
'- JT
as to amount
contain a statement of the amount of the capital which has been of capital.
subscribed, and the amount paid up (d).

When an assurance company transacts other business than one Separate
^^
class of assurance business, it must keep a separate account in sepaSte^
?'Ssurance
respect of each class of assurance business which it transacts (e),
and when such company transacts life, employers' liability, or different
bond investment business, all receipts in respect of each of such business.
classes of business must be carried to a separate assurance fund

which will form a security for the policy holders in each class in
the same manner as if it belonged to a company which carried on
no other business (/). In the case, however, of a company doing
life business, and established before August 9, 1870, the liability
of the life assurance fund for contracts entered into before that
date are not affected by the above provisions (g), and where under
the deed of settlement the life policy holders in such a company
are exclusively entitled to share in the company's profits and on
the face of their policies the liability of the life assurance fund
in respect of other business distinctly appears the provisions
for the separation of funds do not apply (h).
Every assurance company must at the end of each financial Annual

year prepare in the form of the appropriate schedule to the Act (i),
(a) a revenue account in respect of each class of assurance busi-

ness (k) ;
(b) a profit and loss account except where the company
(6) Sec. 113 (1). (i) the Board of Trade may

Sec. i ;
(c) Sec. 113 (2). alter any forms contained in the

of the
(<^) Ass. Comp. Act, 1909, sec. 12. Schedules so as to suit the circum-
(e) Sec. 3. stances of any particular company
(/) Sees. 3, 81 (e), 32 (d). (sec. 22).
(g) Sec. 30 (e).

(k) Sch. I. Where a company carries
{h) Sec. 30 (f). on any one of the five classes of
;
carries on one class of assurance business only and no other

business (I) ;
(c) a balance sheet (m).
Audit of Where the accounts of an insurance company are not subject
accounts.
to audit in accordance with the provisions of the Companies Act,
1908, or the Companies Clauses (Consolidation) Act, 1845 (n),
relating to audit, such accounts must be audited in accordance with
the provisions of sec. 113 (1) and (2) of the Companies Act,
1908 (o). In the case of a company having a share capital the
auditor must be elected annually by the shareholders (^). No
company can be elected as auditor (p).
director or officer of the
Periodical Every assurance company transacting life business or bond

investigation
and actuarial investment business shall once in every five years, or at such
report on all
life and bond
shorter intervals as may be required by the instrument consti-
investment tuting the company or by its regulations or by-laws, cause an
business.
investigation to be made into its financial condition, including a
valuation of its liabilities, by an actuary, and shall cause an
abstract of the report of such actuary to be made in the appropriate
form or forms in the fourth schedule to the Act (q).
Actuarial If at any other time an investigation is made into the financial

report
required on condition of a company transacting life or bond investment busi-
every investi- ness with a view to the distribution of profits or the results of
gation,
which are made public, the liabilities shall be valued by an
actuary and an abstract of his report shall be made as in the case
of the periodical investigation (r).
but under In the case of a mutual company whose profits are allocated to
certain
circum- members wholly or mainly by annual abatements of premium, the
stances actu- abstract of the report of the actuary required by the Act may
arial report
may be made notwithstanding the above provisions be made and returned at
and returned
quinquen- intervals not exceeding five years provided that where such
nially.
return is not made annually it shall include particulars as to the
rates of abatement of premiums applicable to different classes or
business to whicb the Act applies, a outside the United Kingdom, wiU be
revenue account is required in respect shown in a separate inclusive general
of aU insurance business, whether account,
coming within the five classes or not. (1) Sch. II.
A separate revenue account is required (m) Sch. III.

in respect of each of those five classes (n) 8 & 9 Vict. ch. 16, sees. 101-108.
and any marine busi-
also in respect of (o) Ass. Comp. Act, 1909, sec. 9
ness and of any sinking fund or capital Ass. Gomp. Rules, 1910.
redemption business, but any addi- {p) Ass. Comp. Rules, 1910.
tional insurance business, including em- (2) Sees. 5 (1), 31 (a), 32 (c), 33 (1) (c).
ployers' liability business transacted (r) See. 5 (2).
series of assurances allowed in each year during the period which

has elapsed since the previous return (s).
Every assurance company transacting life business or bond Periodical
investment business, must also prepare a statement of its assur- oUifecTrbond

ance business at the date to which the accounts of the company l^'î^g™®^'
are made up for the purposes of the periodical investigation in the
form or forms in the fifth schedule to the Act ;
provided that if
the investigation is made annually the company may prepare such

statement once in every five years (<)• The statement must be
signed by the actuary (?i).
The actuary who signs the above-mentioned abstracts and Qualification
statements must be either

(1) a Fellow of the Institute of Actuaries or of the Faculty of
Actuaries ; or
(2) where application is made iy a company and where in the
opinion of the Board of Trade special circumstances exist, an

Associate of the Institute of Actuaries or of the Facility of
Actuaries ; or
(3) the actuary on June 6, 1910, to an assurance company to
which the Act applies, having its head office within the United
Kingdom, or to any closed fund of such a company established
in consequence of an amalgamation or transfer ; or
(4) such other person having actuarial knowledge as the

Board of Trade may on the application of the company approve {v).
In the case of a company transacting accident or employers' Annual state-
liability business the company must annually prepare a statement accident or
of its business in the form in schedule four of the Act applicable fi^û^y"^
In the case of accident business the Act does not business.
thereto (a;).
require such statement to be prepared or signed by an actuary.

In the case of employers' liability business the estimated liability
on claims of five years' duration and upwards outstanding as at

the end of the year of account must be made and signed by an
actuary who must be qualified as above, omitting the words
printed in italics {if).
In the case of a company transacting fire business the Act No periodical
does not require any periodical

..
investigation
.
into its
r-
financial
^ statement of
fire business
(s) See. 30 (h). (a:) Ass. Comp. Act, 1909, sees. 82 (a),
(i) See. 6. 33 (o).
(m) Sch. V. (2/) Sch. IV. (D) (7) ; Ass. Comp.

(«) Ass. Comp. Eules, 1910. Rules, 1910, E. 2.
40 INSUEANCB COMPANIES
unless condition in respect of such business nor does it require any

registered periodical Statement of such business.
under Com-
panies Act.
Shareholders' The Companies Act, 1908, requires that every company

registered under that Act shall keep a register of its members (a).
The Assurance Companies Act, 1909, requires that every

assurance company not registered under the Companies Act, or
which has not incorporated in its deed of settlement sec. 10
of the Companies Clauses (Consolidation) Act, 1845, shall keep
a shareholders' address book in accordance with the provisions
of that section which provides that the secretary shall from time
to time enter in alphabetical order the name, places of abode,
and description of shareholders (5). The book is open for inspection
gratis by every shareholder, and every shareholder or policy
holder is entitled to a copy on payment of a copying fee (6).
Printed Every assurance company not registered under the Companies

of settlement. -^^^^ is required to keep a sufScient number of printed copies of
its deed of settlement or other instrument constituting the
company, and to furnish a copy to any shareholder or policy
holder on payment of a ~
maximum fee of one shilling (c).
Companies registered under the Companies Acts are required to
send to everymember on payment of a maximum fee of one

shilling of the memorandum and articles, and these
a copy
documents may be inspected by any person at the ofi&ce of the
Eegistrar of Joint Stock Companies (d).
Accounts and Every account, balance sheet, abstract, or statement required to
ments of be prepared under the Assurance Companies Act must be printed
pared under
^^^ ^°^^ copies thereof, one of which shall be signed by the chair-
Assurance man and two directors of the company and by the ^
principal
Companies ^ "' r•'
Act to be officer of the company and if the company has a managing
the Boardôf director by the managing director, shall be deposited at the Board
Trade.
^^ Trade within six months after the close of the period to which
the account, balance sheet, abstract, or statement relates or within
such further period not exceeding three months as the Board of
(a)Oomp. Act, 1908, sec. 25. (c) Ass. Oomp. Act, 1909, sec.
(6) Comp. Act, 1909, sec. 10;

Ass. 11.
Comp. Clauses Act, 1845, sec. 10. (d) Comp. Act, 1908, sees. 18, 248 (b).
Trade thinks fit (e). The Board of Trade will communicate with
the company with a view to the correction of any inaccuracies
or deficiencies found in the documents deposited (/). The
company must deposit with every revenue account and balance
sheet any report on the affairs of the company submitted to the
shareholders or policy holders in respect of the financial year to

which the account or balance sheet relates (g). A printed copy of
the last deposited accounts, balance sheet, abstract, or statement
must on the application of any shareholder or policy holder of the
company be forwarded to him by the company by post or other-
wise (Ji). A copy of every account, balance sheet, abstract, state-
ment or report deposited with the Board of Trade is kept by the

Eegistrar of Joint Stock Companies and is open to inspection by
any person on payment of a fee of one shilling for each inspection,
and any person may procure a copy of any such document on

payment of 4d a folio of 72 words (i). Any document purporting
to be certified by the Eegistrar or by an Assistant Eegistrar as a
copy of a document deposited with the Board of Trade is prima

facie evidence of the contents of the original document (/«). It is
the duty of the Board of Trade to lay annually before Parliament

the accounts, balance sheets, abstracts, and statements deposited
with them during the preceding year (/).
Underwriters at Lloyds may, instead of complying with the Eequire-
general provisions of the Act, comply with the modified provisions members of
Lloyds.
in Schedule VIII. and in the rules made in pursuance thereof.
Subiect to the alternative mentioned below in the case of fire or Deposit of
, Ti J J
•. J
J. -i. £2000 with
accident business, every underwriter at Lloyds must deposit and
i.
trustees
keep deposited with trustees appointed by the committee of Lloyds ^ggâg *^^''
a sum of £2000 in respect
^ of each of the five classes of insurance annual state-
ment of
business to which the Act applies and which is carried on by business.
him(m). The payment, repayment, investment of and dealing

with such deposit, and the payment of interest and dividends on
such deposit, are regulated by the terms of a trust deed executed
(e) Ass. Oomp. Act, 1909, seo. 7 (1). (i) See. 20 ; Ass. Comp. Kules, 1910.
(/) Seo. 7 (2). m Seo. 21 ; Ass. Oomp. Rules, 1910.
(g) Seo. 7 (3). (0 Seo. 27.

{h) Seo. 8. (»m) -A-SS. Comp, Aot, 1909, Sch. VIII.
;
by the underwriter, by Lloyds, and by the trustee (n). Such trust

must be executed in accordance with a model form approved by
the Board of Trade, and there must be a separate deed in respect
of each deposit (o). As soon as the deposit has been made and
the deed executed, it is the duty of Lloyds to notify to the Board
of Trade the name and address of the underwriter, the date of the
deed, and the class of assurance business in respect of which the
deposit is made, and the trustees of the deed shall from time to
time notify any change in the name or address of the underwriter
or any other material information with regard to the deposit or
investment thereof (p). The deposit will, so long as any liability

under any policy issued by the underwriter in the class of assur-
ance business in respect of which the deposit is made remains
unsatisfied, be available solely to meet claims under such policies (§').
The underwriter must also in respect of each class of insurance
business furnish every year to the Board of Trade a statement

of the extent and character of such business in the appropriate
form or forms contained in the Assurance Companies Eules (r).
Alternative In the case of fire or accident business, an underwriter at Lloyds

requirements
in fire and may, instead of depositing a sum of £2000 as above, comply with
accident the following alternative requirements (s). All premiums received
business.
in respect of each class of business must be placed in a trust fund
in accordance with the provisions of a trust deed approved by
the Board of Trade (i). The underwriter must also furnish security
to the satisfaction of the Committee of Lloyds, such security to

be in the form of a deposit or guarantee or partly one and partly
the other, and never to be less than the aggregate of the premiums
received or receivable by the underwriter in the last preceding
year in connexion with fire and accident business, and any other
non-marine business not being one of the five classes of insurance

Separate business to which the Act applies (m). The security shall be
assurance
fund, security available solely to meet claims under policies issued by the under-
to the satis-
faction of the
writer in connexion with fire, accident, or such other non-marine
committee, business (u). The underwriter must also have his accounts audited
and aimual
audit of («,) Ass. Comp. Eules,il910, B. 2. (b), (D) (2), (B) (2) ; Ass. Comp. Eules,
accounts. (o) B. 3. 1910, H.
{p) B. i. (s) Sch. VIII. (B) and (0) (2).
(S) Ass. Comp. Act, 1909, Sch. VIII. (t) Sch. VIII. (B) and (C) (2) (a).
(A) (1), (B) and (0) (1) (a), (D) (1), (E) {u) Sch. VIII. (B) and (C) (b)
(2)
(1). Ass. Comp. Act Rules, P.
(r) Sch. VIII. (A) (2), (B) and (C) (1)
annually by accountants approved by the Committee of Lloyds,

who will furnish a certificate to such committee and to the Board
of Trade in the form prescribed by the Assurance Companies
Eules (x).
In the case of employers' liability business, if a person insured Redemption

of weekly
by any policy issued by an underwriter at Lloyds becomes liable payments to
to make a weekly payment to any workman during his incapacity ûrw^"^
and the weekly payment has continued for more than six months, "loapaoity.
the liability must before the expiration of twelve months from the
commencement of the incapacity be redeemed by payment of
a lump sum, and the underwriter must pay the lump sum into the
County Court (y).
Every society registered under the Friendly Societies Act must. Registered
FriGndly
once in every year, not later than May 31, send to the Eegistrar of society's
»o=°"'i*S' ^^°-
Friendly Societies a return of the receipts and expenditure funds
and effects of the society made out to the previous December 31
and showing separately the expenditure in respect of the several an annual
objects of the society or branch (z). The accounts of the society
must be audited once at least in every year either by one of the
pTiblic auditors appointed by the Act or by two or more auditors

appointed under the rules (a). The auditors must examine and
verify the annual return and must either sign it as correct or
specially report to the society if they find it incorrect (a), and any
such special report must be sent to the Eegistrar with the annual
return (&).
Once at least in every five years every registered society, andquin-

except as hereinafter mentioned, must cause to be made and sent statement of
to the Eegistrar a statement showing its assets and liabilities and

the benefits assured and contributions receivable from members (c).
Such statement may either take the form of a valuation and

report by a valuer appointed by the society or of a return by the
society, and in the latter case the Eegistrar shall cause the assets
and liabilities to be valued and reported on by some actuary and
{x) Ass. Comp. Act, 1909, Soh. VIII. («) F. S. Act, 1896, see. 27 (1), (2).
(B) and (C) (2) (o) ; Ass. Comp. Rules, (a) Sec. 26.
1910, G. (6) Sec. 27 (3).
Sch. VIII. (D) (2). (c) Sec. 28.

{y)
shall send to the society a copy of the report and abstract of the
valuation (d). The Chief EegLstrar may, with the approval of the
Treasury, dispense with the necessity of any such valuation report
or return in respect of societies or branches to whose purposes
or to the nature of whose operations he may deem the provisions

therefor to be inapplicable (e).
Public For the purposes of the above audits and valuations the Treasury
auditors and
valuers. appoints public auditors and valuers to be paid at a specified rate
of remuneration, but the employment of such auditors and valuers
is not compulsory (/).
Accounts and Every registered society or branch must keep a copy of the
valuations to
be exhibited last annual return and of the last quinquennial valuation, together
at registered
of&ce. with any special report of the auditors, always hung up in a con-
spicuous place at the registered office of the society or branch (g).
Copies of Every member or person interested in the society's funds is
accounts on
demand. entitled to receive gratuitously a copy of the last annual return
or other document duly audited giving the same particulars (h).
Inspection of
Every member or person interested in the society's funds has also
books.
the right to inspect the books of the society at all reasonable hours
at the registered office (i).
Special in- Upon the application of one-fifth of the whole members of any
vestigations
of society's registered society, or in the case of a society with 1000 but less
affairs.
than 10,000 members of 100 members, or in the case of a society
with more than 10,000 members of 500 members, the Chief
Kegistrar may, with the consent of the Treasury, appoint an
inspector or inspectors to examine into and report on the affairs of
the society (k).
Collecting In the case of a friendly society, whether registered or un-

societies,
accounts, etc. registered, which is a collecting society, the balance sheet must
during the seven days next preceding the meeting at which it is to
be presented be kept open by the society for inspection at every
office at which the business of the society is carried on and a copy
must be delivered or sent by post to every member on demand {I).
{d) Sec. 28. (h) Sec. 89.

(«) Sec. 28 (5). (i) Sec. 40.
(/) Sec. 30. {k) Sec. 76.
(o) Sec. 29. CoU. Soc. Act, 1896,
(l) sec. 6 (1).
;
In the case of a registered friendly society which is a collecting Audit by an

^°°°™*^^'-
society the annual returns must be
certified by an auditor who
carries on publicly the business of an accountant (in).
The above-mentioned provisions of sec. 76 of the Friendly Special
Societies Act, relating to the special investigation of the society's of affairs.
affairs, apply also to every unregistered friendly society which is
a collecting society {n).
Every registered trade union must every year before the first Trade union's
, „ -r , , ,
accounts, etc.
day 01 J une make an annual return to the Eegistrar of Friendly
Societies. Such return must contain a general statement of the
receipts, funds, effects and expenditure of the union and must
show fully the assets and liabilities at the date of the return.
The expenditure in respect of the several objects of the union
must be shown separately (o).
Every member of or depositor in a trade union is entitled to a
gratuitous copy of the annual return (o).
Every assurance company constituted outside the United E'oreign

„• 1 II- -,
Kingdom, whether incorporated or not, which carries on assurance

, •
1 •
assurance
companies
business within the United Kingdom shall, within one month business in'
from the establishment of a place
^ of business within the United ^^? Umted
Kingdom
Kingdom, file with the Eegistrar of Companies (1) a certified copy of i^>is* file
.
particulars
the charter, statutes, or memorandum and articles of the company with
^^^^ ^^^'
or other instrument constituting or defining the constitution of the
company and if the instrument is not written in the English lan-
guage a certified translation thereof; (2) a list of the directors of the
company ; (3) the names and addresses of some one or more persons
resident in the United Kingdom, authorised to accept on behalf of
the company service of process and any notices required to be
served on the company and notice of any alteration in the above
;
particulars must be given within a month after the alteration {p).

Annual
Every^ such company must annually file with the Eegistrar
° a state-
^ ' •'
balance sheet.
ment in the form of a balance sheet containing a summary of its
share capital, its liabilities and assets {q). Every such company Public state-
ment as to
(to) Sec. 6 (2). (p) Ass. Oomp. Act, 1909, see. 19

(n) Sec. 12. Comp. Act, 1908, sec. 274.
(o) T. U. Act, 1871, sec. 16. (g) Comp. Act, 1908, sec. 274 (3).
country which uses the word " Limited " as part of name must on every-
its
where
constituted. place where it carries on business in the United Kingdom and on
all notices, advertisements, letters, and other documents issued by
the company state the name of the company and the country in
which it is incorporated or otherwise constituted (r).
When foreign A foreign company is deemed to carry on business in the United

company is
deemed to he Kingdom when it has officers or agents therein conducting business
carrying on
husiness in
on its behalf (s). Where insurance business is transacted for the
the United account of a foreign company through an agent resident in this
Kingdom.
country, the question is whether it is the business of the company
carried on by that agent as representing the company or whether
it is really the business of the agent acting independently on his
own behalf. An agent carrying on his own business and making
contracts on behalf of a foreign company on commission is not
in the service of the company and the company is not by reason
of the work done by such agent to be deemed to be carrying on
business in the United Kingdom (t).
Section III. —Amalgamation or Transfer
Statutory The Assurance Companies Act places certain restrictions upon

restrictions
on the trans- the amalgamation (u) or transfer of the undertakings of companies
fer of life,
carrying on life, employers' liability or bond investment business.
employers'
liability, or Companies carrying on no other class of business to which the
bond invest-
ment Act applies than fire or accident business, or both, may enter into
business.
amalgamation agreements, and fire and accident undertakings
may be transferred to any other company, as formerly, that
is to say, in accordance with the powers and under the pro-
visions in deeds of settlement, articles of association, or other
instruments regulating the constitution of the companies con-
cerned (?;). The following are the provisions of the Assurance
Companies Act, relating to amalgamation or transfer in the case
of companies carrying on life, employers' liability, or bond invest-,
ment business. The directors of any one or more of the companies
(r) Sec. 274 (4), (u) As to the meaning of "amalga-

Dunlop Pneumatic Tyre Co. v.
(s) mation," see South African Supply Co.,
Actien-Gesellschaft, Sc, [1902] 1 K. B. In re, [1904] 2 Oh. 268, 287 Buckley,
;
342 ; Comgagme Ginirale Transatlan- 9th edition, p. 433.

tique Y. LoM, [1899] A. 0. 431. {v) Ass. Oomp. Act, sees. 81 (f),
(«) The Prmcess CUmentme, [1897] 32 (e).
P. 18.
AMALGAMATION OR TRANSFER 47
concerned must petition the court to sanction the proposed arrange-

ment (x). Notice of their intention to make such application must
be published in the Gazette (y). The companies must prepare (1) a
provisional agreement or deed under which it is proposed to effect
the amalgamation or transfer (z), (2) a statement of the nature of the

amalgamation or transfer (a), (3) an abstract of the provisional agree-
ment or deed (a), (4) actuarial reports upon which the agreement or
deed is founded, including a report by an independent actuary (a).
Copies of the statement, abstract and actuarial reports must Copies of
be transmitted to each policy holder of each company (a) and to be trans-
any person claiming to be interested in any policy who has given ûoy^hoiders
company notice in writing But and others
to the
^ •'
° of his interest (h).
^ ^
it is
interested,
not necessary to transmit copies of the above documents to policy
holders or persons interested in policies unless the policies are
life, endowment, sinking fund, or bond investment policies and
the business transferred is life or bond investment business (a).
The documents in the case of policy holders may be addressed

and sent to the person to whom notices respecting such policy are
usually sent and in the case of a person claiming to be interested

to the address specified by him in his notice (b), and it is sufficient
to prove that the documents were properly directed and put in

the post office (c). The documents must be sent so as to be
received a reasonable time before the hearing of the petition but

need not necessarily be sent before the presentation of the peti-
tion (d). It is not necessary to send the documents or otherwise
give notice to new policy holders who have taken out policies
between the dates of presentation and hearing of the petition (e).
(x) Ass. Oomp. Act, see. 13 (1). In them all. In the case of the transfer
Scotland a petition presented in the of the business of the Eoonomio Life
name of the company was held com.- Assurance Society to the Alliance As-
petent Empire Guarantee, do., Peti-
: surance Company, Limited, the life
Uoners, [1911] 2 S. L. T. 269. assurance fund of the transferee com-
(y) Sec. 13 (3) (a). pany was unaffected by the agreement,
(z) Sec. 13 (3) (c). and the Court (Warrington, J.) dis-
(a) Sec. 18 (3) (b). pensed with the sending of notices and
(b) Sec. 26. This obligation is new particulars to the life-policy holders of
and imposes a very heavy burden on the transferee company and allowed
the companies. There may be a long notice to be given to them by advertise-
chain of notices of assignment of a ment only (see advt. in The Times,
life policy with nothing to show which 11th July, 1911).
assignees have dropped out and have (c) Oomp. Claus. Act, 1845, sec. 136.
no further interest in the policy. (d) Briton Life, In re (1887), 56
There seems no alternative but
to be L. J. Oh. 988.
to send the necessary documents to (e) Universal Life, In re (1901), 18
The hearing of a petition will not necessarily be delayed until

every policy holder wherever resident has had time to send notice
of his objection, and where, under the Act of 1870, it appeared,
on the hearing of a petition to sanction an amalgamation, that
two policy holders resident abroad could not have received the
notice in time to communicate their assent or dissent, the Court
nevertheless proceeded with the hearing of the petition on being
satisfied that the amount of their policies amounted to much
lessthan one-tenth of the total amount insured (/). The decision
of the Court was based on the ground that the dissent of the two
policy holders would not have been sufficient to compel the Court
under sec. 14 of the Act of 1870 to withhold its sanction from
the scheme, and the contractual rights of those individual policy
holders was preserved in that they were not bound to consent
to a transfer of their policies.
Provisional The provisional agreement or deed must be open for the in-
agreement to
be open to spection of policy holders and shareholders at the office of the
inspection.
companies for a period of 15 days after the notice in the Gazette (g).
When Court The Court may sanction the proposed agreement for transfer and
may sanction
agreement. amalgamation if no sufficient objection thereto is established {gg).
The Assurance Companies Act does not however confer any

power upon the Court to sanction an agreement which apart from
the Act would be ultra vires of the companies concerned Qi). In
no case can the Court sanction an agreement to amalgamate or
transfer the business of a company carrying on life insurance
business if life-policy holders representing one-tenth or more of the
total amount assured dissent from the amalgamation or transfer (t).
Documents Upon the completion of an amalgamation or transfer the com-

to be sent to
Board of bined company or purchasing company as the case may be must
Trade on
deposit with the Board of Trade within ten days (1) certified copies
completion of
agreement. of statements of the assets and liabilities of all the companies con-
cerned, (2) a statement of the nature and terms of the transaction,
(3) a certified copy of the agreement or deed, (4) certified copies
of the actuarial reports upon which it is founded, (5) a declaration
T. L. E. 198. It is, however, proper (g) Ass. Comp. Act, sec. 13 (3) (c).
and usual for the company to inform (gg) See Empire Guarantee, Sc, Peti-
such new policy holders of the pending tioners, [1911] 2 S. L. T. 269.
scheme of amalgamation or transfer (h) Sovereign Life, In re (1889), 42
before completion of their policies. Ch. D. S40.
(/) London and Southwark Insur- (i) Ass. Comp. Act, sec. 30 (d). But
ance, In re (1880), 42 L. T. 247. see infra, p. 57.
under the hand of the chairman of each company and the principal
officer of each company that to the best of their belief every pay-
ment made or to be paid to any person whatsoever on account of
the amalgamation or transfer is therein fully set forth Qc).
Prima facie it is ultra vires of any company to transfer its when is

business and assets to or to amalgamate with another company {I) t™^ m traiis-
purchase the business of another
or to ^ company
-^'
(m).
\ ^
A company
r J
fer agreement
intra v%res ?
cannot, therefore, validly contract to amalgamate with another

company or to transfer its business to another company unless'
ithas power to do so under its deed of settlement or other instru-
ment under which it is formed (mm). It is sufficient, however, if
the deed of settlement or other instrument although not conferring
express power to amalgamate gives the company power to alter
its powers so as among other things to insert a power to
amalgamate (?t). Where an act of parliament conferred on a
company power " to sell, exchange, dispose of, or otherwise deal
with or turn to account any part of the undertaking or property
of the company for such consideration as the company may think
fit and in particular for shares, debentures, or securities of any
other company or society," the Court held that the company had
power to transfer its whole undertaking to another company (nn).
Where a company has power conferred on it to transfer its
business, that raeans, prima facie, power to transfer its whole busi-
ness as a going concern without any cancellation or reduction
of its liabilities (o). Thus the Court refused its sanction to an
agreement whereby an insurance company carrying on a life and

annuity business proposed to transfer the one without the other
and subject to a reduction in the amount of the contracts (o). If a
ik) Sec. 14. scheme of arrangement under see. 120
Sovereign Life, In re (1889),

(tj of the Companiea Act, 1908, or a sale
42 Ch. D. 540 Rivington's Case
; under sec. 192 by the liquidator of a
(1873), Eur. Arb. L. T. 57 17 Sol. J. ; company in voluntary liquidation.
403; aff. C. A. (1876), 3 Oh. D. 10; (ro) Argus Life, In re (1888), 39 Oh.
Albert Life Indemnity Case (1871), 16 D. 571.

Sol. J. 141. (nn) Imperial Life, In re, B\ioklej, 3.
(m) Ernest NichoUs (1857), 6
v. (1902), The Times, July 28, 1902. See
H. L. 0. 401; Era Company's Case also Empire Guarantee, <£c., Peti-
(1862), 1 De G. J. & S. 29 ; Era Assur- tioners, [1911] 2 S. L. T. 269.
ance,In re (1860), 2 J. & H. 400. _

(o) Sovereign Life, In re (1889), 42
(mm) But see infra, p. 54, as "to a Oh. D. 540. In this case the transfer
I.L. 4
;
company has power to transfer its business and assets to another

company it may do so notwithstanding its contracts with the
policy holders to pay out of the funds of the company (ji). Such
contracts do not import an agreement not to part with the assets
but are made subject to the power conferred upon the company
to The power of transferring its business and assets
do so(y).
may be conditional upon the company making proper provision
for its existing liabilities, and if so the mere undertaking of the
transferee company to discharge all claims is not sufficient (g).

There must be proper security provided by the formation of
a special fund to meet such claims (§'). But where the power
given was a power to dissolve and transfer its assets upon obtain-
ing the undertaking of another company to discharge existing

liabilities, it was held that the company was not bound to see
that the assets transferred were appropriated to meet the claims

of the policy holders in the transferor company (r).
No power to The power given to a company to transfer its business and

holders to^'^^'
asscts or to amalgamate with another company does not give it
become power to bind its members or shareholders to accept shares in
'- "
shareholders
in transferee the transferee company (s) ; and each shareholder must have
mpany.
individually agreed to accept the substituted shares and been
entered on the register of the transferee company as a shareholder
before he can be held liable in respect of such shares {t). If a
shareholder in the transferor company sends in his share certifi-
cates to be exchanged for share certificates in the transferee
company in pursuance of a provisional agreement, his offer to
accept the substituted shares is conditional upon the transaction

being validly completed, and if it is never completed he cannot
be made liable as a shareholder in the transferee company (m).
with reduced contracts was ultimately Dougan's Case (1873), L. E. 8 Oh. 540
efiected by means of a scheme of Driver's Case (1871), Alb. Arb. Eeilly, 36.
arrangement under Joint Stock Com- But see infra, p. 54, where the com-
panies Arrangement Act, 1870 (now pany is in voluntary liquidation and
replaced by the Companies Act, 1908, the liquidator exercises his power of
sec. 120). sale under see. 192 of the Companies
Argus Life, In re (1888), 39 Oh. D.
(p) Act, 1908.
571; King v. Acciitmulative Life (1857), (i) United Ports and General, Beck's
27 L. J. 0. P. 57. Case E. 9 Ch. 392.
(1874), L.
(g) Kearns v. Leaf (1864), 1 H. & M. (m) Empire Assurance, Dougan's Case
681. (1873), L. E. 8 Ch. 540 United Ports
;
(?•) Cocker's Case (1876), 3 Oh. D. 1. and General, Wynne's Case, (1873), L. E.
Empire Assurance, In re (1867),
(s) 8 Ch. 1002.
L. R. i Eq. 341 Empire Assurance,
;
.
Where a company made an agreement for transfer and a term

in the agreement was that all the shareholders in the transferor
company should become shareholders in the transferee company,
it was held that a shareholder who acknowledged the receipt of
the new certificates and retained them was bound as a share-
holder in the new company, but that a shareholder who received
the notice and the certificates and retained them without acknow-
ledgment was not bound («). Where a company made an agree-
ment for transfer and a term in the agreement was that the
shareholders in the transferor company should become share-
holders in the transferee company, but that those shareholders
who did not execute the deed of settlement of the transferee
company should take no benefit from the agreement, it was held
that shareholders of the transferor company who did not execute
the deed could not be made liable as shareholders of the transferee
company {y).
Prima facie a power to transfer or amalgamate its business or PrimA facie
topurchase the business of another company does not give a no'power to
company power to become a shareholder in another company (2), ^^°°^®{^
but such power may be expressly conferred upon a company in transferee
1 •, T 1 p 1 1 . , s company.
by its deed ot settlement or other instrument {a).
i'nma /acie the power to transfer its business and assets does Primdfade
^ . ... company has
. .
not give a company any power as against its creditors to relieve its no power to
,
shareholders from their liability to pay the debts or contribute to shareholders

the assets of the company (6). It is impossible merely by an from liability,
agreement between the companies and the shareholders to exonerate
the shareholders from liability in the transferor company upon

their accepting shares in the transferee company (b). A repayment
of the capital to shareholders upon a purported surrender or cancella-
tion of their shares will only have the effect of making them liable
to the extent of the full nominal value of the shares as upon shares
(x) Empire Assurance,

Challis' Case (b) Norwich Provident Insurance,
(1870), L. R. 6 Ch. 266. Bath's Case (1878), 8 Ch. D. 334 Bank ;
(y) British Provident Life and Fire, of London Assurance, Part's Case (1.870),
Webster's Case (1864), 10 L. T. 288. L. B. 10 Eq. 622 West's Case (1873),
;
(a) British Nation Life, Ex parte Eur. Arb. L. T. 71 ; Lee's Case (1871),
Liquidators (1878), 8 Oh. D. 679. Alb. Eeilly 1
Arb. Pownall's Case ;
[a) Durham and Northumberland (1872), Eur. Arb. Eeilly 8 L. T. 8 ; ;
Assurance (1872), Alb. Arb. 16 Sol. J. Lancey's Case (1872), Eur. Arb. Eeilly
680. 12 ; L. T. 15 ; 17 Sol. J. 8.
wholly unpaid (c). A company may by its deed of settlement or

other instrument under which it is formed have express power to
dissolve itself so as to terminate all liability on the part of its
shareholders, but when it has such power it must be exercised

strictly in accordance with its powers or the creditors of the
but transfer company will not be bound (d). The shares company may
of a
of shares may
relieve under the provisions of its deed of settlement be transferable upon
members the terms that the shareholders shall be under no further liability
from liability.
in respect of their shares (e). Where this is so an amalgamation
agreement may relieve shareholders of their liability by providing
that all the shares be transferred to a trustee for the transferee
company (/). In the case of a common law partnership the shares
may be transferable so as to relieve the shareholders of liability
as against policy holders who have contracted subject to the terms
of the deed of settlement, but without relieving them from liability
as against general creditors of the company (g). In some cases
the shares of a common law partnership have been mad* transfer-
able by special act of parliament, and they must be transferred

strictly in accordance with the provisions of the Act in order to
relieve the shareholders as against general creditors (h). Where
a transfer of shares was legally made in accordance with the
provisions of a special act of parliament it was held that the
transfer of the shares would not be set aside merely because it
was made as part of an amalgamation agreement which was ultra

Power to vires of the powers of the companies (i). Where a deed of settle-
cancel shares
for default
ment provided that the directors should have power to cancel and
cannot be extinguish shares if any call thereon should remain unpaid for two
used to re-
lieve share- months, it was held that this power could not be used merely to
holders of
liability.
relieve shareholders of their liability, and where the making of the
call and the default was only a pretence there was no power to
cancel (^). Where a life company started a fire business and
(c) Lord Digbij's Case (1873), Eur. ((?) Clarke's Exors'. Case (1872), Alb.
Arb. 18 Sol. J. 184; Murrotigh's Arb. Beilly 223 ; 16 Sol. -J. 554.
Case (1872), Eur. Arb. 16 Sol. J. (h) Doman's Case (No. 2) (1874), Eur.
483. Arb. L. T. 159 ; 18 Sol. J. 798 ; (1876)
(d) Wood's Case (1871), Alb. Arb. 3 Ch. D. 21.
Beilly 54. (i) Bivingbm's Case (1873), Bur. Arb.
(e) Clarke's Exors\ Case (1872), Alb. L. T. 57 ; 17 Sol. 3. 403 ; (1876) 3 Ch. D.
Arb. Beilly 223; 16 Sol. J. 554. 10.
(/) Daman's Case (1878), Eur. Arb. (k) Manisty's Case (1873), Eur. Arb.
L. T. 183 ; 17 Sol. J. 785. L. T. 87.
;
issued fire shares in connexion therewith and the validity of the

issue was afterwards questioned, and the company by way of
settling the dispute cancelled the shares
and transferred the business
to a new company, it was held that the cancellation was valid
as a hand fide compromise, but that the shareholders might still
be made liable as past members (I).
Prima facie a company cannot transfer its contract with a Power to
policy holder without his consent (U) ; but if the deed of settlement tract of
or other instrument under which a company is formed gives the ^fthJuthfa^''

company express power to transfer its liabilities, and the policies consent,
of the company are expressed to be issued subject to the deed of

settlement, the company may, by an agreement of amalgamation or
transfer, substitute the liability of the transferee company for its
own liability without the consent of the policy holders («i). But
the power to transfer must be clearly expressed in order to bind
the policy holder (n), and the transfer must be carried out strictly
in accordance with the deed (o). When no power to transfer its

liabilities is expressed in the deed but the company has power to
alter its deed so as to acquire such power, it would seem that the
company cannot thereby bind dissenting policy holders as the
contract with them is made subject only to the power clearly
expressed in the deed (oo). Where a company's deed of settle-
ment gave the company power, if one-tenth of its nominal
capital should have been lost, to call a general meeting and dis-
solve the company, and provided that proper measures for the
purpose of effecting such dissolution without prejudice to the
rights of the parties then assured should be taken by a committee,
and that the affairs and concerns of the company should, with all
convenient speed, be wound up, and the debts and liabilities of
and claims on the company be satisfied, repurchased, discharged,

or otherwise sufficiently provided for by investment or by transfer
to other existing and approved assurance offices, it was held that

{I) Norwich Provident Insurance, Life, Oarr's Case (1864), 33 Beav.
Bath's Case (1878), 8 Oh. D. 334. 542.
(11) Life and Health Assurance, In re, Barne's Case (1873), Eur. Arb.
(n)
[1910] 1 Ch. 458. See also Empire L. T. 72 17 Sol. J. 594 ; BltmdeU's
;
Guarantee, &c., Petitioners, [1911] 2 Case (1872), Bur. Arb. Reilly 84; L.T.
S.L. T. 269. 39; 17 Sol. J. 87.
(m) Hart's Case (1875), 1 Ch. D. 307 (o) Wood's Case (1871), Alb. Arb.
Dowse's Case (1876), 3 Oh. D. 384 EeiUy 54.
Merchants and Tradesmen's Assurance (oo) See, however, Priest v. Symons,
(1870), L. B. 9 Eq. 694 Waterloo
; [1903] 2 Ch. 506.
,
54 mSUBANCE COMPANIES
the company had no power to transfer its obligation to pay an

annuity without the consent of the annuitant (p).
Injunotion to If an amalgamation or transfer agreement is proposed which
restraincom-
is ultra vires of either company concerned, the Court will, at the
pany from
carrying out
instance of any shareholder or policy holder whose interests may
an ultra vires
agreement. be prejudicially affected, restrain the company and its officers
from executing it or carrying it into effect (q).
Transfer of A transfer of business from one company to another, although

business
under pro- otherwise ultra vires of the powers of the transferor company,
visions of
may nevertheless be carried through by a scheme of arrangement
Companies
Act, 1908. under sec. 120 of the Companies Act, 1908, or by voluntary
liquidation under sec. 192 of the same Act.
Scheme Sec. 120 of the Companies Act, 1908, applies to all companies
of arrange,
ment under which may be wound up under the Companies Act, that is in
sec. 120.
effect to all lawful companies whether registered or unregistered.
The section replaces sec. 2 of the Joint Stock Companies Arrange-
ment Act, 1870. It applies equally to companies which are
going concerns, and to companies which are in the course of being
wound up. By means of a scheme of arrangement thereunder,
the contracts of the company may be reduced, and the whole or
part of the assets transferred to another company without refer-
ence to the powers of the company or the terms of its contracts.
The scheme must be approved by a three-fourths majority of each
class of creditors or shareholders affected by the scheme, and
thereafter must be sanctioned by the Court. When so approved
and sanctioned the scheme is binding on the company and on all
its creditors and shareholders.

Sale by Under section 192 of the Companies Act, 1908 (g'^'), if a
liquidator in
voluntary company is wound up voluntarily under that Act, the liquidator
winding-up. may, with the sanction of a special resolution of the company,
transfer or sell to another company the whole or part of its
business or property in consideration for cash, shares, policies

or other interest in the transferee company for distribution among
(p) India and London Life, In re Jowett V. Progressive Assv/rance (1909)

(1872), L. E. 7, Ch. 651. Tine Times Newspaper, July 29.
(2) Charlton v. Newcastle and Car- (22) Eeplaoing see. 161 of the Com-
lisle Bail. Co. (1859), 5 Jur. N.S. 1096; panies Act, 1862.
Kearns v. Leaf (1864), 1 H. & M. 681 ;
AMALGAMATION OE TBANSFER 55
the members of the transferor company, or may enter into any

arrangement whereby the members of the transferor company
may participate in the profits of or receive any other benefit from
the transferee company. Any such transfer or sale is binding on
all members of the company, although the transaction would
have been ultra, vires of the company (r). If any member of
the transferor company who did not vote in favour of the special
resolution at either of the meetings held for passing or con-
firming the same expresses his dissent therefrom in writing
addressed to the liquidator, and left at the registered office of
the company within seven days after the confirmation of the
resolution, he may require the liquidator either to abstain from
carrying the resolution into effect or to purchase his interest
at a price to be determined by agreement or by arbitration (s).
If within a year from the passing of the special resolution an

order is made for winding up the company by or subject to
the supervision of the Court, the special resolution shall not

be valid unless sanctioned by the Court {t). A special resolution
under sec. 192 is not void merely because the agreement for
transfer contains provisions which may prove detrimental to

the interest of creditors (m). Thus a stipulation that the pur-
chasing company shall take a portion only of the assets and
liabilities of the transferor company, leaving the rest of the debts
to be paid by the liquidator of the transferor company, or a stipu-
lation that the shares in the purchasing company which are to be
given as a consideration for the transfer shall be distributed directly

among the shareholders of the transferor company and not given
to the liquidator as part of the assets in the winding-up, may be
introduced into an agreement for transfer made in pursuance of
sec. 192 {u). If a creditor is aggrieved in respect of any such

stipulation, his remedy is to petition within the year for a wind-
ing-up by the Court or a supervision order (-k). The company
cannot, however, by special resolution under sec. 192 place upon
(r) The question has been raised from express power conferred by the
whether the power of the liquidator to deed or articles. Life and Health
transfer or sell the business gives him Insurance, In re, [1910] 1 Oh. 458.
power to transfer the liabilities on (s) Comp. Act, 1908, sec. 192 (3), (4).
policies without the consent of the (t) Sec. 192 (5).
holders se as to discharge the transferor (m) City and Countij Investment Co.,
company. It seems to be reasonably In re (1879), 13 Oh. D. 475.
clear that he has no such power apart
its members any liability beyond that which

shareholders or
might be placed upon them by the exercise of the company's
ordinary powers (»). Thus, under an agreement for transfer, it
was provided that the transferee company should purchase the

goodwill and property of the transferor company in consideration
of 25,000 shares in the transferee company to be allotted among
the shareholders of the transferor company. The assets of the
transferor company were to be applied in payment of its liabilities,
and then in payment of £6 a share on each of the 25,000 shares,
and, if the assets were insufficient, a call was to be made on the
shareholders of the transferor company. It was held that such an
agreement was ultra vires and could not be supported under the
section, and it was set aside on the suit of a dissentient share-
holder of the transferor company (v).

An unregistered company which has no power under its deed
of settlement to transfer its business, may effect a transfer under
sec. 192 by registering itself under Part VII. of the Companies
Act and winding up voluntarily (w).
Question An extremely important question arises with regard to the

whether
transfer of exercise of the powers of arrangement and transfer under sec. 120
business
under pro-
or sec. 192 of the Companies Act. The Assurance Companies
visions of Act, 1909, provides, following the precise words of the Act of
Companies
Act can be 1870, that no assurance company shall amalgamate with another,
carried
through with- or transfer its business to another, unless the amalgamation or
out reference
transfer is sanctioned by the Court in accordance with sec. 13 of
to Assurance
Companies the Act, that is to say, there must be a petition to the Court by
Act, see. 13.
the directors, and notices must be sent out in accordance with the
section, and in the case of life insurance companies no transfer
will be sanctioned if it appears that life-policy holders repre-
senting one-tenth or more of the total amount assured in the
Company dissent from the transfer. The question is whether the
provisions of sec. 13 of the Assurance Companies Act apply to a
transfer carried out under the Companies Act, 1908, or whether
in such a case
it is sufficient to comply with the provisions of the
Companies Act without reference to the provisions of the Assur-

ance Companies Act.
It is well known that transfers of life insurance business have,
(v) Clinch V. Financial Corporation (m) Southall v. British Mutual Life

(1868), L. R. 4 Oh, 117. (1871), L. B. 6 Oh. 614.
in fact, been carried through, either by means of a scheme of
arrangement or a sale by the liquidator, without complying with

the provisions of the Life Assurance Companies Act, 1870. In
1889 the Sovereign Life Company failed to get the sanction of the
Court under the Life Assurance Companies Act, 1870, to a transfer

of its business to the Sun Life Company on the grounds (1) that
the transfer was ultra vires of the transferor company, (2) that
more than one-tenth of the policy holders dissented {x). Afterwards
a scheme under the Joint Stock Companies Arrangement Act,
1870, was sanctioned by the Court, whereby the business was trans-
ferred, the amounts of the policies were reduced, and the liability
of the transfereecompany was substituted for that of the trans-

ferorcompany {y). In the case of the transfer of the business of
the Western Counties Assurance Company to the British Empire
Mutual Life Assurance Company in 1889, the transfer was
carried out by a voluntary liquidation and sale by the liquidator,
under sec. 161 of the Companies Act, 1862, and no application
was made to the Court for its sanction to the transfer {z).
From the practical business point of view, there is an

enormous advantage in being able to dispense with the necessity
for applying to the Court, or, at least, in being able to get rid of
the right of veto of the one-tenth of the policy holders in life
companies, and this practical advantage has very probably in-

duced companies to strain the law in order to meet the business
point of view (a). In support of this view it may be said that
the provisions for transfer in the Assurance Companies Act
and the Companies Act respectively, are alternative and not
cumulative. It may be argued that, as the Assurance Companies
Act, sec. 13, provides that " the directors " of the company or
companies may apply to the Court and makes no provision for

anybody else applying, that section cannot be applicable to a case
where the control of the company's affairs has passed from the
directors into the hands of the liquidator ; and that the express
provision that " no company shall amalgamate with another, or
transfer its business to another unless such amalgamation or
(x) Sovereign Life, In re (1889), 42 (a) See Mr. Olauson's Lectures on

Oh. D. 540. the Companies Acts before the Insti-
(y) Sovereign Life v. Dodd (1892), 1 tute of Actuaries (1899), p. 121 and ;
Q. B. 405 (1892) 2 Q. B. 573.

;
Article by Mr, G. King in J. I. A., Vol.
(2) Pari. P. (1891), 830 p. 313. 29, p. 521.

transfer is confirmed by the Court in accordance with this
section," must be read with the implied qualification that it only

applies to transactions which could be carried out under the
section ; and that as the section is not applicable to the case of a
saleby the liquidator, no restriction is placed by the Assurance

Companies Act on the exercise of the liquidator's powers under
sec. 192 of the Companies Act. It may be further argued that it
ought not to be deemed to have been within the contemplation of

the legislature that the conditions, imposed by the Assurance
Companies Act, in order to protect the policy holders of the
companies concerned against the acts of directors whose powers
under the deed of settlement might otherwise be absolutely un-
restricted, should also apply in order to place further restrictions
upon the statutory powers of the company or its liquidator under
the Companies Act, which powers are already carefully restricted
by the terms of the Statute which confers them. On the other
side it is submitted that it is fallacious to speak of the procedure
under the Assurance Companies Acts and the Companies Acts

respectively, as alternative methods of transferring the com-
pany's business. The different methods of transfer are (1) by the
directors in the exercise of the company's powers under the instru-
ment of incorporation ; (2) by a scheme of arrangement under
sec. 120 of the Companies Act ; (3) by a by the liquidator
sale
under sec. 192 of the Companies Act. These three methods of

transfer are applicable to all companies without regard to the
nature of the business carried on. As regards one class of
company, that is to say insurance companies, the Assurance
Companies Act imposes special conditions for the protection of a
special class of creditor. These conditions are upon the plain

interpretation of the words applicable to any transfer of business
by an insurance company. In either of the three methods of
transfer just indicated, the transfer is a transfer by the company.
The fact that when the company is in liquidation, the power of
transfer is exercised by the liquidator, does not make it any the
less a transfer by the company. There is nothing to prevent an
application being made to the Court under sec. 13 of the Assur-
ance Companies Act, even if the company is in liquidation,
because although the directors are indicated as the proper persons
to make the application, the powers of the directors are vested in
the liquidator, who thereby becomes entitled to make such

application either in the name of the directors or in his own name.
In the absence of anything in the Assurance Companies Act
expressly restricting the application of sec. 13 to the transfer of
the company's business by the directors acting in pursuance of
the company's ordinary powers it is submitted that that section
applies to every transfer of the company's business, and that the
fact that all transfers under the Companies Act are safeguarded by
certain conditions does not render inoperative the special con-
ditions imposed by the Assurance Companies Act upon all
transfers of a special class of business. There is an entire absence

of direct authority upon the point, but in support of the opinion
here expressed reference may be made to the dictum of Eve, J., in
the case of the Life and Health Assurance Company (h), where he
said, " I think it is hopeless to contend that sec. 14 of the Act of
1870 does not apply to a transfer made by a company in liquida-
tion exactly as it applies to a transfer made by a company as a
going concern."
The following are the principal provisions which will be Summary of
contained in an agreement for transferring the business of a life provisions in

a transfer
assurance company, say the
, 1
A*
company,
J
to
j_i
another company, agreement,
say the B company, in a normal case.
SUMMABY OF AGREEMENT FOB TRANSFER OF A LiFE AsSTJRANCE BUSINESS
(i) As affecting the Policy-holders of the A Company
(a) The A company to transfer to the B company its whole undertaking,

and the goodwill of its business, and the benefit of all contracts (including
contracts with agents and reassurance contracts, and contracts in the nature of
reassurance or guarantee), and all real and personal property and other assets
constituting the assurances and annuity fund of the A company.
(6) The transfer to take effect as on a specified date, from which date all
contracts and transactions, receipts and payments, losses and obligations, shall
pass to the B company.
(c) Payments to the B company of premiums on any policy in the A
company to be deemed to keep such policy on foot as a contract between the
policy-holder and the B company, in substitution for the contract with the A
company.
(d) The assurance and annuity fund to be closed to new entrants, and not to
(b) Life and Health Assurance, In re, [1910] 1 Oh. 458, 462.
go mSUEANCE COMPANIES
be liable for any liabilities of the B company otber than those ranking
against
the said fund, until such last-mentioned liabilities including such —

future
been
bonuses as may be provided by the agreement {vide (e) in/j-a)—have
discharged, after which any remaining funds shall be the absolute property of
the B company.
The transferred funds, if thus kept distinct, to be managed at a fixed
(e)
rate of expense, less than the actual rate in the A

company : and the transferred
policies to receive such future bonuses as may be earned by the working of the
separate fund.
(/) Alternatively to (d) and (e). The transferred fund of the
company A
to in the funds of the B company
merge and the participating policy-holders of
:
the A company to receive either fixed guaranteed bonuses, or bonuses fixed in

relation to the bonuses which may be declared by the B company on its own
policies.
(g) The B company to pay,

satisfy, discharge, and fulfil, and keep the A
company indemnified against all the debts, liabilities, and obligations of the A
company of every description in respect of contracts existing at the date when
the agreement becomes absolute, including all insurance, annuity, and other
—
contracts and engagements of the society' save that the primary security there-
for shall be the transferred funds if these are kept separate as specific security,
vide (d) supra) — and against all costs and expenses of and incidental to the
agreement, including the expenses of winding up and dissolution of the A
company.
(ii) As affecting the Shareholders {if any) of the A Company
(h) The B company to pay or allot to the A company, or its nominees, or

to its liquidators or their nominees, a specified amount in cash and/or shares
and/or debenture stock of the B company, such cash, shares or debentures to be
distributed pro rata among the shareholders of the company shareholders A :
who do not assent within a speoiSed period after notice to be deemed to desire
their proportion of shares and/or debentures to be sold, and to be paid the

proceeds in cash.
(i) The B company to pay the cost of discharging the claim (under sub-
section (3) of section 192 of The Companies Act, 1908) of any shareholder of the
A company who dissents from the special resolution of that company sanctioning
the transfer, if effected under the said section 192.
(j") The A company or its liquidator to be at liberty to pay out of its assets
prior to the transfer, or alternatively the B company to pay after the transfer,
dividends in cash of a specified amount among the shareholders of the A
company.
The above provisions under heading (ii) contemplate the

voluntary winding-up of the A company, and this course is now
almost invariably adopted in order to facilitate the transfer, and
secure the members of the A company against liability for
future claims.
Covenant o£ Prima facie the obligation by the transferee company to
oompa^nyô
indemnify the transferor company against all claims, debts, and
;
liabilities does not include an obligation to pay the costs of wind- indemnify
ing np, and, consequently, if it is intended to include such costs company'^^
in the indemnity, the obligation must be expressed (c). Where ^p.™st
the transferee company is one in which the liability of members

is unlimited, the obligation to indemnify may by its terms be
limited to the subscribed capital of the company (c), but, if not so
expressed, it will not be deemed to be limited (d). The obligation
to indemnify the transferor company against all liabilities is an
obligation to pay the full amount of all claims, and therefore, on
the winding-up of both companies, the transferor company could
prove, in the winding-up of the transferee company, for the full
amount of such claims, notwithstanding the inability of the trans-
feror company to satisfy the claims (e). In one of the European
arbitration cases, where the transferor and transferee company
were both being wound up, Lord Westbury held that the agree-
ment of the transferee company to indemnify the other could not
be taken into consideration until all the creditors of the trans-
feree company had been paid(/). In another case a transferee
company, after the business and assets had been transferred to it,
sought to repudiate its liability on the agreement to indemnify the

transferor company on the ground that the whole agreement was
ultra vires of the transferee company, and had been obtained by
fraud. The charge of fraud was not proved, and on the question
of idtra vires it was held that the transferee company, having had
the benefit of the transfer of business and assets, could not
repudiate liability on the agreement to indemnify on the ground
that there was any irregularity or informality in the transaction (g).
But in an earlier case in the House of Lords it was held that

where the transfer agreement had not been submitted to a general
(c) Indemnity Case (1871), Alb. Arb. L. T. 71. But where certain policy
17 16 Sol. J. 141
; Indemnity Case
; holders had concurrent claiias against
(1872), Eur. Arb. Beilly 3 L. T. 4
; both companies he would not permit
Boyal Naval Society's Indemnity Case them to prove individually against the
(1874), Eur. Arb. L. T. 165 Vrere's
; transferee company, but directed the
Case (1872), Alb. Arb. Beilly 211; 16 liquidator of the transferor company
Sol. J. 501. to bring in one proof in respect of all
(d) Anglo-Australian Co. Indemnity claims under the indemnity covenant.
Case (1874), Eur. Arb. L. T. 161; 18 Line's and Leah's Cases (1874), Eur.
Sol. J. 242. Arb. L. T. 167 18 Sol. J. 879.
;
(e)British Provident Life and Fire, (g) Anglo-Australian Life, In re

Webster's Case (1864), 10 L. T. 326. (1862), 3 Giff. 521.
(/) West's Case (1873), Eur. Arb.

meeting of the shareholders, as required by sec. 29 of the Joint

Stock Companies Act, 1844, the transferor company could not
prove in the winding-up of the transferee company in respect of
the contract to indemnify Qi). In another case it was held that
where an agreement for transfer of business was ultra vires by
reason of the purchasing company having no power to purchase,
such company could not aftervrards claim against the selling

company payments made in discharge of the latter's debts (i).
Section IV. —Novation

pifierences of During the Albert and European arbitrations the arbitrators
opinion. had frequently great difficulty in deciding in the case of an

amalgamation or transfer whether there had or had not been
a novation of the policy holders' contracts, that is to say
whether the policy holders of the transferor company had or
had not accepted the liability of the transferee company in sub-
stitution for the liability of the transferor company. This question
was frequently of the utmost importance to policy holders, because
in many cases a proof in the winding-up of a subsidiary company
was, owing to the unlimited liability of its members, of greater
value than a proof in the winding-up of the principal company

which had taken over its business. In the European arbitration
Lord Westbury took the view that a novation of a policy holder's
contract ought not to be lightly presumed, and he announced that
in all cases of alleged novation he would require proof of the
following facts : company had legal power
(1) that the transferee
to take over the policies of the transferor company (2) that the ;
power of the transferee company was made known to the policy

holder, and that an offer was made to him to accept either a new
policy or an indorsement of the transferee company (3) that such ;
offer was accepted by acts which unequivocally denoted his under-
standing and acceptance of the proposal (w). On the other hand

in the Albert arbitration Lord Cairns held that
any evidence was
which showed that the policy
sufficient to establish a novation
holder acquiesced in the transfer and the substitution of the
iji) Ernest v. Nicholls (1857), (ii) BlundeU's Case (1872), Eur.

6 H. L. 0. 401. Arb. Eeilly 84 ; L, T. 39 17 Sol'
;
(i) Era Company's Case (1862), 1 J. 87.

De G. 3. & S. 29.
NOVATION 63
liability of the transferee company for the original liability of the

transferor company. Lord Eomilly, who succeeded Lord "Westbury
as arbitrator in the European arbitration, adopted the view of
Lord Cairns in preference to that of Lord Westbury (j). Probably Assurance
as the result of those differences of opinion, and in order to Ao™i87r^
^^^
prevent a recurrence in future cases of the great complication '^q^^"'®'^
which arose from the difficulty of deciding whether or not any holder's
individual policy holder had accepted the liability of the trans- order to
*
feree company, it was provided by the Life Assurance Companies complete
novation.
Act, 1872, sec. 7, that where a company either before or after
the passing of the Act had transferred its business to or been

amalgamated with another company, no policy holder in the
first-mentioned company who should pay to the other company
the premiums accruing due in respect of his policy, should by
reason of any such payment made after the passing of the Act,
or by reason of any other act done after the passing of the Act,
be deemed to have abandoned any claim which he would have

had against the first-mentioned company on due payment of
premiums to such company, or to have accepted in lieu thereof
the liabnity of the other company, unless such abandonment and
acceptance were signified by some writing signed by him or his
agent lawfully authorised. This provision doubtless made it
much easier to ascertain in any given case whether or not a policy
holder remained a creditor of the transferor company, but at the

same time it added very considerably to the number of cases
in which novation was negatived and so increased the difficulty of

satisfactorily carrying through an amalgamation or transfer. The
provision was largely ignored in practice and has been dropped
from the Assurance Companies Act, 1909, thus leaving the matter
iu the same apparently unsatisfactory condition that it was in
before 1872. If, however, the notices which must now be sent to
policy holders before any amalgamation or transfer can be carried

through are carefully drafted so as to fix such policy holders with
notice of the transfer the payment of future premiums to the
transferee company will usually be conclusive evidence of novation.

Further as it is now the almost invariable practice to wind up the
transferor company at the time the transfer is effected, the question
of novation will not in the future be of much practical importance
(j) Barman's Case (1873), Eur. Arb. L. T. 129 ; 18 Sol. J. 25.

;
because the policy holders who do not accept the transfer may-
prove in the winding up of the transferor company and upon the
completion of the winding-up and final dissolution of the company
the contributories will be discharged from further liability.
What is now The law applicable to the novation of the policy holders'
necessary to
establish contracts presents little difficulty, although it is not always easy
complete Where the trans-
to apply it to the facts of any particular case.
novation.
feror company has no power to transfer the policy holder's contract
without his consent, then the contract will remain a valid and
subsisting contract until cancelled by an agreement, tacit or
express, whereby the policy holder agrees to accept the liability
of the transferee company in substitution for the liability of the

transferor company, or until by reason of non-payment of the
premium to some person authorised to receive it on behalf of
the transferorcompany the policy lapses (k). The transferee com-
pany becomes liable when it undertakes to pay the claims of the
policy holders either by way of a substituted liability or by way

of guaranteeing the original liability. The payment of premiums
to the transferee company is in itself an equivocal act, the mean-
ing of which must be construed mainly by reference to the

terms of the notice received by the assured with reference to
the amalgamation.
When the assured has clear notice that the transferee company
has undertaken to pay the claims of the policy holders in the
transferor company upon payment of the premiums to the trans-
feree company, then payment of the premiums accordingly with-
out anything else is a sufficient acceptance of the transferee
company's offer (Z). No indorsement of the original policy or
issue of a substituted policy is necessary in order to render the
company liable (to). Prima, facie the liability of the
transferee
company on the policies of the transferor company
transferee
must be deemed to have been offered and accepted as a substitute
(k) If the transferor company ceases (1870), L. B. 5 Oh. 381 ; Anchor Assur-
to carry on business, and no provision ance, In re (1870), L. R. 5 Oh. 682
is made for receiving payment of the Kennedy's Case (1871), Alb. Arb. Eeilly
premiums, the policy does not lapse by 5 Fagan's Case (1871), Alb. Arb. Reilly
;
reason of the non-payment of premiums 179 Dormng's Case (1872), Alb. Arb.
;
because there is no hand to receive Reilly 144; Whitehaven Bank Case

them. Conquest's Case (1873), Eur. (1871), Alb. Arb. ReiUy 62.
Arb. L. T. 121. (m) British Provident Life and Fire,
(J)
Times Life Assurance, In re In re (1864), 10 L. T. 826.
NOVATION 65
for the liability of the transferor company, and not as an additional

security («). On the other hand, there have been cases where the
transferee company has been held liable as providing an additional
and not a substituted security (o). If a policy holder has not
clear notice that the undertaking of the transferor company's
obligations by the transferee company is one of the terms of the
agreement between the companies, then payment of the premium to
the transferee company is by itself no evidence of a novation {p).
Payment of premium to the transferee company might be made
in order to keep alive the original policy with the transferor
company, the former merely acting as agents of the latter to
receive the premiums {q). It is not, therefore, sufficient evidence
of a novation merely to show that the assured upon payment of

his premium received receipts headed with the name of the
amalgamated or transferee company (r). But if an order has
been made to wind up the transferor company, any implied
authority to the transferee company to receive premiums on their
behalf is determined by the order, and any payment of premium
thereafter to the transferee company by a policy holder who had
actual or constructive notice of the winding-up order is sufficient
evidence of a novation (s). The notice of transfer or amalgama-

tion may be framed so as to give the assured the alternative of
keeping alive his original claim upon the transferor company, or
of taking the substituted liability of the transferee company, and
when such an alternative is presented the mere payment of
premium will primarily be attributed to the first alternative, and
does not prove a novation (i). Thus a circular sent to policy
holders in the transferor company stated that the terms and
(w) International Life,Ex p. Blood Manchester and London Life,

(r)
(1870), L. B. 9 Eq. 316 Talbot's Case

; Bartlett's Case (1870), L. R. 5 Oh.
(1874), Eur. Arb. L. T. 169; 18 Sol. J. 640; BlundelVs Case (1872), Eur. Arb.
758; Dale's Case (1871), Alb. Arb. ReiUy 84 L. T. 39 17 Sol. J. 87 OoMiii
; ; ;
ViAMy 11; European Assurance, Miller's D'Alte's Case (1873), Alb, Arb, Reilly
Case (1876), 3 Ob. D, 391. 253 17 Sol, J, 865.
;
(o) Gardiner's Case (1873), Eur. Arb, (s) Carpmael's Case (1873), Eur.
L, T. 63 17 Sol. J. 464
; Barman's ; Arb. L. T. 95 ; 17 Sol. J, 838 Line's ;
Case (1873), Eur, Arb. L. T. 129; 18 Case (1874), Eur, Arb, L, T, 151; 18
Sol, J. 25 reversed (1874), 19 Sol. J.
; Sol. J. 418.
68 (1875), 1 Oh. D. 326.

;
(t) Sort's Case (1873), Eur, Arb,
(p) Family Endowment Soc., Pitt's L, T, 109 ; 17 Sol. J. 765 ; reversed
Case B. 5 Oh. 118.
(1870), L. (1875), 1 Oh, D. 307 Swift's Case
;
(g) Manchester and London Life, (1873), Eur. Arb. L. T. 89.

Bartlett's Case (1870), L. R. 5 Oh. 640,
I.L, 5
conditions of their policies would remain unaltered, and that

in all future bonuses they would participate on an equality with
the other policy holders in the conjoint companies. The circular
further invited the policy holders to send their policies for
indorsement, or to surrender them in exchange for a new policy
in the transferee company. A policy holder having received the

above circular, took no notice of it except that she paid the
premiums to the transferee company, and received their receipt.
Afterwards the transferee company declared a bonus and notified

the assured that a certain sum had been allotted and added to
her policy. Of this she took no notice. It was held that

there was no novation, and that the assured was entitled to
prove against the company (m). No novation can

transferor
be inferred from the payment of premium to the transferee
company when the assured expressly declines to accept the
substituted liability of the transferee company (ai), or states that
the premium is paid to keep alive the original policy with the
transferor company {y), or that it is made provisionally pending
the receipt of further information (s), or that he declines to
recognise the amalgamation (a). In one case a policy holder

who had protested against the amalgamation, asked the transferor
company where he might pay the premiums in order to keep his
original policy alive. He was told that he could not do so,
and thereupon he paid the premium, and asked for a receipt

indicating that it was paid to keep alive his claim against the
transferor company. He was told that he must take the ordinary
receipt of the transferee company or nothing. It was held that
the assured had not consented to the transfer of his poLicy(J).
In another case, however, where the company took up a similar
attitude, and told the assured that he had no alternative but to
accept the liability of the transferee company, or let the policy
lapse, it was held that although the information given was
(m) ConsMesi's Case (1873), Eur. Arb. (y) Btich/ner's Case (3873), Aib. Arb.
L. T. 67 17 Sol. J. 328 (1875), 1 Ch.
; ; EeiUy 258.
D. 334. (2) Wood's Case (1871), Alb. Arb.
(x) Medical Invalid and General Eeilly 54.
Life, Griffith's Case (1871), L. E. 6 Ch. (a) Bow's Exors'. Case
(1872), Alb.
374 Clarke's Case (1872), Alb. Arb.
; Arb. Eeilly 245.
Eeilly 217 16 Sol. J. 752 Darning's
; ; (6) Coghlan's Case (1872), Eur. Arb
Case (1872), Alb. Arb. Eeilly 144 16 ; Eeilly 46 L. T. 31
; 17 Sol. J 127
;
Sol. J. 673.
;
NOVATION 67
erroneous, the assured did ultimately pay on the footing of trans-

ferring his liability, and that there was a complete novation (b).
A mere protest or objection made by the policy holder in the
first instance may be consistent with his subsequent acquiescence
in or acceptance of the amalgamation {d). The acceptance of the
liability of the company may be indicated not only
transferee
by payment of premium, but by other acts from which such
acceptance may be properly inferred. Thus the acceptance of a
bonus declared by the transferee company is strong evidence of
novation when the bonus is declared out of the profits of the
transferee company («). If the assured sends his policy to the
transferee company and obtains an alteration of its terms, that

is also strong evidence that he has accepted the liability of the
transfereecompany (/), although in one case the mere indorse-
ment on the policy by the transferee company of leave to reside
abroad upon payment of an extra premium was held not to be
sufficient to establish a novation (5'). When the policy holder
is a party to the amalgamation agreement, and executes the
documents either as a shareholder or otherwise, and the transfer
of all the policies of the transferor company forms part of the
amalgamation scheme, such policy holder must be deemed to
have consented to a transfer of his own policy, and the Court
without further evidence will hold that there has been a complete
novation (/i). Wlien the policy has been indorsed with the under-
taking of the transferee company to pay the sum assured, it must
in the absence of evidence to the contrary be presumed that the
assured consented to the indorsement, and that there was a
novation (i).
(c) Howell's Case (1872), Alb. Arb. Alb. Arb. Eeilly 132 ; 16 Sol. J.
Reilly 116 ; 16 Sol. J. 632. 673.
(d) Holme's Case (1872), Alb. Arb. (/) Carpmael's Case (1873), Eur.
Reilly 110; Bivaz's Case (1872), Alb. Arb. L. T. 95 ; 17 Sol. J. 838; German
Arb. ReiUy 104 16 Sol. J. 590 German
; ; Life Company's Case (1871), Alb. Arb.
Life Company's Case (1871), Alb. Arb. Reilly 189; Butler's Case (1871), Alb.
Remyl89; Warne's Case {1812), Alb. Arb. Reilly 203.
Arb. 113; 16 Sol. J. 631, {g) Grain's Case (1874), Eur. Arb.
Medical Invalid and General Life,
(e) L. T. 157 18 Sol. J. 758.
;
Spencer's Case (1871), L. R. 6 Ch. 362 ;

(h) National Provincial Life, Flem-
Werninck's Case {1871), Alh.Arh.'Remy ing's Case (1871), L. R. 6 Ob. 393;

101 Benjamin Smith's Case (1874),
; Harman's Case (1875), 1 Oh. D. 326
Eur. Arb. L. T. 173 Alkn's Case ; Frere's Case (1872), Alb. Arb. Reilly
(1872), Alb. Arb. ReUly 127 16 Sol, J. ; 211 ; 16 Sol. J. 501.
657 Glazehrook's Case (1872), Alb.
; (i) European
Assurance, Miller's
Arb. ReiUy 135 Knox's Case (1872),
; Case (1876), 3 Oh. D. 391.
Novation Where premiums are paid to aa agent and after an amalgama-

where pre-
miums oon- tion the same agent continues to collect the premiums on behalf
tinue to be
paid to same of the transferee company, the issue of receipts in the name of the
agent.
transferee company prima facie sufficient to show that the
is
assured is paying the premiums to the transferee company (/c) :
but where, the assured was illiterate, and continued to pay his
premiums without any knowledge of the transfer, the issue of

receipts to him in the name of the transferee company was held to
be no evidence of a novation (I).
Where pre- Where premiums are paid by an agent of the assured the agent
miums are
paid by agent has prima facie no power to bind the assured to a novation, and
on behalf of
the assured. therefore payment by such agent to the transferee company has
not necessarily the same significance as payment by the assured (m).
Even where the agent has expressly accepted the liability of the
transferee company in substitution for the liability of the trans-
feror company, if he has done so without the authority of the
assured, the latter is not bound, and the payment of the premium
may be taken as a payment made to keep alive the original
liability (n).
Where pre- Where premiums are paid by trustees or by other persons who
miums are
paid by have not the whole beneficial interest in the policy moneys, such
trustees or
other third as settlors or mortgagors, the persons who are beneficially entitled
persons on bound by a novation according
will or will not be as the person
behalf of the
person bene- paying the premiums has or has not power as against such
ficially
interested. beneficiaries to substitute one policy for another (o). Where,
however, the legal holder of the policy purports to effect a
novation, the future payment of the premium by him to the
transferee company cannot be referred to the original liability,
and therefore the beneficiaries cannot recover against the trans-
feror company unless the liability of that company has been
preserved by some independent payment or tender of the premium
on behalf of such beneficiaries (jp).
(k) Lancaster's Case (No. 2) (1871), (o) Balfour's Case (1871), Alb.
Arb.
Alb. Arb. Eeilly 95. Eeilly 207; 16 Sol. J. 534.
(l) Clegg's Case (1873), Alb. Arb. (p) Andrew's Case (1872), Alb. Arb.
Eeilly 266. EeiUy 107 ; 16 Sol. J. 609; Werninck's
(m) Count D'AUe's Case (1873), Alb. Case (1871), Alb, Arb. Eeilly 101;
Arb. Beilly 253 17 Sol. J. 365.
; Talbot's Case (1874), Eur. Arb, L, T.
(rt) Duprf's Exors'. Case (1872), Alb. 169 18 Sol. J. 758.
;
Arb. Reilly 236.

'
NOVATION 69
Where a life policy issued by the transferor company was, wtere policy
together with an annuity, mortgaged to the company, with power gaged to com-
to the company to pay the premiums out of the annuity, and after ûmsâre"^^'
the transfer of its business, the transferee company, with the V^^^ by 'he
oompany
knowledge and consent of the assured, received the annuity and itself out of
paid to itself the premiums on the policy, it was held that there pgrty held as
was a complete novation (q). In another case a lady being entitled geourHy^^
to a rent-charge, payable by a receiver out of the Court of
Chancery, insured in the transferor company, and mortgaged
the policy and the rent-charge to company in security
the
for a loan. By a consent order of the Court the premiums and
interest on the loan were paid by the receiver to an agent for the
company. Upon amalgamation the debt and securities, together

with the other assets of the transferor company, were transferred
to the transferee company as a trust fund to meet the claims of
the policy holders, and the agent thereafter paid the premiums
and interest to the trustees of this fund. The assured never
heard of the amalgamation, or of the new arrangement for pay-
ment of premiums and interest. It was held that there had been
no novation, and that the original liability of the transferor
company had survived (?•).
Where a policy has matured, and the claim become payable. How far a
,1 , . „ . . •
i ii claim made
i J! 1
the mere making ol a claim against the transferee company, and against the
their admission of liability,
J
does not in itself constitute a com- *'^^'i2f''i'ee
company
plete novation so as to release the transferor company from establishes
. , novation.
liability (s). A claim, however, made against the transferee com-
pany may be evidence show the intention of the assured in
to
making a previous payment of premium (t). And where after the

amalgamation agreement a policy holder whose claim had matured
obtained from the transferee company an indorsenlent on the
policy to company alone were
the effect that the transferee
liable, and that the claim was admitted and would be paid
in certain specified instalments, and some of the instalments
were paid, it was held that there was a good consideration

for the undertaking of the company to pay, and that there
[q) Mooney's Case (1872), Alb. Arb. (s) Wilson's Case (1874), Eur. Arb.
EeiUy 241. L. T. 158.
(r) Power's Case (1872), Alb. Arb. {t) Btcdden's Case (1872), Alb. Arb.
Keilly 232 ; 16 Sol. J. 732. Reilly 120 ; 16 Sol. J. 462.
was a complete novation which released the transferor com-

pany (m). •
Novation in Annuities stand as regards novation on a somewhat different

annuity con-
tract. footing from life policies. The general principles of law are the
same, that is to say, there must be evidence to show that the
annuitant has accepted the liability of the transferee company in
substitution for the liability of the transferor company. The
same importance, however, cannot be attributed to the receipt of
the periodical payment at the hands of the transferee company

as is attributed to the payment of premiums in the case of a life
policy. Knowledge that the transferee company are taking over
the liabilities of the transferor company and receipt of the
annuity from them is not in itself sufficient to show that
the annuitant has accepted the one liability for the other («).
And even when the annuity was accepted from the transferee
company after an order for the winding-up of the transferor
company had been made, it was held that the annuitant had not
released the obligation of the transferor company, and that he
was entitled to prove concurrently against both companies (y).
Prima facie, however, M'here the annuitant clearly accepts the
liability of the transferee company, as where the company
indorses upon the deed an undertaking pay the annuity, such
to
liability must be deemed to be in substitution for and not merely

by way company (z).
of guaranteeing the liability of the transferor
A policy holder on a policy upon which all premiums have been

paid at the date of the amalgamation is in the same position
as an annuitant, and as a rule there must be an indorsement of
the policy or some definite acceptance of the transferee company's
liability before novation can be presumed {a).
Section V. — Winding-Up
Summary Insurance companies which have been registered under the
of provisions
relating to
Companies Acts, may be wound up under the Companies Act,
winding-up.
ill) United-Ports and General, Ewen's {y) Bicrns's Case (1873), Eur. Arb.
Claim B. 16 Eq. 354.
(1873), L. L. T. 127 ; 17 Sol. J. 855.
{x) National Provincial Life, In re («) DaWs Case (1871), Alb. Arb.
(1870), L. B. 9 Eq. 306 Family En- ; BeiUy 11.
dowment Society, In re (1870), L. B. (o) Hawtrey's Case (1872), Alb. Arb.

5 Ch. 118. Beilly 188 16 Sol. J. 713,
;
:
WINDING-UP 71
1908, either (1) by the Court, (2) voluntarily, or (3) subject to the
supervision of the Court (&). A company not formed or registered
under the above Act, but which is capable of being registered
under the Companies Act, may register for the express purpose of
enabling it to be wound up voluntarily (c).
Unregistered companies, if not illegal, either because they Unregistered

ought to have been registered or for any other reason, may be
wound up by the Court under the provisions of the Companies
Act (d). They cannot be wound up voluntarily (e). An " un-
registered company " means, for the purpose of winding up, any
company not registered under the Companies Acts(/), and
includes a purely mutual association (g) and a friendly society,
whether registered or unregistered (h). An unregistered company
or friendly society may be dissolved under the provisions of its
deed of settlement (i) or under the provisions of the Friendly

Societies Act (k), but, notwithstanding such dissolution, it may
still be wound up by the Court (i). Apart from the Companies
Act an unregistered and unincorporated company may also be
wo^^nd up in an action brought under the general jurisdiction of

the Court (I).
A company or association which is illegal cannot be wound up Illegal
on own
its petition, or on the petition of any member or policy
holder who is aware of the illegality (m). But if a petition is
brought by a member or policy holder who is ignorant of the

illegality, the company cannot set up its own illegality as a
defence to the petition {n).
The Courts having jurisdiction to wind up companies registered Jurisdiction
of the Courts.
(6) Oomp. Act, 1908, sec. 122; Ass. {g) Oreat Britain Mutual Life (1880),
Comp. Act, 1909, sec. 15. 16 Oh. D. 246 ; London Marine In-
(c) Comp. Act, 1908, sec, 2i9. But surance (1869), L. E. 8 Eq. 176.
the registration must be before a (h) Independent Protestant Loan
petition to wind up has been presented. Fund, [1895] Ir. R. 1,
Registration after the commencement (i) Friendly Endowment Society, hi
of the winding-up is a mere nullity re (1870), L. R. 5 Ch. 118.

Bercules Insurance, In re (1871),L. R.ll (h) Friendly Soc, Act, 1896, sees. 78-
Eq.321. 83; Collecting Soc. Act, 1896, sec. 12.

(i)Comp. Act, 1908, sec. 267; Ass. [1) Lead Co.'s Workmen's Fund,
Comp. Act, 1909, sec. 15 Bowling and
; [1904] 2 Ch. 196.
Welby's Contract, [1895] 1 Ch. 663. (ot) Padstow Total Loss, In re (1882),
(e) Comp. Act, 1908, sec. 268 (1) (i). 20 Ch. D. 137.
Bank London and National (») South Wales Atlantic S.S. Co.,
In
(/) of
Provincial, In re (1871), L. E, 6 Ch. re (1876), 2 Ch. D. 763.
421.
;
in England are the High Court, the Chancery Courts of the

Counties Palatine of Lancaster and Durham, and such County
Courts as have jurisdiction in bankruptcy (o). The County
Court has jurisdiction when the share capital of the company
paid up or credited as up does not exceed £10,000 (p).
paid
Tlie jurisdiction of the Courts of the Counties Palatine and of the
County Courts is determined according to the place where the

registered office of the company is situated (q). In the case of
unregistered companies, the jurisdiction of all Courts for the
purposes of winding-up is determined according to the place where
the principal place of business is situated (r).
Foreign A company carrying on business within the

foreign juris-
companies.
diction may be wound up by the Court, and the Court may either
distribute the assets which are in this country (s), or may protect
such assets pending proceedings in a foreign Court, until satisfied
that the foreign liquidator will admit the English creditors pari
passu with the foreign creditors (0-
When may a Any insurance company may be wound up by the Court

company be
wound up by if it makes default in complying with any of the requirements of
the Court. the Assurance Companies Act, 1909, and if the default continues
for a period of three months after notice of default by the Board
of Trade («).
A
company registered under the Companies Act may be
wound up by the Court (u) (1) if the company has by special
resolution resolved that the company be wound up by the Court
or (2) if default is made in filing the statutory report, or in holding
the statutory meeting (v) ; or (3) if the company does not commence
its business within a year, or suspends its business for a whole
year ; or (4) if the number of members is reduced below seven ; or
(5) if the company is unable to pay its debts ; or (6) if the Court is
of opinion that it is just and equitable that it should be wound up.

An unregistered company may be wound up by the Court
(o) Oomp, Act, 1908, sec. 131 (1), (t) Matheson Bros., Ltd., In r« (1884),
(5). 27 Ch. D. 225.
(p) Sec. 131 (2), (3). (ti) Oomp. Act, 1909, sec. 23.
Ass.
(q) Sec. 131 (2), (3). Oomp. Act, 1908, sec. 129.
\u)
(r) Sec. 268 (1) (i). (v) Only a shareholder can present
Commercial Bank, In
(s) re (1886) a petition in respect of (2) Oomp, Act,
83 Oh. D. 174. 1908, sec. 137 (b).
WINDING-UP 73
(a) if the company is dissolved or has ceased to carry on business,

or is carrying on business only for the purpose of winding up its
affairs ;
or (b) if the company is unable to pay its debts ; or (c) if
the Court is of opinion that it is just and equitable that the

company should be wound up (x).
A company is deemed unable to pay its debts (1) if a creditor when is a
by assignment or otherwise, to whom the company is indebted in ^™bki"k) pay
a sum exceeding £50 then due, has served on the company by '*^ ^^''*^-
leaving at its registered office (or in the case of an unregistered

company by leaving at its principal place of business, or by
delivering to the secretary, or some director, manager, or principal
officer of the company, or by otherwise serving in such manner as
the Court may approve or direct) a demand under his hand
requiring the company to pay the sum so due, and the company
has for three weeks after the service of the demand neglected to
pay the sum or to secure or compound for it to the satisfaction of
the creditor {y) ; or (2) if in the case of an unregistered company

any action or other proceeding has been instituted against any
member for any debt or demand due, or claimed to be due, from
the company, or from him in his character of member, and notice
in writing of the institution of the action or proceeding having
been served on the company in the manner above specified, the
company has not within ten days after service of the notice paid,
secured, or compounded for the debt or demand, or procured the
action or proceeding to be stayed, or indemnified the defendant to
his reasonable satisfaction against the action or proceeding and
against all costs, damages, and expenses to be incurred by him by
reason of the same {z) ; or (3) if execution or other process issued
on a judgment, decree, or order obtained in any court in favour of
a creditor against the company (or in the case of an unregistered
company, against any member thereof as such, or any person
authorised to be sued as nominal defendant on behalf of the
company) is returned unsatisfied in whole or in part (a) ; or (4) if
it is otherwise proved to the satisfaction of the Court that the

company is unable to pay its debts ; and in determining whether a
(a;) Comp. Act, sec. 268. charge for payment on an extract

{y) Sees. 130 (i), 268 (iv) (a). decree or an extract registered bond
(z) Sec. 268 (1) (iv) (b). or an extract registered protest have
(a) Sees. 130 (ii) (iii), 268 (1) (iv) (c) expired without payment being made,
(d), or in Scotland if the induoiae of a
74: INSURANCE COMPANIES
company is unable to pay its debts the Court shall take into
account the contingent and prospective liabilities under the policies
and annuities, and other existing contracts of the company (6).
Who may An application to the Court for a winding-up order ismade by

petition for
winding-up. petition presented either by (a) the company ;
(b) any ten or more
holders of policies, investment bonds, or annuities of an aggregate
value of £10,000; (c) any other creditor or creditors; (d) any
contributory or contributories (c).
Effect of Apart from sec. 15 of the Assurance Companies Act, 1909, the
Assurance
Companies holder of a policy, investment bond, or annuity would be entitled
Act, sec. 15.
under sec. 137 of the Companies Consolidation Act, 1908, to
present a petition as a contingent or prospective creditor of the
company (c?). Section 15, however, limits the right of such
creditors, company
and although a single general creditor of the
could present a petition without reference to the amount of his
debt, a policy holder can only present a petition when nine others
are associated with him and the total value of their policies
amounts to £10,000 (d).
Petition by A contributory may not present a petition unless (1) the

contributory.
number of members in the company is reduced below seven, or
(2) the shares in respect of which he is a contributory have been
held by him for at least six months during the previous eighteen
months or have devolved on him through the death of the former
holder (e). Prima facie, every member who is liable to be placed
on the list of contributories upon winding up has, subject to the
above-mentioned conditions, a locus standi to present a petition.
A past member of a company registered under the Joint Stock
Companies Act, 1844, was held to be entitled to present a petition
because, although as between him and the other shareholders the
deed of settlement relieved him from further liability after he had
transferred his shares, yet he was liable to be sued individually in
(b) Comp. 130 (iv),'

Act, 1908, sees. Court will have regard not merely to
268 See European Life, In re
(1) (iv) (e). the nominal amount of uncalled capital,
(1869), L. R. 9 Eq. 122 Agriculturist
; but to the amount which upon the evi-
Cattle Insurance, In re (1849), 1 Mac. & dence can in fact be realized National:
G. 170 but the definition of insolvency

; Funds Asstircmce (1876), 24 W. E. 1066.
was apparently enlarged in the case of (c) Comp. Act, 1908, sec. 137 (1);
life assurance companies by Life Ass. Ass. Comp. Act, 1909, sec. 15.
Comp. Act, 1870, sec. 21, and as re- (d) British Equitable Bond and Mort-
gards all companies by Comp. Act, gage Corp., In re, [1910] 1 Ch. 574.
1907, sec. 28, Where part of the (e) Comp. Act, 1908, sec. 137 (1) (a).
assets consists of uncalled capital the

WINDING-UP 75
respect of the company's debts iu the event of a judgment creditor

failing to obtain satisfaction after execution against the property
of the company (/). But whore there was an amalgamation agree-

ment whereby the shareholders in the transferor company were to
become shareholders in the transferee company and the transferee

company was to indemnify the transferor company against all
claims, a shareholder who executed the agreement, although liable

as a contributory in the transferor company, was held not to be
entitled as against shareholders who had dissented from the agree-
ment to petition to wind up the transferor company, because in
effect he was calling upon such shareholders to contribute to
claims against which he, as a party to the agreement, had con-
tracted to indemnify them (c/).
A petition by policy holders or annuitants, or by any other Policy
contingent or prospective creditor or creditors (h), can only be pre- other con-
sented by leave of the Court, which will not be granted unless g™ljf*
a prima facie case for winding up has been established, and must give
security and
such security for costs has been given as the Court thinks reason- make a prim&
'"'"'^^ °^^^'
able. The object of this provision is to avoid publicity being
given to a petition presented upon wholly inadequate evidence or

from malicious motives. When the petition is filed it will be
referred to a judge in chambers to inquire whether a prima facie
case has been made. The judge may summon the respondents to
attend the inquiry, but no advertisement of the petition is per-

missible until the judge is satisfied that a prima facie case has
been proved (i). Where there is a voluntary winding-up, and a
petition is presented for a winding-up by the Court, it is unneces-
sary to consider whether there is a prima facie case, and security
for costs will not be required {k).
The Assurance Companies Act, 1909, defines a policy holder as Who are
" the person who

for the time being is the legal holder of the holders.
policy for securing the contract with the assurance company " (t).
The definition is badly drafted leaving it in doubt upon a literal
interpretation whether any other person is a policy holder than the
{/) The Times Fire, In re (1861), 30 (i) European Assurance, In re (1871),

Beav. 596. 19 W. K. 881.
(g) Anglo-Australian Assurance, In (It) British Alliance Assurance, In re
re (1860), 1 Dr. & Sm. 113. (1878), 9 Oh. D, 685.
(h) Oomp. Act, 1908, sec. 137 (1) {V) Ass. Comp. Act, 1909, sec. 29.
(c).
person for the time being in lawful physical possession of the

document. It seems reasonably clear that the definition is not
intended to refer to a holding of the policy in the physical sense
and that for instance a solicitor exercising his lien for costs upon
his client's policy would not be a policy holder entitled to present
a petition. It is submitted that the legal holder of the policy
means the person who has the legal title to the policy moneys, and
therefore includes a trustee or legal mortgagee but not a mere
beneficiary, an equitable mortgagee, or the: owner of the equity of
redemption.
Can persons It was decided under the Companies Act, 1862, that a creditor
with only an in equity was entitled to petition for the winding-up of a company
equitable
title petition under that Act(m). This was decided partly upon the wording of
as policy
holders ? sec. 80, which referred to a creditor " at law or in equity." Those
words have now been omitted from the corresponding sec. 130 of
the Companies Act, 1908. No doubt the words were omitted as
being unnecessary, and it may be assumed that an equitable
assignee of a debt would still have a locus standi to petition under
the' Companies Acts. Apparently, however, where the creditors are
policy holders or annuitants holding contracts in a company to
which the Assurance Companies Act, 1909, applies, theymust be
legal holders of the policy or other contract, and merely equitable
assignees or beneficiaries cannot petition.
Can the It has been held under the Companies Acts that a creditor
holder of the
bare legal
who is a trustee or who has otherwise a bare legal title to the debt
title in a without any beneficial interest, is not entitled to present a petition
policy
petition as a creditor without joining those who are beneficially interested
without
joining the and sui juris (n). This principle is apparently equally applicable
beneficial
owner
to the case of policy holders, and therefore beneficiaries and equit-
?
able assignees of a policy must as a rule be joined with the legal
holder. In one case Jessel, M.E., doubted whether a creditor
holding a policy upon a young life merely as security for a debt
had a sufficient beneficial interest to petition for the winding-up of
the company without showing that his debtor was insolvent (o).
Security to Every petitioner resident out of the jurisdiction must give
(w) Montgomery Moore Synd. (1903), W. N. See Sovereign Life, In re

55.
W. N. 121. (1889), 42 Oh. D. 450.
(«) Dearie, Exparte (1884), 14 Q. B. D, (o) Oreat Britain Mutual Life, In re
184 ; Pentalta Exploration Co. (1898), (1880), 16 Oh. D. 246.

WINDING-UP 77
security even although not required to do so as a policy holder or ^<^ giyen by
other contingent creditor (jj). North, J., held that a petitioner resident
resident in Scotland must give security for costs, as the Judgment ,°uris'diction
Extension Act does not apply to winding-up proceedings, but the

Court of Appeal held that if he has substantial property in
England he need not give security (g), and as sec. 180 of the
Companies Act makes every order made by an English Court in the
course of a winding-up enforceable in Scotland and Ireland as if
the order had been made there, it may be doubted whether a

petitioner ought to be required to give security merely because
he is resident in Scotland or Ireland.
On hearing tlie petition the Court may dismiss it with or with- Power of
out costs or adjourn the hearing conditionally or unconditionally miss petition
or make any interim order or any other order that it deems just, ôêdlnos
but the Court shall not refuse to make a winding-up order on the
ground only that the assets of the company have been mortgaged
for an amount up to or in excess of those assets or that the com-
pany has no assets (r). Under the Life Assurance Companies Act,
1870, the Court was given express power to suspend proceedings
on the petition to enable uncalled capital to be called up (s), and
thus the better to determine whether the company was in fact
insolvent (t). This provision is omitted from the Assurance Com-

panies Act, 1909, no doubt because the general powers given
by the Companies Act, 1908, are sufficiently wide to enable the
Court in its discretion to suspend proceedings for this or any other

purpose.
A winding-up of a company by the Court shall be deemed to Commenoe-
commence at the time of the presentation of the petition for the winding-up.
winding-up (u), and, where the order is made on more than one
petition, at the time when the earliest was presented (x).
Where there has been a transfer of assurance business from Power of
one company to another, and the transferor or subsidiary company order wind-
er the creditors thereof have claims against the transferee or

™f"sidiary
company.
(p) Home Assurance, In re (No. 2), [t) Great -Britain Mutual Life, In re
(1871), L. E. 12 Eq. 112. (1880), 16 Ch. D. 246.
(«>) 0°^P- ^^°^' ^ ^^^^' ^'^°- 139-
Iq) Howe Machine Co., Fountain's ^
^''°'-'^ ^°-' ^'^ «'
Case (1889), 41 Oh. D. 118. ^""^'g*™?
^^'^^^[
(r) Comp. Act, 1908, sec. 141. (aj) Kent v. FreeJwld Land Co. (1808),
(s) Sec. 21. L. R. 3 Ch. 493.
principal company, then if the principal company is being wound

up by or under the supervision of the Court, and the subsidiary
company is wound up, the Court shall order the sub-
also being
sidiary to be wound up in conjunction with the principal com-

pany {y). And if the subsidiary company is not being wound up
the Court may order such company to be wound up in conjunction
with the principal company, if in the opinion of the Court such a
course is just and equitable {y). The same person may be

appointed to be liquidator for the two companies, and the Court
may make such other provision as may seem necessary with a
view to the companies being wound up as if they were one com-
pany. The commencement of the winding-up of the principal
company shall, save as otherwise ordered by the Court, be the
commencement of the winding-up of the subsidiary company.
When the winding-up of any subsidiary company is of a
simple nature, as in a case where there were only two creditors,
the Court may direct that the list of contributories of that com-
pany be at once settled and that all other necessary steps be
immediately taken for payment of the company's debts without
waiting for the corresponding steps being taken in the principal
or other subsidiary companies («).
Power of The Court, in the case of an assurance company which has been
Court to re- may,
proved to be unable to pay its debts, if it thinks fit, reduce the
duce amount
of company's amount of the contracts of the company upon such terms and
contracts
instead of subject to such conditions as the Court thinks just, in place of
winding-up.
making a winding-up order (a). A scheme under this provision is
a substitution for a winding-up order. Provision will be made

for immediate payment, either in full or in part, of policies which
have matured, and for the formation of a trust fund into which
future premiums will be paid and out of which future claims will
be paid on the reduced scale. The costs of a winding-up are thus
avoided and the policy holders will ultimately get more. The
provision is not intended to enable an insolvent company to
continue to carry on business by relieving it of part of its present
(y) See Lancashire Plate Olass, In ever much

the affairs of the companies
re (1911), 46 Law Journal, 683. Ass. might be involved the one with the
Oomp. Act, 1909, sec. 16 before
; other: Shields Marine Association
the Life Assurance Companies Act, (1867), 16 W. E. 69.
1870, the Court had no jurisdiction (a) Dyke's Case (1872), Eur. Arb.
to make one winding-up order in re- Keilly 12 L. T. 10.
;
spect of two distinct oompaniea, how- (a) Ass, Gomp, Act, 1909, sec. 18.
WINDING-UP 79
and future liabilities. Such a scheme would not be entertained

by the Court (&). Where a scheme provided that policy holders
whose claims had matured should be paid in full and that other
policies should be reduced, the Court held that the crucial time
should be the date of the presentation of the petition, and that no
policy maturing after, that date should be paid in full (c). The
power of approving a scheme \mder the above provision cannot be
exercised so long as there is a winding-up order in existence, and
if after the making of a winding-up order the policy holders
desire to present a scheme for the approval of the Court, the
winding-up order ought to be discharged and meetings of policy
holders and shareholders summoned in order to ascertain their
wishes (d).
If upon the hearing of a petition for a winding-up it is
suggested that a scheme for reduction of contracts might be

arranged, the petition may be ordered to stand over in order to
enable meetings to be summoned, and the matter will be referred
to Chambers (e).
The Court has also power under sec. 120 of the Companies Scheme of
^^^'^8^^^^ •
Consolidation Act, 1908, to sanction an arrangement or compromise

between a company and its creditors if approved by a majority
in number representing three-fourths in value of the creditors
interested (/ ). Such a scheme may either be a means of avoiding
a winding-up and enabling the company's business to be carried
on (17) or it may be a means of facilitating the winding-up and
enabling the liquidator to gather and distribute the assets to the
best advantage of all concerned. Under such a scheme the con-

tracts of the company may be reduced either to enable the
company to continue to carry on its own business or to enable it
to transfer the business to another company.

At any time after the presentation of a petition, and before stay o£
a winding-up order has been made, the company or any creditor or against com'-
contributory may apply to the High Court or Court of Appeal for P*°^y P^
a stay of any proceedings against the company (or, in the case of
(b) Reconstruction Case (1872), Alb. (e) Briton Medical and General, In
Arb. EeUly 150 Nelson S Co., In re,
; re (1886), 54 L. T. 14.
[1905] 1 Oh. 551. /y) Seeôsf, p. 99.

(c) Great Britain Mutual Life, In re ,.,,„.,
S"**^'' Widows Assurance, In re,
ria821 20 Oh D
351 (3)-
Britain Mutual Life, In re [1905] 2 Oh. 40.

{d) 'oreat
(1880), 16 Oh. D. 246.

;
an unregistered company, against any contributory), pending

therein, or may apply to the Court having jurisdiction in the
winding-up to restrain any proceedings pending in any other
Court (70.
When a winding-up order has been made, no proceeding shall
be proceeded with or commenced against the company (or, in the
case of an unregistered company, against any contributory), except
by leave of the Court, and subject to such terms as the Court may
impose (i).
Sbatement of When a winding-up order has been made, a statement as to

affairs to be
submitted to the affairs of the company, verified by one or more director or
the official
receiver.
directors and by the secretary or other chief ofi&cer, must be
submitted to the official receiver in bankruptcy within fourteen
days from the date of the order, or within such extended time as
the official receiver or the Court may, for special reasons, appoint,
and any person stating himself in writing to be a creditor or con-
tributory may inspect such statement (A). After receipt of the

statement, the makes a report to the Court (l).
official receiver
Official re- The winding-up proceedings are managed by a liquidator or,
ceiver as
provisional liquidators (m). The official receiver is provisional liquidator,
liquidator
summons and acts as liquidator, unless or until some other liquidator is
meetings to appointed (w). When the winding-up order has been made, the
select liqui-
dator and official receiver summons separate meetings of the creditors and
committee of
inspection. contributories of the company, for the purpose of determining
whether or not an application is to be made to the Court for
appointing a liquidator in the place of the of&cial receiver, and
whether or not an application is to be made to the Court for the
appointment of a committee of inspection to act with the liqui-
dator, and to determine who are to be the members of the com-
mittee, if appointed (o). If there is any difference between the
determinations of the meetings, the Court will decide the difference
and make such order as it thinks fit (p).
Liquidator The liquidator takes into his custody or under his control all
has custody
and control of the property and things in action to which the company is, or
allproperty
and things in
action. (h) Comp. Act, X908, sees. 140, 270. (o) Sec. (1). The committee of
152
(i) Sees. 142, 2Y1. inspection composed of creditors and
is
(k) Sec. U7. contributories and acts by a majority

(l) Sec. 148. sec. 160.
(to) Sec. 149. (p) See. 152 (2).
(n) Sees. 149, 152 (3).

WINDING-UP 81
appears to be, entitled (q). In the case ol" an unregistered company

which has no power to sue and be sued in a common name,
or if, for any other reason, it seems expedient, the Court may
make an order directing that all or any part of the property and
things in action belonging to the company or to trustees on its
behalf, shall vest in the liquidator by his official name (/•), and a
company which has been registered since the commencement of
the winding-up merely tor the purpose of enabling it to be
wound up voluntarily, is deemed to be an unregistered company
for the purpose of this provision, and a vesting order may be
made accordingly (s).
In. Scotland and Ireland there is no official receiver. The Liquidator in
Court may appoint a provisional liquidator to act until the wishes inland.
of the creditors and contributories have been ascertained {(). So
long as there is no liquidator, all the property of the company
is deemed to be in the custody of the Court («). No committee
of inspection is appointed in the case of a winding-up in Scotland
or Ireland.
The liquidator in a winding-up by the Court has power, with Powei-a of
the sanction either of the Court or of the committee of inspection :

^vith^sanotion
of court or
fa')
^ ''
to oj.
^ or defend legal proceedings; (b) to carry on the committee of
brins o'x/ ./
business of the company so far as may be necessary for the bene- inspection.
ficial winding-up thereof ;
(c) to employ a solicitor or other agent
to take any proceedings or to do any business which he is unable

to take or do himself (c).
The liquidator in a winding-up by the Court has power (a) Discretionary
(a) to sell the real and personal property and things in action ; liquidator
(b) to do all acts and to execute in the name and on behalf of the
company all deeds, receipts, and other documents ;
(c) to prove in
the bankruptcy of any contributory ;
(d) to draw, accept, make,
and indorse, on behalf of the company, any bill of exchange or
promissory note ;
(e) to raise on the security of the assets of the
company any money requisite (f) to take out letters of adminis-;
tration to any deceased, contributory (g) to do all such other ;
((j) Oomp. Act, 1908, sec. 150 (1). («) Sec. 150 (:2).
(»•) Sec. ^72. [r] Sec. 151 (1).
(s) Hercules Insiiraiwc, In re (1871), (x) But in the ease of a winding-up

L. B. 11 Eq. 331. in Scotland or Ireland only with the
{f) Oomp. Act, 190S, seo, 149 (3). sanction of the Court,
i.r.. 6
things as may be necessary for the winding-up the affairs of the

company and distributing its assets {y).
All powers The exercise of the above powers is subject to the control
subject to
control o£ of the Court, and any creditor or contributory may apply to the
Court.
Court with respect to any exercise or proposed exercise of any of
these powers (2).
Liquidator's The liquidator must keep proper books, and at such times
books and
accounts. as may be prescribed, but not less than twice in each year during
his term of office, must send to the Board of Trade an account of
his receipts and payments. The Board of Trade causes the
account to be audited, and one copy is filed and kept by the Board
and another is filed with the Court, and each copy is open to the
inspection of any creditor or other person interested {a).

Wishes of The liquidator must, in the administration of the assets of the
creditors and
contribu- company, and in the distribution thereof among its creditors, have
tories to be
ascertained by
regard to any direction that may be given by resolution of the
summoning creditors or contributories at any general meeting, and in order to
meetings.
ascertain their wishes may at any time summon a meeting, and
must summon a meeting at such times as the creditors or contribu-
tories may direct, or whenever requested in writing to do so by
one-tenth, in value of the creditors or contributories, as the case
may be (&).
Applications The liquidator may apply to the Court for directions in rela-
to the Court.
tion to any particular matter arising under the winding-up (c).
Subject to the provisions of the Companies Act, he may use his
own discretion in the management of the estate and its distribu-
tion among the creditors {d). If any person is aggrieved by any

act or decision of the liquidator, that person may apply to the
Court, and the Court may confirm, reverse, or modify the act or
decision complained of, and make such order in the premises as it
thinks just (e).
Power of As soon as may be after making a winding-up order, the Court

Court to settle
list of cou-
will settle a list of contributories, and has power to rectify the
tributories, register of members in all cases where rectification is required (/).
(y) Comp. Act, 1908, sec. 151 (2). (a) Comp. Act, 1908, sees. 155, 156.
(z) In Scotland or Ireland the Court (6) Sec. 158 (1), (2).
may by order provide that the liqui- (c) Sec. 158 (3).
dator may exercise any of the above (d) Sec. 158 (4).
powers, except the power of appointing (e) Sec. 158 (5).
a solicitor or law agent, without the (/) Sec. 163.
sanction or intervention of the Court.
WINDING-UP 83
The Court may order the payment of debts due from contribu- to order oon-
tories, and may make calls upon contributories for the amount pay debts,
unpaid upon their shares, and in making a call the Court may *° ^^^^ ''^^^'^'
take into consideration the probability that some of the contribu-

tories may partly or wholly fail to pay the call (g).
The Court may fix a time or times within which creditors are to fix a time
within which
to prove their debts or claims, or to be excluded from the benefit creditors
™^^ piove,
of any distribution made before those debts are proved (h).
The Court will adiust the rights of the contributories among t? a,A]mb the
themselves, and distribute any surplus among the persons entitled tributories
, , . , .V inter se,
thereto {i).
The Court may, in the event of the assets being insufficient to to make
satisfy the liabilities, make an order as to the payment out of the priority of
assets of the costs, charges, and expenses incurred in the winding- ^"nîng-up.
up in such order of priority as the Court thinks fit (/<;).
The Court may delegate to the liquidator, as an officer of the Powers of
Court and subject to the control of the Court, the powers of the -syhichmaybo
°^
Court in respect of the following matters, that is to say (a) hold- :
^^^'gf
ing and conducting meetings of creditors and contributories ;
liquidator.
(b) settling lists of contributories ;

(c) requiring delivery of
property or documents ;
(d) making calls ;
(e) fixing a time within
which debts and claims must be proved; provided that the

liquidator shall not, without the special leave of the Court, rectify
the register of the members, and shall not make any call without
either the special leave of the Court or the sanction of the com-
mittee of inspection (I).
When company have been completely wound

the affairs of the
Order that
coiiip3jiiy
_ Tjiio
up, the Court makes an order that the company be dissolved bedissolvod.
from the date of the order, and the company is dissolved accord-
ingly. The order must be reported by the liquidator to the
Eegistrar of companies, who will make in his books a minute of
the dissolution of the company (m).
A company registered under the Companies Acts may be When may a
wound up voluntarily (1) when the event (if any) occurs, on the wound up
voluntarily 7
Sees. 165, 166. (h) Sec. 171.

(g)
(h) Sec. 169. (') Sec. 173.
(0 Sec. 170. W See. 172.

INSURANCE COMPANIES
occurrence of which the articles (or act of parliament, deed of
settlement, or other instrument constituting or regulating the
company, as the case may be) provide that the company is to be
dissolved, and the company has passed a resolution requiring the

company to be wound up voluntarily; company
or (2) if the
resolves by special resolution that the company be wound up

voluntarily; or (3) if the company resolves by extraordinary
resolution to the effect that it cannot, by means of its liabilities,
continue its business, and that it is advisable to wiad it up (n).
Commenoe- A voluntary winding-up shall be deemed to commence at the

ment of
voluntary time of the passing of the resolution authorising the winding-
winding-up. up and where a petition for a winding-up by the Court was
(o),
presented, and the Court appointed a provisional liquidator, and

thereafter a resolution was passed for a. voluntary winding-up,
and a supervision order was made on the petition, it was
held that the winding-up commenced as at the date of the
resolution (j>).
Notice of When a company has resolved to wind up voluntarily, it must

resolution.
give notice of the resolution in the Gazette (q).
Appointment The company in general meeting must appoint one or more

of liquidator.
liquidators for the purpose of winding up the affairs and distri-
buting the assets of the company (r), and the liquidator must,
within twenty-one days after his appointment, file with the
Eegistrar of companies a notice of his appointment (s).
First meeting The liquidator in a voluntary winding-up must, within seven

of creditors.
days from his appointment, send notice by post to all persons
who appear to him to be creditors of the company that a meet-
ing of the creditors of the company will be held on a date not
being less than fourteen nor more than twenty-one days after his
appointment (t). The meeting of creditors must also be advertised
in the Gazette and in two local newspapers (i). At the meeting
the creditors shall determine whether an application shall be made
to the Court for the appointment of any person as liquidator in
place of or jointly with the liquidator appointed by the company,
or for the appointment of a committee of inspection, and, if the
(n) Comp. Act, 1908, sec. 182. (g) Comp. Act, 1908, sec. 185.
(o) Sec. 183. (r) Sec. 186 (ii).
(p) Emperor Life, In re (1885), 31 (s) Sec. 187.

Ch. D. 78. (f) Sec. 188 (1).
WINDING-UP 85
creditors so resolve, an application will be made, and the Court

may make sucli order thereon as may seem just (u).
If, from any cause whatever, there is no liquidator acting, the Appointment
Court may, on the application of a contributory, appoint a ^y theôouTt.
liquidator (a;). The Court may also, on cause shown, remove a
liquidator and appoint another liquidator (y).
On the appointment of a liquidator, all the powers of the Powers of
directors cease except so far as the company in general meeting or

the liquidator sanctions the continuance thereof (a). The liquidator
in a voluntary winding-up may, without the sanction of the Court,
exercise all powers given by the Companies Act to the liquidator
in a winding-up by the Court, and may exercise the powers of the

Court of settling a list of contributories and of making calls, and
must pay the debts of the company and adjust the rights of the
contributories among themselves (a).

The liquidator or any contributory or creditor may apply to Application to
the Court to determine any question arising in the winding-up,

or to exercise, as respects the enforcing of calls or any other
matter, all or any of the powers which the Court might exercise
if company were being wound up by the Court, and the Court
the
may make such order on the application as the Court thinks just (6).
The liquidator in a voluntary winding-up may summon a Annual
general meeting of the company as he thinks fit, and, in the event ^^p^^^y"
of the liquidation continuing for more than a year, must summon
a general meeting at the end of the first and every subsequent
year during which the liquidation continues, and lay before the
meeting an account of his acts and dealings (c).
When the affairs of the company are fully wound up, the Pinal meeting
^^"
liquidatormust prepare an account and lay it before a general t£n of^^°
meeting called by advertisement in the Gazette published one oo™pa°y-
month before the meeting. Within one week after the meeting
the liquidator must make a return thereof to the Eegistrar, who
will register it, and three months after such registration the
company shall be deemed to be dissolved, unless in the mean time
the Court, at the instance of the liquidator or other .person
(u) Comp. Act, 1908, sec. 188 (2), (3), («) See. 186 (iii).
(4), (5). {a) Sec. 186 (v).
(x) Sec. 186 (viil). (6) See. 193.

{y) Sec. 186 (ix). (c) See. 194.
interested, makes an order deferring the date at which the
dissolution is to take place (d).
Voluntary When a company has resolved to wind up voluntarily, the

rubfecTto tte
*ô"^fc °iay. ^PO^ a petition, make an order that the voluntary
supervision winding-up shall continue, but subiect to the supervision of the
of the Court. ^ ^ ,^,.,.,/n
Court upon such terms as the Court thinks just (e). When such
-tTTi. x.
an order is made, the affairs of the company remain in the hands

of the liquidator appointed by the company, and the provisions of
the Companies Acts with regard to the filing of a statement of
affairs, making a report by the official receiver, the appointment
of a liquidator and committee of inspection, the audit of the
liquidator's accounts, the keeping of books, and the summoning of
meetings in the case of a winding-up by the Court do not apply,

but as regards most other matters, and in particular as regards
the powers of the liquidator, the staying of actions, the settlement
of lists of contributories, the making and enforcement of calls, and
the collection and distribution of assets, the winding-up continues

as if it were a winding-up by the Court (/).
Section VI. — Conirihitories

In the case of In the event of a company formed and registered under the
formed wfa Companies Acts being wound up every past and present member
registered
g|ja,n be liable to Contribute to the assets of the company to an
under the _ ....
Companies amount Sufficient for payment of its debts and liabilities, and the
costs, charges, and expenses of the winding-up, and for the
adjustment of the rights of the contributories among themselves,
with the following qualifications, that is to say, (1) a past member
shall not be liable to contribute if he has ceased to be a member
for one year or upwards before the commencement of the winding-
up ; (2) a past member shall not be liable to contribute in respect
of any debt or liability of the company contracted after he ceased
to be a member ; (3) a past member shall not be liable to con-
tribute unless it appears to the Court that the existing members

are unable to satisfy the necessary contributions ; (4) in the case
of acompany limited by shares, no contribution shall be required
from any member exceeding the amount (if any) unpaid on the
{d) Comp. Act, 1908, see. 195. (/) Seo. 203,

(«) Seo. 199.
OONTRIBUTORIES 87
shares in respect of which he is liable as a present or past

member (g) ; (5) in the case of a company limited by guarantee,
no contribution shall be required from any member exceeding the
amount undertaken to be contributed by him to the assets of the
company in the event of its being wound up ; (6) nothing in
the provisions of the Companies Act invalidates any provision
contained in any policy of insurance or other contract whereby the
liability of individual members on the policy or contract is
restricted, or whereby the funds of the company alone are made

liable in respect of the policy or contract Qi).
The above rules regulate the liability of members to contribute when a call
"î^y lê made,
to the assets of company (t); they do not regulate the dis-
the
tribution of the assets {i). A call may be made upon members
when it appears that the other assets realised or immediately
realisable are not sufficient to meet the claims of the creditors {k).
The liquidator is not bound to wait until all possible assets have
been realised Qe). A call may be made upon past members when
it appears that the sum realised from present members is not
sufficient to meet the deficiency {h). But no past member can be
called on to contribute (1) unless there are outstanding debts
which were incurred before he ceased to be a member ; (2) if he
has ceased to be a member for more than a year. If a past
member buys up and releases all debts of the company incurred
member no call can be made on him (/).
before he ceased to be a
When a call is made upon a past member the amount called up
forms part of the general assets of the company and is equally
available for the payment of all debts without any preference to
the past creditors (m). Where a life company commenced a fire

business and issued fire shares in respect thereof, and afterwards,
(g) Where the deed of aettlement share capital. Cathie's Case (1872),
provided that a certain portion of pro- Eur. Arb. Beilly 27 ; 17 Sol. J. 29 ;
fits should be credited to each share- L. T. 18.

holder in addition to the amount paid {h) Comp. Act, 1908, sec. 123.
up upon his shares it was held that the (i) Wehh v. Whiffin (1872), L. R. 5
shareholder might set off such profits H. L. 711.
against calls notwithstanding that (fe) Helbert v. Banner (1871), L. B.
there was no indication of the matter 5 H. L. 28.
in the annual list of members with the (Z) Blahely Ordnance Co., In re,
amount of shares and the amount i3r«?i's Case (1873), L. R. Oh. 800.
8.
called up on each share. The applioa- (m) Webh v. Whiffin (1872), L. B. 5

tion of profits to reduce the uncalled H. L. 711.
share capital was not a calling up of
when doubts were raised as to the validity of the issue, the fire
business and assets were transferred to a new company and the

old company purported to cancel the original fire shares and to
indemnify the shareholders against all liability, it was held in

winding-up of the old company that although the holders of the
fire shares were liable as contributors to meet fire claims they
were liable as past members only, and as the company had con-
tracted to indemnify them they could not be called upon until all
the present shareholders of the company had been exhausted (m).
Contribu- lu the case of a company not formed under, but subsequently
tories in the
case of com- registered under, the Companies Acts, the above rules apply in
panies not
respect of the debts and liabilities of the company contracted
formed but
subsequently after registration, but in respect of the debts and liabilities of the
registered un-
der the Com- company contracted before registration, every person is a con-
panies Act.
tributory who is liable to pay or contribute to the payment of any
such debt or liability, or to pay or contribute to the payment of
any sum for the adjustment of the rights of the members among
themselves, or to pay or contribute to the costs and expenses of the
winding-up of the company (o).
Contribu- In the case of an unregistered company, every person is a con-

tories in the
case of un- tributory who is liable to pay or contribute to the payment of any
registered
debt or liability, or to pay or contribute to the payment of any
companies.
sum for the adjustment of the rights of members among them-
selves, or to pay or contribute to the payment of the costs of
winding-up the company (p).
Liability to The and others to pay or contribute
liability of policy holders
pay or con-
tribute to the to payment of the debts or liabilities of an unregistered
the
payment of
company depends (1) upon the nature of the company, that is to
the debts or
liabilities of say whether it is a purely mutual association, a common law
the company.
partnership, or a corporation ; (2) upon the terms of the deed of
settlement, contract of co-partnery, charter, letters patent, act of
parliament, or other instrument creating the company or defining
its constitution and the rights and liabilities of its members ;
(3) upon the provisions of the Chartered Companies Acts or
(to) Norwich Provident Insurance, sec. 210 of the Companies Act, 1862.
Hesheth's Case (1880), 13 Ch. D. 693. They are in the same position as com-
(o) Comp. Act, 1908, sec. 263 (iii) (f), panies not formed but voluntarily
applies to companies formed under the registering under the Act.
Joint Stock Companies Act, 1844, and (p) European Assurance, Ramsay's
compulsorily registered in pursuance of Case (1876), 3 Oh. D. 388.
CONTRIBUTORIES 89
Joint Stock Companies Act, 1844, in the case of companies to

which any of those Acts apply ; (4) upon the terms of the contract
with the company as contained in the policy, agreement to take
shares, or otherwise.
The Court in settling the list of contributories has power to Specific per-
rectify the register of members. It may therefore put on the agreemenUo

lêcome a
register
° and on the list of contributories the names of persons who
'^
member.
had agreed to become members but whose names had not been
entered in the register at the commencement of the winding-up.
The Court, however, will not thus grant specific performance of an
agreement to take shares when it would be unreasonable to do so
owing to the lapse of time. On the formation of a company under
a deed of settlement registered under the Joint Stock Companies
Act, 1844, shares were allotted to an applicant, and he paid a
deposit of 2s., and his name was placed on the company's register
of shareholders. He died shortly afterwards and certificates were
never issued nor dividends paid nor was the deed of settlement
ever executed by the applicant or his executors. It was held that
the applicant's executors could not twenty-five years afterwards be
placed on the list of contributories (q).
Prima facie it is company mtra vires

ultra vires of one mutual inslirance
to become a member of another such company and when the compaOT^to^
secretary of a mutual company effected a reinsurance with be a member
another mutual company on behalf of his company it was held mutual oom-
^^"^"
that the secretary as an individual became a member in the
reinsuring company but that the company on whose behalf the
reinsurance was made did not become a member and could not be
placed on the list of contributories (r).
Transfers of shares are effected in the manner provided in the Transfers of

Q n Q 1' p q
articles, deed of settlement, act of parliament, or charter regulating
the company's affairs, and the transfer must be strictly in accordance
with the terms thereof in order to relieve the shareholder of
liability as a present member (s). Shares may be made transferable
only after the approval of the proposed transfer by the directors (t)-
If the approval of the transfer is obtained by a misrepresentation

or concealment as to the means or station in life of the proposed
(g) Mackenzie's Case (1873), 'Em. Arh. (s) Morgan, Exp. (1849), 1 Mac. &
L. T. 141; 18 Sol. 3. 223. G. 225.
(r) Seouriiy Mutical Life, In re (t) Lloyd's Case (1872), Eur. Arb.
(1858), 6 W. R. 431. Reilly 35 L. T. 25
; ; 17 Sol. J. 46.
transferee the transfer will be set aside and the transferor placed
on the list of contributories as the shareholder (m). Where the
directors first refused to pass a transfer on the ground of the
insufficiency of the proposed transferee, but afterwards agreed as
a compromise of a claim for calls against the transferor to pass
the transfer on payment of the calls, it was held that the agree-
ment with the shareholder was ultra vires ; but where the directors
were satisfied that they had got all they could out of a transferor,
and compromised with him by allowing the transfer, it was held
binding (x). Where the articles or other instrument regulating the
company's affairs contains no clause authorising the directors to
reject a proposed transferee, a transfer to a pauper enables the
transferor to escape liability provided the transfer is complete and
the transferor retains no beneficial interest {y).
Agreement to A member does not get rid of his liability as a present member
sell shares.
merely by an agreement to sell his shares («). Where a share-
holder had sold his shares to his servant for a nominal considera-
tion, but owing to delay in getting the request form of transfer
from the company, the transfer was not completed when a petition
for winding-up was presented, it was held that there was no
equity in favour of the shareholder, and that in the absence of
wilful and unnecessary delay on the part of the company the name
of the shareholder must stand on the list of contributories (a).
But where an agreement to take shares was not completed owing

to the wilful default of the directors the Court ordered the
register to be rectified and the purchaser to be placed on the list
instead of the vendor (6).

Purchase by Where an infant purchased shares and afterwards repudiated
infant.
{u) Discoveries Finance Go., In re, {x) Hodge's Case (1873), Bur. Arb. 18
[1910] 1 Gh. 312 Imperial Mercantile
; Sol. J. 708.
Credit, Inre, Payne's Case (1869), L. R. (y) Discoveries Finance Co., In re,
9 Eq. 223 Dymock's Case (1873), Eur.
; [1910] 1 Ch. 312.
Arb. L. T. IM Simpson's Case (1873),
; (a)Lee's Case (1871), Alb. Arb. Reilly
Bur. Arb. L. T. 77; 17 Sol. J. 648; 1 ; Nichols's Case 1871), Alb. Arb. Reilly
Paterson's Case (1873), Eur. Arb. L. T. 40.
79 WilUam's Case (1873), Eur. Arb.
; Bead's Case (1872), Bur. Arb.
(a)
L. T. 84; 18 Sol. J. 84; Walton Reilly 19 L. T. 10.
;
WilUam's Case (1873), Eur. Arb. L. T. (6) Bentinek's Case (1873), Eur. Arb.
125 Musket's Case (1874), Eur. Arb.
; L. T. 99 17 Sol. J. 807 Brown's Case
; ;
L. T. 139; 18 Sol. J. 202; Murgat- (1873), Eur. Arb. L. T. 103 17 Sol. J. ;
royd's Case (1873), Eur. Arb. L. T. 289; Murgatroyd's Case (1873), Eur.
146; PMUip's Case (1874), Eur. Arb. Arb. L. T. Minshall's Case (1872),
;
L. T. 148; 18Sol. J. 380. Eur. Arb. L. T. 29.

1
CONTEIBUTORIES 9
the transaction, the Court, on the application of the company who

had no knowledge of the infancy, ordered the infant's name to be
removed from the list of contributories, and the name of the
vendor to be substituted (c).
In the case of a voluntary winding-up every transfer of shares Transfer after
except transfers made to or with the sanction of the liquidator, ment of

'^^'^'^'ng-up.
and every alteration in the status of the members of the company
made after the commencement of the winding-up is void {d). In
the case of a winding-up by or subject to the supervision of the
Court every disposition of the property (including things in action)
of the company and every transfer of shares or alteration in
the status of its membei's made after the commencement of the
winding-up is void unless the Court otherwise orders (e).
If a contributory dies before or after he has been placed on Death of oon-
the list of contributories, his personal representatives and his

heirs and devisees are liable in a due course of administration
to contribute to the assets of the company in discharge of his
and are contributories accordingly (/). If the personal

liability,
representatives make default in paying any money ordered to be

paid by them, proceedings may be taken for administering the
personal and real estates of the deceased contributory, or either
of them, and for compelling payment thereout of the money due (g).
If a contributory becomes bankrupt either before or after he Bankruptcy
has been placed on the list of contributories, then his trustee in tutory"'
bankruptcy shall represent him, and shall be a contributory

accordingly, and may be called on to admit to proof against the
estate of the bankrupt a claim for any contribution due and
for the estimated Liability on future calls (A).
Whether the company is in liquidation or not, it may prove Eight of a
in the bankruptcy of a shareholder in respect of the unpaid prove in the

°^
balance on his shares (i). The bankruptcy satisfies all claims
^ member.^
provable in bankruptcy, and if the trustee in bankruptcy has dis-
claimed the shares, and the bankrupt has been discharged, neither
trustee nor bankrupt can thereafter be placed on the list of
(c) BentiMck's Case (1873), Eur. Arb. 106 ; Oumi's Case (1873), Eur. Arb.
L. T. 143. L. T. 118.
(d) Gomp. Act, 1908, see. 205 (1). {g) Comp. Act, 1908, see. 126 (2).
(e) Sec. 205 (2). (h) Gomp. Act, 1908, sec. 127. National
(/)'Comp. Act, 1908, sec. 126 (1). Bisurance, Ex p., [189i:']W.lS. 156.
Lady Bolt's Case (1873), Eur. Arb. L. T, (i) McMahon, In re, [1900] 1 Oh. 173.
contributories in respect of the unpaid balance on his shares {h).

Formerly the unlimited liability of a shareholder to general
creditors, or for possible costs of winding-up was deemed not
provable in bankruptcy, and therefore not satisfied by the
bankrupt's discharge (^), but apparently under a later decision
in the House of Lords all contingent liability is provable in
bankruptcy unless an order of the Court is made declaring it to
be incapable of being fairly estimated (m). Therefore, unless such
order is obtained, the claim of the company in respect of any
future liability is barred by the contributory's bankruptcy and
discharge (m).
Husband of The husband of a female contributory married before the date
female con-
tributory. of the commencement of the Married Women's Property Act,
1882 (to), shall, during the continuance of the marriage, be liable,
as respects any liability attaching to any shares acquired by her

before that date, to contribute to the assets of the company the
same sum as she would have been liable to contribute if she had
not married, and shall be a contributory accordingly (o).
Set-off. A contributory cannot set off a debt due to him by the

company against calls until all the creditors are paid in full (|?).
Order on con- The Court may order any contributory to pay any money due
tributory to
pay debts from him to the company exclusive of money payable by virtue
other than
calls.
of a call {q). In making such order the Court may in the case of
an unlimited company allow to the contributory by way of set-
off any money due to him from the company not being money
due to him as a member of the company in respect of any

dividend or profit {q).
Section VII. —Proof in Winding-JJp

Matured and All policy holders or annuitants in a company in liquidation
contingent
claims. must like other creditors prove against the company for the-
value of their contracts (r). If the claim became payable before
(&) Brown's Case (1872), Eur. Arb. gatroyd's Case (1878), Eur. Arb. L. T.
EeUly 32 L. T. 21 17 Sol. J. 310.
; ; 105 Scarishrick's Case (1873), Eur.
;
(V) Case (1873),

Davis's Eur. Arb. Arb. L. T. 105 D'Ouseley's Case (1873),
;
L. T. 80; 17Sol. J. 670. Eur. Arb. L. T. 187 18 Sol. J. 282.

;
(m) Hardy v. Fothergill (1888), 18 (p) Black S Co.'s Case (1872), L. B.

A. C. 351. 8 Ch. 254.
(n) Or Scotland the Married
in (q) Comp. Act, 1908, sec. 165.
Women's Property (Scotland) Act, 1881. (?-) Oomp. Act, 1908, sec. 206.
, (o) Oomp. Act, 1908, sec. 128. Mur-
,
PROOF IN WINDING-UP 93
the date of the petition or resolution to wind up, and was

unpaid at that date, the policy holder will prove for the amount
due, and interest thereon down to that date(s). Such policy
holder has no priority over the other policy holders whose policies
have not become payable (<). The Court may order that any
claim paid after thecommencement of the winding-up shall be
refunded to the liquidator («), but when a claim is paid while
a petition to wind up is pending, the Court may decline to
order repayment of the money if the claimant did not know and
could not with reasonable diligence have known that a petition
was pending (a;). If the claim became payable after the pre-
sentation of a petition to wind up, but before the winding-up

order, the claimant will prove for the amount due without inte-
rest (y). As regards claims which are still contingent when a

winding-up order is made or a resolution to wind up is passed,
they must be valued as at that date in accordance with the rules
for valuation contained in Schedule VI. of the Assurance Com-
panies Act (z). If, however, a policy becomes payable during the
liquidation, the holder may prove for the full value whether the
period for sending in claims has expired or not (a).
The valuation of contingent claims upon life policies current Conflict of
was much discussed at the time of

at the date of the liquidation opinion as to
the Albert and European
^ arbitrations, and as at that time there V^°V^\ ^y-^^
_ _
for valuing
was no statutory rule or otter binding authority upon which policies.
the arbitrators could act, they had to formulate methods for

themselves. James, V.O., took the reinsurance or reinstate-
ment value, that is, amount which under the then existing
the
circumstances of health and age, a similar office would charge for
(s) Wallberg's Case (1872), Eur. Arb. company whicli is solvent is wound up
Keilly 65 L. T. 50 Sullivan's Case
; ; the claimants will be entitled to interest
(1872), 17 Sol. J. 226. on aU claims until the date of payment.
(t) International Life, M'lver's Claim In the case of a contingent claim it will
(1870), L.R. 5 Oh. 424. be valued as at the date of the winding-
(u) National Bank's Case (1873), up order or resolution, and the claimant
Eur. Arb. L. T. 92. will be entitled to the valued amount
(x) Brown and Tylden's Case (1874) with interest thereon from the date of
Eur. Arb. 163 18 Sol. J. 781.
; the winding-up order or resolution
(y) Oarlant's Case (1872), Eur. Arb. until the date of payment. Watt's
Eeilly 2 L. T. 4
; Wallberg's Case,
; Case (1872), Alb. Arb. 16 Sol. J. 517.
supra. (a) Northern Counties of England
(z) Ass. Comp. Act, 1909, sec. 17 ; Fire, Macfarlane's Claim (1880), 17 Ch.
Comp. Act, 1908, sec. 206. Where a D. 337.
taking over the liability (&). Other methods suggested were:

(1) to take the amount insured less the actuarial value of future
premiums upon the tables of mortality ; (2) to take the amount

of the premiums paid with interest thereon (c). The method of
valuation adopted by the Life Assurance Companies Act, 1870,
and now by the Assurance Companies Act, 1909, was first formu-
lated by Lord Cairns during the Albert arbitration {d). It was
afterwards disapproved of by Lord Eomilly, who preferred the re-
insurance or reinstatement value formulated by James, V.C. Lord
Eomilly considered that Lord Cairns' formula was unfair as being
entirely arbitrary and without relation to actual circumstances.
But although arbitrary, the method adopted by Lord Cairns and
now adopted by statute has the great advantage of depending solely
upon an actuarial calculation. An inquiry into the insurability
of each life at the commencement of a winding up would be quite
impracticable and the Legislature was fully justified in adopting
the more rigid rule, even although its application must always
result in cases of individual hardship {dd).
Method of The sixth schedule of the Assurance Companies Act, 1909,

valuation now
defined by contains separate rules for the valuation of (1) an annuity; (2) a
Statute.
life policy ; (3) a fire policy ; (4) a periodical payment under an
accident policy; (5) an accident policy; (6) a weekly payment
under an employers' liability policy ; (7) an employers' liability
policy ; (8) a bond investment policy or certificate.
Valuation of An annuity is to be valued according to the tables used by the
annuity.
company which granted such annuity at the time of granting the
same, and where such tables cannot be ascertained or adopted to
the satisfaction of the Court then according to such rate of interest
or table of mortality as the Court may direct (e). Annuitants are
entitled to prove (1) as regards instalments which fall due before
the date of the petition or resolution, for the instalments and
(b) Case (1870), L. B. 9 Eq. 706.

Bell's another office. Such a scheme main-
(c) Slator'sCase (1871), Alb. Arb. tains the principle of the spreading and
Eeilly 71 Stevenson v. Snow (1761), 3
; sharing of risks instead of attempting
Buir. 1237 Warner, Exp. (1870), W. N.
; to fix the pecuniary value of individual
104, 192, 210; 39 L. J. Ch. 736. risks; and therefore it is not open to
(d) Lancaster's Case (1871), Alb. Arb. the criticism that it is either entirely
KeiUy 76 16 Sol. J. 108.
; arbitrary or without relation to actual
{dd) This hardship is to a great circumstances. Vide supra, p. 54, et
extent avoided by a scheme of re- infra, p. 99.
duction of contracts with or without (c) Ass. Comp. Act, 1909, Schedule
transfer of the reduced contracts to VI. (A).
PROOF IN WINDING-UP 95
interest thereon down to that date ; (2) as regards instalments

wliichfall due after the date of the petition but before the winding-
up order, for such instalments without interest; (3) as regards
instalments falling due after the date of the winding-up order or
resolution, for the value of the annuity as at that date(/). When
the company is solvent the annuitant will also be entitled to
interest on the total claim down to the time of payment {g).
The value of a life policy is the difference between the present Valuation of
"•
^ P"
value of the reversion in the sum assured according to the con- ' ^
tingency upon which it is payable, including any bonus or addition

thereto made before the commencement of the winding-up, and
the present value of the future annual premiums Qi). In calcu-
lating such present values interest is to be assumed at such rate,
and the rate of mortality according to such tables, as the Court

may direct (^). The premium to be calculated is to be such
premium as, according to the said rate of interest and rate of
mortality, is sufficient to provide for the risk incurred by the
office in issuing the policy exclusive of any addition thereto for
office expenses or charges (h). That is to say, the premium upon
which the calculation is to be made is the pure premium, and not
the loaded premium, and all extra premiums are to be disregarded,
such as an additional sum payable during residence in tropical
climates, or, where the policy is a participating policy, that portion
of the premium which is attributable to the sharing of profits (i).
The policy is to be valued as at the date of the winding-up order

or resolution to wind up {k). "Where the policy provides for a
surrender value which the assured can claim at any time on giving
(/) Wallberg's Case (1872), Eur. Arb. holder for the same benefit : and rightly
Eeilly 65 L. T. 50. Sullivan's Case
; so since the additional premium pay-
(1872) ; 17 Sol. J. 226. able for a right to a share in the profits
Watt's Case (1872), Alb. Arb. 16 is of the nature of a trading adventure
(g)
Sol. J. 517. which must depend on the realisation
(h) Ass. Oomp. Act, 1909, Schedule of profits. It follows that the transi-
IV. (A). tioii from being just solvent to being

(i)Lancaster's Case (1871), Alb. Arb. just insolvent introduces, by reason of
Eeilly 76 16 Sol. J. 103.
; It is to be the rules laid down in the Act, a sudden
noted that this rule gives the same change in the relative rights of with-
measure of proof in a winding-up to a profit and without-profit policies. This
with-profit policy holder and a without- change would generally be avoided, at
profit policy holder although, if the
; any rate to a large extent, in a scheme
company were just solvent but earning of reduced contracts instead of liquida-
no profit, the with-profit policy holder tion. Vide supra, p. 54, et infra,
could continue paying a higher pre- p. 99.
mium than the without-profit policy (k) Wallberg's Case, supra.

the prescribed notice, the assured cannot prove in respect of such

surrender value in lieu of proving in respect of the valuation under
the schedule unless he has given notice to surrender and the
notice has expired before the winding-up order or resolution (I).
Premium If a policy is valid and subsisting at the date of the petition

falling due
affected by the
between dates or resolution to wind up, the right to prove is not
of petition
and winding-
subsequent non-payment of premium, and therefore when the
up order. premium falls due before the petition, but the days of grace do
not expire until afterwards, non-payment of the premium does not
affect the holder's right to prove in the winding-up (m). But if a
premium has fallen due before the winding-up order, it must be

paid to the liquidator before the holder's claim is admitted to
valuation (n), and when the annual premium is payable in quarterly
instalments, the whole premium for the current year must be
paid (o).
Wliether Where a policy has become payable, and the amount payable
holder can
set off claim is a fixed amount or has been ascertained before the commence-
on poUoy ment of the winding-up, the claimant may set off the amount
against debt
due by him to due to him against any fixed or ascertained debt due by him
the company.
to the company Qj). The liquidation of a company does not
affect the right of a creditor to set off one liquidated demand
against another (§'). Thus, where the company has advanced
money on a life policy which has matured, the claimant may treat
his liability as extinguished by the set-off and prove in the
winding-up for the balance of the policy moneys over the amount
of the loan (q). But where the policy has not become payable, or
the amount payable is not a fixed amount and has not been
ascertained before the commencement of the winding-up, there is
no right ofset-off (r). The assured cannot set off the estimated
value of his current policy against a loan upon the policy from
the company. He must pay the loan in full and prove for the
estimated value (r).
(Q British Imperial Insurance (1878), (p) Sovereign Life v. Dodd, [1892]

47 L. Ch. 318 European Assurance,
J. ;
2 Q. B. 573 Progress AssuA-anec, Exp.
;
Gloag's Case (1873), Eur. Arb. L. T. Bates (1870), 39 L. J. Oh. 496.

82 17 Sol. J. 534.
; Sovereign Life v. Dodd, supra.
(2)
(w) Albert Life, Cook's Case (1870), Price, Ex p.
(r) (1876), 10 Oh. 648 ;
L. B. 9 Eq. 703. Pwrlby's Case (1871), Alb. Arb. Beilly

(ra) Wallberg's Case, supra. 48; Bourne's Case (1871), Alb. Arb.
(o) Scott's Case (1873), Eur. Arb. Beilly 44 Oloag's Case, supra.
;
L. T. 109.
;
PROOF IN WINDING-UP [)']'
Where two companies which had reinsured one another were Sot off as
beingwound up and claims became payable after the commence- surruMo'om.
ment of the winding-up, it was held that the liquidators had the P"^"'®*'
right to set off the one against the otlier (s).
The same rules prevail with regard to the respective rights of Sooiuod
secured and unsecured creditors as are in force under the law of
bankruptcy (/).
The provision in a policy that the stock and funds shall alone what oro.itos
°"
be liable to pay the sum insured does not give the assured any tho coin-
'^"""" ^""^'''
chai-ge upon the stock and funds so as to create a priority over '^
the general creditors of the company, nor have the policy holders
any right have the assets marshalled so that they alone may be
to
paid out of the stock and funds, and the general creditors be paid
out of the unlimited liability of members (».). The costs of tho
winding-up should, however, where there is unlimited liability, bo
paid by the members and not out of the stock and funds (iV). But
tho terms of a policy may be such as to create a charge on tlie
company's funds in priority to general creditors (//), or certain

funds may be set apart in trust for policy holders or policy-
holders of a particular class.

Any deposit made under the provisions of the Assurance statutory
Companies Act is essentially an insurance fund, and the policy a^4°^cia{''"^^
holders have a priority thereon over general creditors and in ^^j,""'-'' ^°^
{:),
the case of a company transacting life, employers' liability, or boKlois.
bond investment business, and not confining itself to one class

of business only, the deposit in respect of any of these three
classes of business forms pai-t of a separate insurance fund for the
policy holders in the particular class in respect of whioJi it was
deposited (a), and all receipts in respect of that class of business
must be carried to such insurance fund (a).

Apart from tlie provisions of the statute certain of the company's Assurance
(s) Ea^le Iiisiiraiici', In iv (1872), {.r) Professional Life, Iinr {1S61),1j.
Alb. Arb. 16; Sol. J. 483. R, 3 Eq, G68; 3 Oh. 167; Agricitl-
(<) Comp. Aot, 1908, seo. 207. twist Cattle Insurance, In re (1874),
(«) Intertiatiotial Life, In re (187C), L. R. 10 Ch. 1.
2 Ch. D. 47(i ; (1877), 36 L. T. 914 (y) British IiHperial Insurance,
Professîonal Life, In re (1867), L. R. 3 Fan's Claim (1878), 47 L. J. Oh. 318 ;
Eq. 668 ; 3 Ch. 167 ; State Fire Insitr- Athemviim Life, In re (1859), Johns 633.
omv, In re (1863), 1 De G. J. & S. 684 ; (;) Nelson '.f Co., Ltd., In re (1907),
English and Irish Church Assurance, 24 T. L. R. 74.
In re (1863), 1 Hem. & M. 85; Evans (o) Ass. Comp, Act, 1909, sees. 2 (4),
V. Coventni (1S57), 8 De Q. M. & G. 835. 3, 31 (e), 3:2 (d).
IL. " 7
and other stock or funds may be set apart as an assurance fund, reserve fund,
funds created
under pro- or guarantee fund, and be made the special security of the policy
visions of
holders in accordance with the provisions of the deed of settle-
deed of settle-
ment, etc. ment or other instrument regulating the company's affairs (5).
Where a particular fund is thus set apart it forms a trust fund for
the special purposes indicated, and will be so applied in the
winding-up. Upon the transfer of one company's business to
another the funds of the transferor company will usually con-
stitute a trust fund for the security of the policy holders of the
transferor company, but a mere transfer of the funds and under-
taking by the transferee company to meet the obligations of the
transferor company does not iix the transferred funds with any
Special fund trust (c). Upon a transfer of business a trust fund may be
created on
transfer of formed to meet claims against the transferor company which have
business to
satisfy policy
become payable, or which may become payable before a named
liolders in
transferor
date. A policy holder, who
became payable had
before his claim
company. accepted a substituted policy in the transferee company, was held
to have no claim against such a fund (d), and an annuitant was
held not to be entitled to claim out of such a fund the capital
value of her annuity (e).
Section VIII. — Compromise and Arrangement

Power of The liquidator may, either with the sanction of the Court or of
liquidator to
compromise the committee of inspection, or in the case of a voluntary winding-
claims.
up, with the sanction of an extraordinary resolution of the com-
pany, make any compromise or arrangement with creditors of the
company, or persons claiming to be creditors, or with contribu-
tories or other persons indebted to the company (/).
Arrangement Any arrangement entered into between a company about to be
between com-
or in the course of being wound up voluntarily, and its creditors,
pany in
voluntary shall be binding on the company if sanctioned by an extraordinary
liquidation
and its resolution, and on the creditors if acceded to by three-fourths in
creditors.
number and value of the creditors {g). Any creditor may within
(6) Buthm Guardians' Case (1872), {d) Bowring's Case (1872), Alb. Arb.
Eur. Arb. L. T. X ; Boyal Naval and 16 Sol. J. 305.
Military Society's Case (1872), Eur. (e) ButUr's Case (1872), Alb. Arb. 16
Arb. L. T. 47; 17 Sol. J. 246. Sol. J. 399.
(c) Boyal Naval and Military Society's Comp. Act, 1908, sec. 214.
(/)
Case (1872), Eur. Arb. L. T. 47; 17 (g) Sec. 191.
Sol. J. 246; Jull's Case (1872), Alb.
Arb. 16 Sol. J. 341.
COMPROMISE AND ARRANGEMENT 99
three weeks from the completioa of the arraagemeiit appeal to

the Court against it, and the Court may thereupon, as it thinks
just, amend, vary, or confirm the arrangement {g).
Where a compromise or arrangement is proposed between a Power o£
company and its creditors, or any class of them, or between the uonlsoheme
company and its members, or any class of them (whether
^
the °^ arrange-
.
ment between
company is being wound up by the Court, or voluntarily, or is any company
still a going concern), the Court may, on the application in a cTOditors.
summary way of the company, or of any creditor or member of
the company, or, in the case of a company being wound up, of the
liquidator, order a meeting of the creditors, or class of creditors, or
of the members of the company, or class of members, as the case

may be, to be summoned manner as the Court directs.
in such
If a majority in number representing three-fourths in value of the
creditors or class of creditors, or members, or class of members, as
the case may be, present either in person or by proxy at the
meeting, agree to any compromise or arrangement, the compromise
or arrangement shall, if sanctioned by the Court, be binding on all
the creditors or the class of creditors, or on the members or class
of members as the case may be, and also on the company, or in
the case of a company in the course of being wound up on the
liquidator and contributories of the company Qi).
Policy holders whose policies have matured at the date of the Separate
meetings for
proposed compromise are a different class of creditors with different separate
interests from policyholders whose claims are still contingent, and ojedUtors.
separate meetings must be held (i).
In the case of the liquidation of the Law Guarantee Trust and Scheme of
'-
arrangement
Accident Society a scheme under sec. 120 of the Companies Act, approved in
1908, was presented by the liquidator and approved by the Court. Guarantee
The main object of the scheme was to give time for the judicious Jent''ô^.
realisation of the company's assets. The time for the payment of pany's liqui
dation.
claims was postponed until September 30, 1918. Holders of con-
tingent policies whose claims should not have matured on or
before that date were to be entitled to prove in respect of their
contingent claims as on that date, but where any contingent
claim should mature before that date the holder should be entitled
to prove forthwith (m),
(h) Gomp. Act, 1908, sec. 120. ance, In re, [1910] 2 Ch. 477 ; [1911]
(i)Sovereign Life v. Dodd, [1892] 2 W. N. 40.
Q. B. 573. United Provident Insur- (to) Law Guarantee Trust and Acci-
Section IX. —Proceedings hy or against a Company

Common law Proceedings brought by or against a company which is a
partnersUps
and mutual common law partnership may be brought by or against the partner-
associations.
ship in the name of the company (»). Proceedings by or against a
company which is merely an association of individuals but neither

a partnership nor a corporation may be brought by or against one or
more of the members as representing the whole of the members (o).
The persons chosen as representatives ought to be persons who

from their position as trustees, directors, or otherwise can reason-
ably be said to represent the interests of the whole body, and if
the deed of settlement makes provision for the appointment of

persons in whose name actions must be brought an action in the
name of any person or persons not properly appointed may be
dismissed (p). Companies unincorporated but authorised by letters
patent under the Chartered Companies Act may sue and be sued
in the name of the two officers of the company registered in that
behalf in the enrolment department of the High Court {q). The
same applies to unincorporated companies which are established
or regulated by any act of parliament which provides that repre-
sentatives duly appointed and registered may sue and be sued for
and on behalf of the company (r).
Corporations. Proceedings brought by or against a company which is incor-

porated whether by charter, act of parliament, or under any of
the Companies Acts must be brought by or against the company
in its corporate name.
Proceedings The trustees of a registered friendly society or branch or any
by or against
friendly- other officers authorised by the rules thereof may bring or defend
societies.
any legal proceedings touching or concerning any property right
or claim of the Society. In any legal proceedings under the
Friendly Societies Act by a member or person claiming through a
member, a registered society or branch may also be sued in the
name, as defendant, of any officer or person who receives contribu-
tions or issues policies on its behalf. The process will be suffi-
ciently served by personally serving the officer or other person
de»i«Socie«2/, 7m re (1910), Times News- (p) Dames v. Bawkms (1815) 3
paper, July 28, 29. m. & S. 488.
(m) R S. C. Order XLVIIIa, (2) 7 Will. IV. and 1 Viot. o. 73,

sec. 3.
r. 1.
(r) Steward v. Oreaves (1842), 10
(o) R. S. C. Order XYI, r, 9. M. & W. 711,
PROCEEDINGS BY OR AGAINST A COMPANY 101
sued on behalf of the society or braach, or by leaving a true copy

at the registered office of tlie society or at any place of business
of the society or branch within the jurisdiction of the Court in
which the proceeding is brought, or if that office or place of business
is closed, by posting the copy on the outer door. If the process is
served otherwise than by personal service on the persons sued or

by leaving a copy at the registered office, then a copy must also be
sent in a registered letter addi-essed to the committee at the regis-
tered office of the society or branch and posted six days before
any further step or proceeding is taken (s).
The ti'ustees of any registered trade union or any other officer Prouoediugs
of such trade union who may be authorised so to do by the rules trade unions.
thereof may bring or defend any legal proceedings touching or

concerning the property, right, or claim to property of the trade
union. The summons may be served by lea\ing the same at the
registered office of the trade union (t).
or trade unions, although not Friendly

Eegistered friendly societies
, T... „.,..,,
societies and
incorporated, are associations oi individuals recognised by law trade unions
-i-ii
with a capacity for owning property and acting by agents, and i^'i^Mstered
may therefore be sued in their registered name as well as in the ""ô
name of their trustees or other officers ((().
A friendly society or trade union, whether registered or or in name of
unregistered, may, as an association of individuals, be sued in the tive members.
name of one or more representative members (u).
The directors of a company may, by personally executing a Pereonal

°
policy, become personally liable thereon. Thus, where in a policy a^-ector
company executing
the directors covenanted that the stock and funds of the ^ '
policy.
should stand charged and be liable to pay the sum assured, it was
held that the directors were liable to be sued in their own
persons, and were bound to pay so long as the funds proved
adequate to meet the claim (y).
company registered under
Process against a the Companies Ser\-ice of
Acts may be served on the company by leaving it at or sending it company"
by post to the registered office of the company (:).
(y) Gurney Rawlins (1836), -2

(s) P. S. Act, 1896, sec. 9i. v.
(t) T. U. Act, 1871, sec. 9. H. & W, 87.

(«) Taff Vale JRailway v. Amalga- («) Comp. Act, 1908, sec. 116.
tnated Society of Railway Servants,

[1901] A. C. 426.
Where a company by charter or act of parlia-

is incorporated
ment express provision may be made for the service of process,
but in default of such provision service may be made on the head
office or on the secretary of the company (a).
Foreign com- Process against a foreigncompany carrying on a
insurance
pany carrying
on business business in the United Kingdom may be served by leaving the
within the
jurisdiction. process with or sending it by post to the person or persons
authorised by the company to accept service on its behalf and
whose names and addresses are registered with the Registrar of
companies in compliance with sec. 274 of the Companies Act,
1908 (&). Process against a foreign company which carries on
business in the United Kingdom but has not complied with the
requirements of the Companies Act, may be served on the
principal officer or agent resident in the jurisdiction (c).
Not carrying Process against a foreign company not carrying on business

on business
within the within the jurisdiction may, by leave of the Court, be served upon the
jurisdiction.
company out of the jurisdiction when the action is founded on the
breach of an agreement to be performed within the jurisdiction (t?),
or where the company is a necessary or proper party to an action
properly brought against some other person duly served within
the jurisdiction (dd).
Service on Process in England against a Scottish or Irish company
Scottish or
Irish
cannot be served out of England (e), and can only be served in
company. England if such company carries on business through an agency
or branch office in England, the service in such a case being on
the principal officer or agent resident in the jurisdiction (/). No
such service, however, can be made where, according to any
statutory provision, the proper place for serving the company is
in Scotland or Ireland (g), and therefore in the case of a company
registered under the Companies Acts with its registered office in
Scotland, an English process cannot be served at a branch office in
England (A). Proceedings against the company must necessarily
be brought in a Scottish Court.
(a) E. S. C. Order IX. r. 8. (e) Jones v. Scottish Accident
(1886),
(6) Comp. Act, 1908, sec. 274 (2). 17 Q. B. D. 421.
(c) Dunlop Pneumatic Tyre Co. v. (/) Logan Y. Bank of Scotland.mOil
Actien-Gesellsehaft, dc, [1902] 1 K. B. 2K. B. 495.
342. As to when a company is deemed (g) Palmer v. Caledonian Bail. Co.,
to be carrying on business in the [1892] 1 Q. B. 823.
United Kingdom, see ante, p. 46. (h) Watkins v. Scottish Imperial
(d) R. S. 0. Order XI. r. 1 (e). (1889), 23 Q. B. D. 285.
{dd) K. S. 0. Order XI. r. 1 (g).
CHAPTER II
Insurable Interest and Illegality
Section I. —Statutes relating to Insurable Interest
In considering the question of insurable interest it is necessary rnsurable
at the outset of the inquiry to distinguish between the interest be'requiredby

which the law requires the assured to have in the subject matter the terms o£
of insurance
11-interest which
and the
1 • 1
is
-nil
required by the terms of the
(• ^ the contract
or by statute.
particular contract under consideration. An interest is required

by the terms of the contract itself if the promise of the insurer is
merely to indemnify the assured against pecuniary loss arising
from the event insured against, i If the assured has no interest at

the time the event happens it is clear that he cannot recover any-
thing, because heno damage and therefore has no claim to
suffers
an indemnity. Similarly if he has an interest which is limited to
something less than the full value of the subject matter he suffers
no greater damage than the value of his interest at the time of the
loss, and therefore his claim to an indemnity cannot exceed the
value of his interest. But 'the contract of insurance is not neces-

sarily a contract of indemnity (a). The promise of the insurer
may be to pay on the happening of the event insured against a
certain or ascertainable sum of money irrespective of whether or
not the assured has suffered loss, or of the amount of such loss if he
has suffered any. The ordinary forms and accident
of life (a)
insurance are examples of this class of contract, and even fire (b)
and burglary insurances need not necessarily be contracts of stiict
indemnity.^ But, whether the terms of the contract require an
interest or not, an raterest of some kind and to some extent is
required by statute ia every contract of insurance, and contracts
made without the necessary interest are illegal and void, and the
(a) Dalby v. India and London Life 5 El.& Bl. 870 London and North
;
(1854), 15 C. B. 365. Westernv. Glyn(lS59),lEL &'El. 652.

(6) Waters v. Monarch Life (1856),
104 IXSURABLE IKTEREST
parties to the contract cannot waive the illegahty (c). If the

illegahty is not pleaded in defence it is the duty of the Court to
take cognisance of it and refuse to enforce the contract {d). The
nature and extent of the interest required by various statutes will
be considered in the present chapter. It is the duty of the Court
always to lean in favour of insurable interest if possible (e), and in
the absence of evidence it will be presumed that the assured named

in the policy has an insurable interest (/).
Wagers at Before the legislature intervened gambling and wagering were
^mmon ^^^^prohibited by English law. A wager as such was not illegal,
and could be enforced in a Court of law. Judges sat and solemnly
determined questions of the most frivolous character in which the
parties had no interest except by reason of their wager (gf), and
although the judges constantly complained of the waste of valuable
time which the trying of such cases involved, they had no choice
but to hear and determine them with the best patience which they
could command. The only wagers upon which they refused to
adjudicate were those which, on account of their subject matter,
were deemed to be contrary to pubhc pohcy (h), but it was never
in England considered to be contrary to pubhc pohcy to permit
the Courts to adjudicate upon a wager merely because it was a
wager. The furthest the English Courts ever went in their opposi-
tion to wagermg contracts as such was to discourage actions upon
wagers by refusing to grant facihties in procedure which were
granted to other htigants (i). The Scottish Courts, on the other
hand, have always refused to recognise the vahdity of wagering
contracts and have held that sponsiones ludicrce, as they style
such contracts, are void by the Common Law of Scotland (k).
(c) Royal Exchange Assurance v. East, 150; Evans v. Jones (1839),

Sjoforsakrlngs, [19021 2 K. B. 384 ; 6 M. & W. 77 ; Atherfold v. Beard
Anctil V. Manufacturers' Life, [1899] (1788), 2 T. R. 610 ; Hartley v. Rice
'*'• ^°™'' Mutual (1808), 10 East, 22 Henkin v. Oeres
ôoo\ ^?^ U ?^?r* ;
^^,^.V'J^
^^^-
(d) Gedge v.
^T
Royal
'^'^-
Exchange,
(1810), 2 Camp. 408; Ditchburn v.
Goldsmith (1815), 4 Camp. 152;
[1^0?] 2 Q- B. 214. Roebuck v. Hammerton (1778), Cowp.
/ngr;,^
(e) S«oc/fc V. (1884), Brett, 737; Da Costa v. Jones (1778),
^- ^' C°^P- 729 ; Allen v. Heame (1785),
i?
,^\- o- ^^-i-
(/) Glasgow Provident v. West- 1 T. R. 56
minster Fire (1887), 14 R. 947. (i) Jackson v. Colegrave (1695),
JP
344; â^^"'-
Good V. 'î-„^'«'T,i.^:??*''
Elhott (\1Q0), Z T. -R.
^^'^^- ^*'^*'^-
East, 160, 162
338; aUbert v. Sykes(l%l2), 16
693 ; Brown v. Leeson (1792), 2 H, Bl. (k) Brucev.Ross (1787) Morr.Diot.

43; Hussey V. Crickett (1811), 3 S52S Wordsworih^^.Pettigrew (1199),
;
Camp. 168 March v. Pigot (1771),
; Morr. Diet. 952i ; O'Connellv. Russell
^ ^ (1864), 3 Maoph. 89.
^^^'Ân^^^- ,
{h) Gilbert v. Sykes (1812), 16
;
S'l'ATU'I'lOH UI';i>A'l'IXG 'I'O 105
The same principle; whiciî the (,'ojiimon Law applied to wagois Policies made
in tho form of wagers watt applied to wiigorn which were cloaked teresfc'at'"'
iij thf! miiHc of policicH of iifdnnc insurance If tho nartioH choKo CVj""'''"
Law.
m
•
1
to make a wiif,'cr t,ii(! form of a maririf policy thr> Courts enforced
the contract. It is true that in Home of the earher cases in
Chanci.Ty that Court n]i\icsu-n to have cancelled pohcies on its
heing shown that the assured had no interest (Z). It has been
suf,'f,'eHted that thone caHen could only have been decided as they
were' on the f,'roufid of fraud or some other extrinsic circumstances
but, however that may [je, it is clear, from a long series of later
decisions, that waf,'er policies were ultimately recognised as legal
if both pariie'H intended to enter into a wager (to). A mutual in-
tention to enter in(,o a wagering transactionwas,however,neceHsary

bcfoic a policy made without interest could be supported. If tho
policy i»urf)orted on the face of it to be a contract of indeinnifjy,
and was in fiict fria,de by the assured without interest, the assured
c(juld not recover, and the practicf,' of tho Court was to assume that
all itfjlicies which could possibly bear that construction were
indemnity policies rrjade on interr^st. Policies therefore which
were int(;nded to bo merewagering contracts had to be so expressed
as to show that the promise to pay was not a contract of in-
demnity but a ])rornise to pay irrespective of interest. Vox this
[lurpose the clause known as the ji.p.i. (policy proof of interest)
clause was introduced. 'J'iiis clause was originally employed in
perfectly bond fide insurances for tlu; jturpose of eliminating the
dilliculty of proving tlie assured's interest or the amount of it, but
towards the end of the eigliteenth century it tjocame to a very great
extent a more instrument for wagering. Tbo abuse of the p.p.i.
policy for this purpose was so (txtensive that it was felt to be
(l) Marlinv. SUweU(lW.)]),l Show, R. 170; Ki-ilh v. /'rolrrlion Marine

106; Goddm-t v. (larrH (1092), 2 (1882), JO I.. K. Jr. r,l. Mr. Jiiinyon
Vcfri. 200; Li: I'yprr, v. IParr (Kiro luBiirariof!, ;ir(J Edit. p. 5)
(1710), 2 ViiiTi. 710; WhiUimjkam v. Htatnd t\uii a, wagering policy of firo
Thornborowjli, (J 000), 2 Vorn. 200. iriHiininco apart from statute
woiilil
(m) hur.i'na v. draufiiril (\M)'l), ',)
bii hning contrary to public
illegal as
B. & J'. 75, 101 (/KOO)', 2 N, K. 200;
;
policy, but althoiigb UiIh viow has
(louninH V. NcmleB (1811), 'I'mirit,. .'1 Ixxin adoptod in AtrK'ricii, and by
Bllt ; A HH ii'Viido V. fJamliridf/n (17J0), Horrio judj;(iH country, it is
in l-biH
10 Mod. 77 ; Itarmnn v. Van llaltan contrary to tbo wrigbt of authority.

(1716), 2 Vorn. 717; De/paha v. iSMling v. Arddmlal Dmlli. (1857),
Ludlow (1721 ), 1 Com. .•((11 ; Dean v. 2 F. & Good v. Elliot (1790),
N. 42 ;
IHiikc.r (1746), 2 Htr. 1250 ; J)<Uhi) v. .'tT. B, 0»:j Ruse v. Mutual Benefit
;
The India ami London Life (1854), Life (1801), 21! N. Y. 510; Freeman
15 C. IJ. a05; British Imwance v. v. y'Wtoni'Ve(1862), 38Barb. (N. Y.)
(I8;t<t), Cooke Al. 182; & 247.
8coU V. Roose (1841), .'! Ir, Bq.
106 INSURABLE INTEREST
against the best interests of sound commercial business to permit

its continuance, and accordingly in 1746 an Act was passed pro-
hibiting wagering policies on risks connected with British shipping.
This was the first prohibition against wager policies {mm).
Statute 19 The Marine Insurance Act, 1746 (19 Geo. 2, c. 37), provided " that
Geo. 2, 0. 37.
no assurance or assurances shall be made by any person or persons,
bodies corporate or politic on any ship or ships belonging to his
Majesty or any of his subjects or on any goods, merchandizes, or
effects, laden or to be laden on board of any such ship or ships,
interest or no interest, or without further proof of interest than

the policy, or by way of gaming or wagering, or without benefit of
salvage to the assurer and that every such assurance shall be
:
null and void to all intents and purposes." This was followed
in 1788 by the Act of 28 Geo. 3, c. 56, which provided " that from
and after the passing of this Act it shall not be lawful for any
person or persons to make or effect, or cause to be made or effected,
any policy or policies of assurance upon any ship or ships, vessel
or vessels, or upon any goods, merchandizes, or effects or other
property whatsoever without first inserting or causing to be
inserted in such policy or policies of assurance the name or names
or the usual stile and firm of dealing of one or more of the persons
interested in such assurance ; or without instead thereof inserting
or causing to be inserted in such policy or policies of assurance the
name or names or the usual stile and firm of dealing of the con-
signor or consignors, consignee or consignees, of the goods, mer-
chandizes, effects or property so to be insured ; or the name or
names or the usual stile and firm of dealing of the person or
persons residing in Great Britain who shall receive the order for
and effect such policy or poUcies of assurance or of the person or
persons who shall give the order or direction to the agent or agents
immediately employed to negotiate or effect such policy or poUcies
of assurance."
Statute 19 The Act of 19 Geo. 2, c. 37, was construed as requiring interest
Geo. 2, c. 37,
required to be shown at the time of the loss (n) except in the case of a " lost
interest at the
date of loss
{mm,) Legislation had already been M. & W. 10 Barr v. Gibson (1838),
only. ;
directed against fraudulent and ex- 3 M. & W. 390. The assured having
cessive gambling and betting at interest at the time of the loss could
games or sports, 16 Car. 2, c. 7 9 ; sue notwithstanding that he had
Anne, c. 14; but neither of these subsequently parted with his interest
statutes affected the validity of before action brought. Sparhes v.
wagering policies of insurance. Marshall (1836), 3 Scott, 172.
(n) Powles V. Innes (1843), 11
STATUTES RELATING TO 107
or not lost " policy, entered into after a partial loss had occurred
in ignorance of such partial loss, in which case it was sufficient to
show interest at the time the contract was made (o). As a general
rule it was not necessary to show interest at the time the contract
was made (p). It was the contract was to pay on
sufficient if
interest at the time of the loss. At one time it was apparently

thought to be necessary to aver and prove interest from the time
of the commencement of the risk down to the time of the loss (p),
but in practice proof of interest at the time of the loss has always
been deemed sufficient, and no doubt for this reason, that the policy
being a poUcy on interest does not attach until interest is acquired,
and therefore the acquiring of interest and commencement of the
risk are simultaneous. It was never decided whether, if a poHcy
was effected by the assured without any hope or expectation of
acquiring interest in the subject, such policy would be void as one
made by way of gaming or wagering. Under the Marine Insur-
ance Act, 1906, a poHcy made without hope or expectation of
interest is declared to be void, but therewas probably nothing in
19 Geo. which made such a policy illegal. In the absence
2, c. 37,
of any " p.p.i. " or " interest or no interest " clause the policy
would be deemed to be made on such interest as might appear,
and it would not be competent by extrinsic evidence to show
that was other than a policy to pay only on interest. A con-
it
tract topay on interest, if any, at the time of the loss could not be
open to objection on the ground of gaming or wagering merely
because the assured had no hope or expectation of acquiring an
interest at the time the contract was made.
The Act of 19 Geo. 2, c. 37, did not apply to foreign vessels or Policies
to merchandise carried therein, nor to British privateers, nor to ^^^^ô. 2,"^°™
merchandise carried from Spanish and Portuguese possessions in o. 37, remained
Europe or America. In cases to which the Act did not apply the Common
^*'*^-
policy was valid at Common Law if expressly made irrespective
of interest {q). But where the policy was not p.p.i., or interest or
no interest, it was deemed to be made on interest, and therefore

interest at the time of the loss had to be averred and proved as in
the case of policies within the statute (r).
(o) Sutherland v. Pratt (1843), 11 4 Bing. 567 ; Levns v. Rucker (1761),

M. & W. 296. 2 Burr. 1167 ; Grant v. Parkinson
(p) Ehind v. Wilkinson (1809), 2 (1781), 3 Doug. 16.
Taunt. 237. United States Shipping Co. v.
(r)
(q) Irving v. Manning (1847), 1 Empress Assurance, [1907] 1 K. B.

H. L. C. 287 ; Murphy v. Bell (1828), 259.
— ;
19 Geo. 2, Although contracts of marine 'insurance have always been

V. 37, did not
require in- construed where possible as contracts of strict indemnity, the
terest to the
statute did not require the contract to be confined to a strict
full amount.
indemnity Thus valued poUcies were permitted under the
(s).
Act, and the assured thereby might recover more than the actual
loss which he had sustained (t). So insurances on freight were
by custom deemed to be contracts to pay the gross freight in case
of loss, and thus the assured who saved the expenses of earning the
freight recovered more than an indemnity (m). What the statute
therefore required was not that the amount which the insurer
contracted to pay should be strictly limited to the amount of the
assured's interest at the time of the loss, but merely that the
assured should have a substantial interest in the subject matter
at that time (v). The statute could not be evaded by insurance
to a substantial amount on a comparatively trifling or illusory
interest (x).
The provisions of 19 Geo. 2, c. 37, are now superseded by the
Marine Insurance Act, 1906.
Marine Insurance Act, 1906, sees. 4, 5, 6, 23

6 Edw. 7, 0.
41.
Avoidance of
Sec. 4. — (1) Every contract of marine insurance by way of gaming or
wagering or
wagering is void.
gaming oon- (2) A contract of marine insurance is deemed to be a gaming or wagering
tracta. contract
(a) When the assured has not an insurable interest as defined by this Act,
and the contract is entered into with no expectation of acquiring
such an interest ; or
(6) When the policy is made " interest or no interest " or " without further
proof of interest than the policy itself " or " without benefit of salvage
to the insurer " or subject to any other like term.
Provided that when there is no possibility of salvage a policy may be
effected without benefit of salvage to the insurer.
Insurable Sec. 5. — Subject to the provisions of this Act every person has an
(1)
interest insurable interest who is interested in a marine adventure.
defined.
(2) In particular a person is interested in a marine adventure when he stands
in any legal or equitable relation to the adventure or to any insurable property
at risk therein in consequence of which he may benefit by the safety or due
(s) Kentv. Bird {m7),Cowp.5S3. B. & P. 75, 101 ; (1806), 2 N. R. 269

{t) Page v. Fry (1800), 2 B. & P. Thellusson v. Fletcher (1780), Doug.
240. 315; Cousins v. Nantes (1811), 3
(«) Tasker V. iScott (1815), 6 Taunt. Taunt. 513.
234; Thellueaon V. Fletcher (1780), (x) But see Powleav. Innes (1843),
Doug. 315. 11 M. & W. 10.
(«) iMcena v. Craufurd (1802), 3
:: : — :
arrival of insurable property or may be prejudiced by its loss or by damage

thereto or by the detention thereof or may incur liability in respect thereof.
Sec. 6. —
(1) The assured must be interested in the subject matter insured When interest
at the time of the loss though he need not be interested when the insurance must attach.
is effected.
Provided that when the subject matter is insured " lost or not lost " the
assured may recover although he may not have acquired his interest until
after the loss, unless at the time of effecting the contract of insurance the
assured was aware of the loss and the insurer was not.
(2) When the assured has no interest at the time of the loss he cannot
acquire interest by any act or election after he is aware of the loss.
Sec. 23. A marine policy must specify
(1) The name of the assured or of some person who effects the insurance What policy
on his behalf must specify.
(2) The subject matter insured and the risk insured against
(3) The voyage or period of time or both as the case maybe covered by
the insurance
(4) The sum or sums insured
(5) The name or names of the insurers.
Until 1774 policies other than on marine risks were still subject Statute u
to the rules of Common Law, and therefore not void merely on the ' '
'
ground that they were wagers or made without interest, In that

year the Act 14 Geo. 3, c. 48, was passed.
statute 14 Geo. 3, c. 48
Whereas hath been found by experience that the making insurances on

it
lives or other events wherein the assured shall have no interest hath introduced
a mischievous kind of gaming for remedy whereof be it enacted that from
;
and after the passing of this Act no insurance shall be made by any person
or persons bodies politic or corporate on the life or lives of any person or persons,
or on any other event or events whatsoever wherein the person or persons for
whose use, benefit or on whose account such policy or policies shall be made
shall have no interest or by way of gaming or wagering and that every assur-
:
ance made contrary to the true intent and meaning hereof shall be null and
void to all intents and purposes whatsoever.
2. It shall not be lawful to make any policy or policies on the life or lives
of any person or persons or other event or events without inserting in such

policy or policies the person or persons name or names interested therein or
forwhose use benefit or on whose account such policy is so made or underwrote.
3. In all cases where the assured hath interest in such life or lives event or
events no greater sum shall be recovered or received from the insurer or insurers
than the amount or value of the interest of the insured in such life or lives
or other event or events.
4. Provided always that nothing herein contained shall extend or be con-
strued to extend to insurances bona fide made by any person or persons on ships
goods or merchandises: but every such insurance shall be as valid and effectual
in the law as if this Act had not been made.

;
110 INSURABLE INTEEEST
14 Geo. 3, The above Act, be observed, covers all insurances other

it will
tlian those on ships, goods or merchandises, that is other than marine
"°*
cover t!'
surances on insurances covered by 19 Geo. 2, c. 37, or insurances on chattels.
^°°
Whatever the real intention of the legislature may have been the
exception of insurances on goods or merchandises was construed
as extending to insurances on all chattels whether against marine
or land risks {y), and therefore the passing of this statute still left
insurances on chattels against land risks subject only to the
common law and accordingly still unfettered by any prohibition
against wagering transactions or any stipulation as to the insertion
of the names of the assured or other person taking out the policy,
u Geo. 3, The Act 14 Geo. 3, c. 48, wasnot intended to prohibit wagering,
u. 48, applies j^^^ only to prohibit wagering under the cloak of a mercantile
surances in document which purported to be a contract of insurance (z).
ioimôiT^^ Contracts therefore in the form of an ordinary poUcy of insurance

policy. are within the Act, although not strictly contracts of insurance (a)
but contracts not in the form of a poHcy are not within the Act,
although they may incidentally fulfil some of the objects of a
contract of insurance (h). An advertisement issued by the pro-

prietors of a medical preparation called " The Carbolic Smoke
Ball " contained a promise to pay £100 to any person who might
contract influenza after having used the ball. Although the
acceptance of this offer created a binding contract it was not a
policy of insurance and therefore not subject to the provisions of

14 Geo. 3, c. 48. Lindley, L.J., said, " You have only to look at
the advertisement to dismiss the suggestion "(c).
14 Geo. 3, The Act of 14 Geo. 3, c. 48, is very differently worded from the
c. 48, requires
^^^ qJj J9 Qg^^ 2, c. 37. Both alike prohibit pohcies made byway
the date of of gaming or wagering, but here the similarity ends. The Marine
the contract.
^^^ prohibited policies made " interest or no interest or without
further proof of interest than the pohcy," and this was con-
strued as requiring the contract to be a contract to pay on interest
subsisting at the date of the loss, and no other interest was
Waters v. Monarch Life (1856),
(y) the Marine Insurance Act, 19 Geo. 2,
5 El. &
Bl. 870 ; c. 37, was held applicable to contracts
(z) Paterson v. Powell (1832), 9 amounting in substance to an in-
Bing. 320 ; Bodiuck v. Hamwnerton surance, although not in the form of
(1778), Cowp. 737. a policy. Kent v. Bird (ITlD.Co-w^.
(a) Ashhurst, J., in Good v. Elliott 583 ; Cook v. Field (1850), 15 Q. B.
(1790), 3 T. R. 693, 703. 460 ; Morgan v. Pebrer (1837), 3 Bing.
(6) Oarlill v. Carbolic Smoke Ball N. C. 457.
Co., [1893] 1 Q. B. 256; Bunyon, Life (c) Garlill v. Carbolic Smoke Ball
Insurance, 2nd Ed. p. 13 ; Bunyon, Co., [1893] 1 Q. B. 256, 261.
Fire Insurance, 3rd Ed. p. 7. But
required. The Act of 14 Geo. 3, c. 48, enacts that no insurance shall

"
be made on any event wherein the assured " shall have no interest
and " no greater amount shall be recovered than the amount or
value of the interest." These words have been construed in
relation to a life policy as requiring interest to be shown only at
the date of the contract and as limiting the amount recoverable
to the amount of that interest without any reference to the interest
or amount of interest at the date of the loss (d). The Act deals
with all contracts of insurance to which it applies on exactly the
same footing, and the interest required in the case of insurances
on lives is the same as the interest required in all other classes of
insurance. It is impossible to give the same words a different
construction when applied to fire and other risks from that given
to them when applied to life risks (e). It is submitted therefore
that, whether the risk be life, fire, accident, or any other risk to
which the statute applies, the statute is satisfied by showing
interest at the date of the contract only and probably the
statute will not be satisfied unless the assured had an insurable
interest to the extent of the amount claimed at the date of the
contract (g). An interest acquired afterwards, although before
the loss, does not seem to satisfy the express proviso that no
contract shall be made unless the assured shall have an interest.
If this is a correct inference, as to which, however, there is no
definite authority, a life policy effected by a creditor on the
life would be void if effected before the debt was
of his debtor
legally constituted, and a fire policy effected by the prospective
purchaser of a house would be void if effected before he had
concluded a legal contract to purchase. The hope or prospect
of obtaining an interest during the currency of the policy would
not be sufficient even although the hope was reahsed before the
loss.
Whether or not interest must be shown at the date of the loss The terms of
depends in the case of all risks other than marine on the terms of ^®
''reqSre
the contract. If the insurers' promise is only to pay an indemnity, interest at
the date of
(d) Dolby V. India and London it is necessary the party insured
Life fl854), 15 C. B. 365. should have an interest at the time
(e) Bunyon suggested that the of the insuring and at the time the
statute might be construed difierently flre happens." This, however, was
according to each particular class before the statute, and the decision
of insurance to which it is applied. is referable solely to the principle of
Fire Insurance, 3rd Ed. pp. 8, 9. indemnity. Sadlers' Company v. Bad-
{g) Lord Hardwicke said in the cock (1743), 2 Atk. 554.
case of a fire policy, " I am of opinion
'
it follows that interest at the date of the loss must be shown, but
not necessarily a continuity of interest between contract and loss Qi).
The rule of marine insurance law to construe the contract if
possible as a contract of strict indemnity was one so familiar to

the judges that they applied it indiscriminately to all classes of
insurance without considering very carefully the peculiar nature

of the different contracts with which they were dealing. Thus in
1807 the Court of King's Bench held that a life policy in ordinary
form effected by a creditor on the life of his debtor was a contract
of indemnity, and that the assured must show interest in the life
and consequent loss at the time the life dropped (i). This decision
was received by the insurance world with a chorus of disapproba-
tion, and the companies did not in practice follow it, but paid in
full on such policies even although the debt had been paid off
when the debtor died (fe). Notwithstanding this, the decision

stood unchallenged in the Courts for nearly fifty years, and even
received judicial approval (Z). Finally, the question was again
contested in Dalby v. The India and London Life (m) and carried
to the Exchequer Chamber, where Godsall and Boldero (n) was
overruled.
Dalby v. The India and London Life (1854), 15 C. B. 365
Dalby v. The Wright insured the life of the Duke of Cambridge for £3000 with the
India and Anchor Life. That company, by way of counter insurance, insured the life
London Life.
of the Duke with the India and London Life for £1000. Subsequently
Wright purchased an annuity from the Anchor, and in part payment of the
price surrendered his policies on the Duke's life. On the death of the Duke
the plaintiff as trustee for the Anchor Life sued the India and London Life
on their policy. The latter contested their liability on the ground that the
policy was void for want of interest. The Court held (1) That no interest
would have been necessary before 14 Geo. 3, c. 48. (2) That that statute
required interest only at the date of the contract. (3) That the terms of the
contract did not require any interest to be shown. The contract was not a
contract to indemnify the Anchor, but a contract to pay them a certain sum
on the happening of a certain event irrespectively of their interest in the life.
Frimd facie The ordinary contract of hfe insurance, therefore, requires no

no interest
interest at the date of the death. It is sufficient if the statutory
at death is
required in
(h) 1 Phil. Ins. sec. 85. Grazier v. {k) Barber v. Morris (1831), 1 M.
life polic}'.
Phoenix Insurance (1870), 2 Hann. & Rob. 62.
{I) Henson v. Blackwell (1845), 4
New Br. 200.
Hare, 434.
(i) Godsall v. Boldero (1807), 9 (m) (1854), 15 C. B. 365.
East, 72. (n) (1807), 9 East, 72.
;.
STATUTES EELATING TO 113
requirement of interest at the date of the contract is satisfied (o)
No doubt a contract to indemnify against loss consequent upon

the death of an individual may be made, but a life pohcy taken
out on the life of another is not to be construed as a contract of
indemnity unless the intention of the parties that it should be so
limited is clearly expressed.
Fire and burglary policies, on the other hand, are essentially Vriindjack
different in their nature from life policies, and are to be preferably time of loss
construed as contracts of strict indemnity (v)- ?^required m
^ ' insurance on
property.
Sadlers' Company v. Badcock (1743), 2 Atk. 554
A held a lease of a house for six and a half years unexpired.

She insured Sadlers''
against a term of seven years in the Hand in Hand Mutual Office, Compani/
fire for
v.
and the company agreed " to pay £400 to her, her executors, administrators,
and assigns so often as the house shall be burned within the said term." The
house was burned during the term of seven years, but after A's interest in the
property had expired. After loss A assigned the policy to the then owner,
who sued on the policy but it was held that he could not recover. Lord
;
Hardwicke construed the policy as a contract to indemnify A against loss to

the extent of £400 and not as an absolute promise to pay her £400 in the event
of the house being burned down any time within the term of seven years.
Lord Hardwicke's decision in Sadlers' Company v. Badcock has

never been disapproved, and shows how strongly the Courts lean
towards the view that a fire policy is a contract of strict indemnity
and therefore, as a general rule, the assured under a fire pohcy who
has parted with his entire interest before the loss cannot recover,
and if he has an interest cannot recover more than the value of it.
But a fire policy need not necessarily be a contract of indemnity
only. All that can be said is that there is a strong presumption
that it is and that it will be so construed in the absence of a clear
intention to the contrary, but when such intention appears in
the policy it is not to be disregarded (q).
Daily The India and London Life (r)

V. is sufficient authority u Geo. 3,
for the proposition that the express words of the statute " shall
no^f^te^ât
the date of
(o) Connecticut Mutual Life v. Darrell v. Tibbitts (1880), 5 Q. B. D.
Schaefer (1876), 94 U. S. 457. 560 ; Lynch v. Dalzell (1729), 4 Bro.
(j>) Brett, L.J., in Castellain v. P. C. 431; Sadlers' Co. v. Badcock
Preston (1883), 11 Q. B. D. 380, 388. (1743), 2 Atk. 554; Ecclesiastical
Cockburn, C. J., in Martineau v. Kit- Commissioners v. Boyal Exchange
ching (1872), 41 L. J. Q. B. 227, 235 ; Assurance (1895), U
T. L. R. 476.
Dalby v. The India and London Life {q) Waters v. Monarch Life (1856),
(1854), 15 C. B. 365; North British 6 EI. & Bl. 870; London tk North
and Mercantile v. London, Liver- VFesterw v. Gi2/n(1859), 1 El. &E1. 652.
pool, and Globe (1877), 5 Ch. D. 569 ; (r) (1854), 15 C. B. 365.
I.L. 8
the loss pro- have interest " refer to interest at the date of the policy and at
ths-t date only but the statute also prohibits policies made " by
policy is ;
^""^ ^^y *^^ gaming and wagering." It is clear that where the assured
M^°t^^
the possibility has an interest which may last during the whole term of the risk,
^ ^^ absolute promise to pay a sum of money not greater than the
that date.
assured's interest at the time of the contract is not essentially a
gaming or wagering poUcy. This was Dalby's Case, as the
interest of the Anchor Life would have lasted until the life
dropped if the policies issued by them had not been previously
surrendered. But a different case is presented where the assured
has at the time the contract is made an interest for a definite
period only, after which there is no hope or expectation of the
interest being continued or renewed. In such a case a contract
containing a promise to pay in the event of loss after the cessa-
tion of interest might well be deemed a contract pro tanto by way
of gaming or wagering.
Law V. London Indisputable (1855), 3 Eq. B. 338
Laio V. X was entitled to certain property in the event of his attaining the age
London In- of thirty years. He assigned this contingent interest to his father A, who
disputable.
thereupon effected a policy to provide against the risk of the contingency
failing. A made full disclosure of his intention to the company and asked
for a policy to cover the period of risk which was then about twenty months.
The company advised A to insure for two years as he was not sure about the
exact date and this was accordingly done, the policy containing a promise
in general terms to pay a certain sum in the event of X dying within two years
from the date of the policy, and premiums for the two years were charged and
paid accordingly. X attained the age of thirty, but died within the two years.
It was held by Vice-Chancellor Page Wood that although A became entitled
to the estates he was also entitled to recover on the policy. The Vice-Chancellor
held that it was the intention of the parties to effect a policy for two years
payable on death within that period, irrespective of the contingency. This
contract was made, however, with the bond fide object of providing against the
contingency, and was extended to two years merely on the ground that the
exact duration of the contingency risk was not known at the time. The
policy was made by one having an interest, and the object of the contract was
solely to protect that interest. In the course of his judgment the Vice-
Chancellor put the extreme case of a party having an interest in one day of
a life insuring for the whole duration of the life, and in argument the case
was put of an insurance against accident during a railway journey, and the
insurers effecting a counter-insurance upon the whole life. The Vioe-Chancellor
said that if such oases arose the question would be whether " a fraud upon
the statute had been committed, and if any device of that description be
found in order to evade the statute it would be very properly left to the jury
to say how such a contract should be dealt with."
STATUTES RELATING- TO 115
Itseems clear on the authority of the above case that if an

interestwere created for a short period merely for the purpose of
legaUsing an msurance for a longer period which would otherwise
have been illegal for want of interest, such device would not avail
the assured would be a " fraud upon the statute." Probably
: it
there must be some reasonable expectation of the interest being

continued to the date when the loss actually occurs in order to
legalise the promise to pay, or else the extension of the term beyond
the term of the interest must be bond fide for the purpose of
covering some such doubt as to the facts as existed in the above
cited case. Where the interest of the assured is limited to a definite
period with no hope or expectation ofits being continued beyond
such period, an insurance to cover a period substantially longer

would probably be void pro tanto.
The second section of 14 Geo. 3, c. 48, provides that no greater Amount of
sum shall be recovered than the amount or value of the interest of ''i*^^?^*
required by
the assured. The express requirement of the statute again refers i* Geo. 3,
"
"" °"
to the interest at the time of making the contract. The Marine '
Insurance Act, 1746, contained no provision limiting the amount

recoverable to the amount of the interest, and accordingly valued
policies, and policies on gross freight, etc., were legal. Under
14 Geo. 3, c. 48, a valued policy would probably be ineffective if
the value were challenged by the insurer, since the amount re-
coverable is limited to the actual value of the interest, and a
promise to pay more would be pro tanto illegal. In the same way,
as the statute apparently requires an interest to be actually
subsisting at the date of the contract, so apparently it restricts the
assured's right to recover to the extent of the interest which he

had at that time. Any accretion of interest during the term of
the risk ought to be the subject of a new contract. When, however,
the value of the interest as distinguished from the extent has
increased, the assured can recover in respect of the increased value.
The Act 14 Geo. 3, c. 48, although it formerly did not apply to Application
Ireland(M),was extended to that country by 29 & 80 Vict. c. 42. Mr.

Bunyon has pointed out (x) that the second section of this last-
mentioned Act refers to policies of insurance upon lives only, and
that therefore there may be a doubt whether as regards insurances
upon " other events" 14 Geo. 3,c. 48, has been extended to Ireland.
(u) British Insurance v. Magee (x) Bunyon on Fire Insurance, 3rd

(1834), 1 Cooke &Alcock, 182; Ed. p. 10.
Scolt V. Roose (1841), 3 Ir. Eq. R. 170.
The first section of 29 & 30 Vict. c. 42 is, however, the principal

enacting section, and it provides in general terms that " the pro-
visions of the said recited Act shall extend to Ireland." It would
be contrary to all rules of construction to hold that this general
enactment is in any way limited by the terms of the second section,
which merely makes provision for the time when the Act shall
commence. The Marine Insurance Act, 1746, was never extended
to Ireland («/), but the Marine Insurance Act, 1906, applies to
Ireland as well as to Great Britain.
The Gaming The Act 14 Geo. 3, c. 48, left untouched insurances on goods
V?ct i; 109 ^'gainst land risks. These, although made without interest, were
enforceable until 1845. In that year the Gaming Act was passed,
and for the first time all contracts made by way of gaming or
wagering were declared void irrespective of their form or subject
matter. It provided that " all contracts or agreements, whether
by parole or in writing, by way of gaming or wagering shall be null
and void." This Act applies to Ireland but not to Scotland.
Its application to Scotland was unnecessary by reason of the rule
of the Scots Common Law that all wagering contracts are void.
What con- The Gaming Act avoids all contracts which in substance are
rendered" void
'^^g^rs made without any kind of interest in the subject matter
by the other than the interest which the wager creates (^). Insurance
policies, therefore, are clearly within the Act if made without any
interest or concern in the subject matter. It is doubtful, however,
whether the Gaming Act requires any insurable interest in the
strict sense in which an insurable interest is required by 19 Geo. 2,
c. 37, or 14 Geo. 3, c. 48. The Act merely prohibits gaming and

wagering, and there is no reference in it to insurances or insurable
interest. Nothing is more clear on the authorities than the rule
that an expectation of future benefit does not create an insurable
interest within the meaning of the insurance Acts : but if the
expectation is more likely to be realised than defeated a contract
to insure against its loss can hardly be deemed a contract by way
of gaming or wagering. It is submitted that the absence of in-
surable interest in the strict sense does not necessarily import the
element of gaming so as to avoid the contract under the Gaming
Act. But however this may be, it is clear that the Gaming Act
does not require the interest to subsist at any particular time, and
(y) Keith v. Protection Marine C. B.538 ; Gieve, In re, [1899] 1 Q. B.

(1882), 10 L. R. Ir. 51. 794; Rourke v. Short (1856), 5 El.
{z) Qnzewood v. Blane (1861), 11 & Bl. 904
NATURE AND EXTENT 117
therefore an insurance made with an expectation of interest would

not be void in the event of interest being acquired before the loss (a),
nor would an insurance made on an actually subsisting interest at

the time of the contract be void by reason of want of interest at
the time of the loss (&). So too, interest to the full amount is
clearly not required by the Gaming Act if the assured beyond his
limited interest has some concern in the safety of the whole
property (c).
Section II. —Nature mid Extent of Insurable Interest required
Neither of the statutes 19 Geo. 2, o. 37, and 14 Geo. 3, c. 48, what is aa

insurable
defines the insurable interest which the assured is required to have
interest.
in the subject matter of the insurance, and the first statutory
definition appears in the Marine Insurance Act, 1906, in relation
to marine risks (cc).
The Marine Insurance Act, 1906, does not attempt to formulate

any exhaustive definition of insurable interest, and it would be
practically impossible to do so since insurable risks are so varied in
their nature, and different considerations must apply to different
classes of risks. If this is so in the case of marine insurance it
applies with much greater force to any attempt to give a defini-

tion of insurable interest which would be applicable to all classes
of risks which are known to the insurer. Section 5, subsection
(2), of the Marine Insurance Act, 1906, states in succinct form the
broad principles which have been laid down by the Courts as a
guide to the solution of the question whether or not in any par-
ticular case there is an insurable interest. It is declaratory of
the case law relating to marine policies, but these cases have been
appHed, so far as applicable, to other risks, and the definition in
the Marine Insurance Act, 1906, may be taken mutatis mutandis

as a good working definition of insurable interest in all insurance
risks, and in particular in risks relating to property.
A good broad definition of insurable interest applicable to all General
risks under the Act of 14 Geo. 3, c. 48, would be as follows : Where insurable
interest.
(a) Ehind v. Wilkinson (1809), 2 (6) v. India and London Life

Dalby
Taunt. 237, unless there waa a (1854), 15 C. B. 365.
J i.- ii- XI. • (c Waters V. Monarch Life 1856,
misrepresentation i.
that there was in
g ^/ ^ gj g^^ .
^^^^^^ and North
fact interest at the time the insurance Western v. Olyn (1859), 1 El. & El,
was effected. Howard v. Lancashire 652.
Insurance (1885), 11 Can. S. C. 92. {cc) Section 5; ante, p. 108.
the assured is so situated that the happening of the event on which

the insurance money is to become payable would, as a proximate
result, involve the assured in the loss or diminution of any right
recognised by law or in any legal liability there is an insurable
interest to the extent of the possible loss or Uability.
A mere moral The right necessary to afford an insurable interest must be a
no insurable right which the kw recognises as valid and subsisting. It may be
interest.
^ right either in law or equity ; but a mere moral claim affords no
insurable interest, as in the eye of the law it is as nothing (d). Thus
a contract which is void (e) or a promise made without good con-
sideration (/) affords no interest, however that the
likely it may be
promisor will fulfil his promise as a moral obligation. The interest
of the promisee in such a case is nothing more than a bare ex-
pectation.
A bare ex- Qne of the main principles laid down by the Courts is that the
pectation of
future benefit mere hope or expectation of a future benefit is not sufficient to
insurable
Constitute an insurable interest in an event which if it happened
interest. would prevent such hope or expectation being realised. This
principle was much discussed in the naval prize cases about
the beginning of the nineteenth century. The captors of lawful
prize became entitled to the proceeds either under the Naval

Prize Acts or by a subsequent grant from the Crown, and the
captors on making a capture insured the captured vessel against
maritime risks until she should be brought into port. In so far
as the captors had a vested right under the Prize Acts, it was
held that they could insure the vessel (g), but in cases where
they had no such right, but only an expectation of a grant from the
Crown, was held that they had no insurable interest {h). In one
it
case Lord Mansfield said that where the expectation amounted to

a moral certainty which had never been known to be defeated,
there was a sufficient interest (*). But this dictum was dis-
approved of by Lord Eldon {k) and Lord EUenborough (l). Chief
Justice Tindal (m) said that if admitted it certainly could not be
(i) StocMale v. Dunlop (1840), 6 East, 428 ; Devaux v. Steele (1840),

M. & W. 224 Hebdon v.
; West (1863), 8 Scott, 637.
3 B. & S. 579. (i) Le Gras v. Hughes (1782), Park
(e) StocMale v. Dunlop (1840), 6 Ins. 568, 3 Dougl. 81.
M. & W. 224. (k) Lucena v. Oraufurd (1806), 2
(/) Hebdonv. West (186Z), 3 B.&S N. R. 269 323.
579. (I) Routh V. Thompson (1809), 11
(g) Le Gras v. Hughes (1782), Park East, 428.
Ins. 568, 3 Dougl. 81. (m) Devaux v. Steele (1840), 8
[h) BotUh V. Thompson (1809), 11 Scott, 637.
.
NATUEB AND EXTENT 119
extended beyond cases where the expectation had never been

known to fail. The rule that expectation alone does not give an
interest is equally applicable to all classes of insurance, to which
the Act 14 Geo. 3, o. 48, appHes. A person who has no interest
in a house, but the hope of possessing it in the future, has no
insurable interest which would entitle him to insure the property
against fire and similar risks (w). It has been suggested that an
expectation may be insured if specifically described (o) ; but there
appears to be no definite authority on this point. The event
insured against in such a case would be the failure of the expecta-
tion owing to certain specified causes or generally owing to any
cause. Thus a man might effect an insurance against the chance
of his father disinheriting him, or against the dimiaution of his
succession owing to loss by fire of his father's property. It is
submitted that such contracts would be contracts made without

insurable interest. The assured has undoubtedly, in one sense,
a very substantial interest in the event insured against, but he
does not stand to lose any legal right nor to suffer any legal
liability, and the pohcy of the law appears to have been to pro-
hibit the insurance of mere visionary or speculative interests (p)
The objection taken to insurance of interest based on an expec-
tation is not that the interest was not sufficiently described, but
that the interest was not insurable.
Although a bare expectation of acquiring a right is not an in- A right,
surable interest, a right may be sufficient to create an insurable contingent
interest, contingent upon the happening
notwithstanding that it is °^ defeasible,
„. ,
of some future event, or that the chance of it ever coming mto
.. creates an
insurable
''^*®''''^*-
possession is extremely remote (g). An interest is none the less
insurable because it is liable to defeasance on the happening of a

future event (r). Thus a right to property under a contract or title
which is not void but voidable gives an insurable interest in the

property until the contract or title is set aside (s).
(n) Clark V. Dwelling House Insur- East, 619; Chaplin v. Hicks (1911),
ance (1889), 81 Me. 373 ; Trott v. 27 T. L. R. 458.
Wooliuich Miaual (1891), 83 Me. (r) Phillips' Insur. 176 Lucena v. ;
362. Craufurd (1806), 2 N. R. 269.

(o) Lord Ellenborough in Routh v. («) Frierson v. Brenham (1850), 5
Thompson (1809), 11 East, 428; t'S, Ann. 540 PeiUgrew -v. The Grand
;
^'^'"^^ Farmer's Mutual (1877), 28

^ Insur. 176, 183.
Phillips' '
U. C. (C. P.) 70. And the Canadian
,
ip) Stockdale v. Dunlop (1840), 6 Courts have doubted whether in a

M. & W. 224 ; Knox v. Wood (1808), case where the assured's title has never
1 Camp. 544. been challenged or disputed by any
(2) Stirling v. Vaughan (1809), 11 claimant to the property the insurers
Contract In One case the Court held that a merchant who con-
under°Saie of tracted orally to purchase two cargoes of oil to arrive had not
Goods Act an insurable interest within 19 Geo. 2, o. 37, since the Statute
of Frauds required a contract for the sale of goods over the
value of £10 to be in writing (<). This decision, however, was
probably on the ground that the 17th section of the statute
rendered the and not merely voidable. That
contract void
section enacted that no contract for the sale of any goods for . . .
"
the price of £10 sterling or upwards " shall be allowed to be good
unless . some note or memorandum in writing be made, signed
. .
by the parties to be charged. This section of the statute is now

superseded by section 4 of the Sale of Goods Act, 1893, which
"
provides that the contract " shall not be enforceable by action
unless the section is complied with. An oral contract for the sale
of goods over the value of £10 is therefore not void. It operates
to pass the property (m), and although it cannot be proved by the

purchaser in an action against the vendor in England, the title
which it gives is good as against third parties, and might even be

enforced against the vendor in another country (x). This un-
doubtedly affords a good insurable interest to the purchaser,
or Statute The Same principle applies to contracts falling within the 4th
of Frauds.
section of the Statute of Frauds (y), which enacts that " no action
shall be brought . . . upon any contract or sale of lands, tenements,
or hereditaments or any interest in or concerning them ; or upon
any agreement which is not to be performed within the space of
one year from the making thereof unless some memorandum

. . .
or note thereof shall be in writing and signed by the party to be

charged." In American States, where the Statute of Frauds has
been adopted, a purchaser of land who could not enforce his
contract by reason of the statute, has been held to have a good
insurable interest in the buildings (z). The same principle would
apply to all other rights which subsist in land, but cannot be en-
forced by action in this country.
can set up the title of a stranger as a (m) Taylor v. G. E. Ry. Co., [1901]
defence to an action on their contract. 1 Q. B. 774.
Stevenson v. London and Lancashire (x) Leroux v. Brown (1852), 12
Fire (1866), 26 U. C. (Q. B.) 148, 152 ; C. B. 801.
Shaw V. Phoenix (1869), 20 U. C. (y) Hebdon v. West (1863), 3 B. &
(C. P.) 170, 181. S. 579.
(t) Stockdale v. Dunlop (1840), 6 (2) v. Milford Mutual Fire
Wainer
M. &W. 224; me
Patrick v. Eames (1891), Mass. 335; Dupuy v.
153
(1813), 3 Camp. 442 Miller v. Warre ; Delaware Mutual (1894), 63 Fed. Rep.
(1824), 1 Car. & P. 237; Waters v. 680; Amsinckv. American Insurance
Towers (1853), 8 Ex. 401. (1880), 129 Mass. 185.
A right where the remedy is barred by the Statutes of Action barred
Limitation, but where the right still subsists, would afford an ofLimita-^
insurable interest (a). The Statutes of Limitation which bar the tw".
remedy, but not the right, are 21 Jac. 1, c. 16, s. 3, relating to

rights founded on simple contract where the remedy is barred
after six years, and 3 & 4 Wm. 4, c. 42, relating to rights founded
on contracts under seal where the remedy is barred after twenty
years. The Statutes 3 & 4 Wm. 4, c. 27, and 37 & 38 Vict. c. 57,
relating to rights to recover land or rent, bar the right as well as
the remedy after twelve years.
1 •«
The chance of incurring legal liability in consequence of the
,• ±
happenmg of an event gives an mterest just as much as the chance
•
i_
• !_ Till
Legal
insurable
liability
creates an
interest in the
of losing a right. Thus all insurers have an insurable interest which
. .
event which
entitles them to remsure or effect a counter-insurance on the sub- may give rise
ject matter of the original insurance (&). Wherever an individual i^^JJi^*^.
has entered into a legal obligation to indemnify another in respect

of loss to property (c), or where the law places such obligation
upon him (d), he is in the position of an insurer, and has an
insurable interest in the property to the extent of his possible
liabiHty. A contractual obligation to insure gives the obligor
an insurable interest (e). And where the occurrence of any event
might directly involve legal liability, the person on whom
such liabihty would fall may insure against the happening of such
event (/).
The general rule of law is that one who effects an insurance As a general
against the happening of an event need not, in the absence of the^natuTe of

specific inquiry, disclose the nature of his interest in that theassured's
event Thus one who msures the life of another need not
(g).
.
IT interest
not be
need
^P''<>'°^''-
disclose whether he is interested in the life as a creditor or a
dependent (h). When property is insured the assured need not
state whether his title be legal or equitable (i). A purchaser
(a) Bawls v. American Mutual worth (1875), L. R. 10 Ex. 142 ;
(1863), 27 N. Y. 282. Crowley v. Cohen (1832), 3 B. & Ad.

(&) Mackenzie v. Whitworth (1875), 478 Russell v. Union (1806), 1 Wash.
;
1 Ex. D. 36. 409; Bartlet v. Goodwin (1816), 13

(c) Germania Fire v. Thompson Mass. 267 ; Cross v. National Fire
(1877), 95 U. S. 547. (1892), 132 N. Y. 133 ; Carruthers v.
{d) Crowley v. Cohen (1832), 3 B. Sheddon (1815), 6 Taunt. 14.
Ad. 478. {h)M'Cormick v. Ferrier (1832),
(e) Heckmdn v. Isaac (1862), 6 Hayes & J. 12.
L. T. 383. (i) Inglis v. Stock (1885), 10 A. C.
(/) Boehm v. Bell (1799), 8 T. B. 263, 270, 274 Aetna Fire v. Tyler
;
154. (1836), 16 Wend. 385; Dohn v.

(g) Inglis v. Stock (1885), 10 A. C. Farmers' Joint Stock (1871), 5 Lans.
263, 270, 274; Mackenzie v. Whit- 275.
•who has a valid contract may insure as owner although the legal
title or property has not passed to him (i). A trustee need not
disclose that he is a bare trustee without beneficial interest
and may insure simply as owner to the full value (fe). A
tenant who effects insurance in respect of his liability to repair
need not disclose that his interest is not that of an owner {I). A
mortgagee may effect insurance on the property which he holds
as security without disclosing that his interest is only that of a
mortgagee (m). In America, Mr. Justice Story expressed an
opinion that the interest of a mortgagee was an interest of such a
special nature that it ought to be disclosed (n), and this is sup-
ported by other authority in America (o). In some of the later
cases, however, this opinion is not approved or followed, and on

general principle these later cases probably represent the sounder
view (p). Unless there are special circumstances which could
mere fact that the assured is mortgagee and not
affect the risk, the
owner does not seem to call for disclosure. Where the assured
was mortgagor and had sold his equity of redemption, and his
only interest in the preservation of the property was in respect
of his personal Uability for the mortgage debt, the Court held that
this interest need not be specified or disclosed (g). On the same

principle, one who effects insurance on goods need not specify his
interest, even although it be only that of a carrier or other bailee ia
respect of his lien (r) or liability to the owner for loss (s).
In some oases In some cases, where the interest of the assured depends upon
of"the interest
*^® preservation of property and is not a right, legal or equitable,
is necessary jn the property itself, but arises incidentally from the ownership
define the of the property or from some contract in relation to the property,
^^^-
it is deemed not to be a sufficient description of the risk to insure
(i) Inglis v. Stock (1885), 10 A. C. rence (1829), 2 Pet. 25; Kernochan

263, 270, 274; Aetna Fire v. Tyler v. New York Bowery {1S58), IT N.Y.
(1886), 16 Wend. 385 Dohn v.
; 428, 439.
Farmers' Joint Stock (1871), 5 Lans. {p) Franklin Fire v. Coates (1859),
275. 14 Md. 285 ; King v. State Mutual
(k) Lucena v. Graufurd (1806), 2 (1850), 61 Mass. 1.
N. R. 269, 324 ; Insurance Go. v. (q) Gone v. Niagara Fire (1875), 60
Chase (1866), 5 Wall. 509; Oakman v. N. Y. 619.
Dorchester Mutual{lS6T),98Maas. 5T. (r) Oodin v. London Assurance
(I) Lawrence v. St. Mark's Fire (1758), 1 Burr. 490
Carruthers v.
;
(1865), 43 Barb. 479. Sheddon (1815), 6 Taunt. 14; PiUs-

(m) King v. State Mutual (1850), burgh Storage v. Scottish Union {1895),
61 Mass. 1. 168 Pa. 522.
(n) Garpenter v. The Providence {«) Growley v. Cohen (1832), 3 B. &
Washington (1842), 16 Pet. 495, 505. Ad. 478 ; Western v. Home Insurance
o) Columbian Insurance v. Law- (1891), 145 Pa. 346.
simply against the loss of the property (i). The risk must be more
particularly described, and in so describing the risk the assured
must necessarily specify the nature of his interest in the property.
the assured desires insurance in respect of the profits which On
If profits
he expects to arise from the purchase and resale of property he

of°™oêrt
must insure eo nomine on profits (u). An insurance simply on
the property will not cover the risk of loss of profit (u). If properly
specified he may insure on profits even although the property itself
is not his and is not at his risk (x) ; but if he has no legal or equitable
title to the property he must have some legally subsisting contract
in relation to it (y). Thus a merchant may insure on the profits
expectant on the purchase and resale of goods if the goods are
already his (2), or if he has entered into a legally subsisting con-
tract for their purchase («/). He need not have contracted to resell
them. He can estimate his probable profits on a resale and have
the profits valued in the policy, or, in default of valuation, he can
recover on the basis of the market price at the time and place
when but for the loss or damage to the goods he could have re-
sold them. In England it has been held in marine cases, and the
principle seems equally applicable to all insurances on profits,
that the assured cannot recover on a valued policy on profits unless
he can show that some profit would have been earned if the goods
had not been lost (a). In America the contrary has been decided,
and it is presumed de jure on a valued policy that the profits as
valued would have been earned (&).
Besides profits expected to be earned from the purchase and On rent or
hire.
resale of goods the assured may be insured against the loss of
other profits or benefits which may accrue from his particular
relationship to the goods, but the risk must be properly described
and incidentally the nature of his interest (c). Thus he may
be insured against loss of the profits to be derived from the
(t) Palmer v. Prait (1824), 2 Bing. (1850), 14 Q. B. 634 ; StochdaU v.

185. Dunlop (1840), 6 M. &
W. 224 ; Knox
(u) Eyre v. Glover (1812), 16 East, v. Wood (1808), 1 Camp. 544.
218 ; Grant v. Parkinson (1781), 3 (2) Barclay v. Cousins (1802), 2
Doug. 16 ; Lucena v. Oraufurd (1806), East, 544 ; Devaux v. J' Anson (1839),
2 N. R. 269, 315 ; Anderson v. 6 Bing. N. C. 519.
Morice (1875), L. R. 10 C. P. 609, (a) Hodgson v. Glover (1805), 6
622, 624; Wright v. Pole (1834), 1 East, 316; Barclay v. Cousins {1802),
Ad. & E. 621. 2 East, 544.
(x) M'Svnney v. Royal Exchange (6) Petapsco Insurance v. Coulter
(1850), 14 Q. B. 634 ; Halhead v. (1830), 3 Pet. 222.
yoMngr (1856), 6 EI. & Bl. 312. {c) Hunter v. Prinsep (1808), 10
iy) M'Swiney v. Boyal Exchange East, 378.
;
hiring or letting of property. The ordinary marine insurance of
the shipowner's or charterer's freight is of this kind (d). A

landlord may insure his rent which he may lose through the
destruction of his premises, but he could not recover such loss on
a simple insurance on the premises (e).
On agent's An agent for the sale of goods or other property can insure
commis-
sion. his expected commission on the transaction, but he must insure
eo nomine (/).
On business A man may also insure the profits which he expects from some
profits.
undertaking or adventure or from the carrying on of a business (g)
but in all such cases he must show that the matter was not merely
a visionary project, but that he had actually entered upon it by
incurring trouble or expense or making contracts in relation
thereto Qi), and he must also define the nature of the risk as an
insurance on profits (e). In an American case an agent of an in-
surance company was remunerated by a certain percentage of the
gross receipts and net profits of the company's fire insurance busi-
ness. He insured " on interest in profits under contract with
the X Insurance Company " against loss caused by the com-
pany's fire losses exceeding a certain total. It was held that he
had an insurable interest and that the risk was sufficiently
described {i).
On shares and Analogous to the insurance of the profits from a business or

dividends.
undertaking is the insurance by a shareholder of the shares which
he holds in a company. The English Courts have adopted the view
that a shareholder as such has no insurable interest in the corporate
property, or, at any rate, cannot insure simply on the property, but
must specify his interest and define the risk as an insurance on his
shares or dividends (k). In other words, he must insure not the

property but the capital which he has staked on the adventure and
the profits which he expects to derive from the investment. The
Court of Appeal in Ontario expressed some doubt as to whether
In the insurance of freight

{d) (g) Puller v. Glover (1810), 12 East,
the assured must show that he 124 ; Puller v. Staniforth (1809), 11
had a definite contract. Flint v. East, 232 ; Barclay v. Cousins (1802),
Flemyng (1830), 1 B. & Ad. 45 ; 2 East, 544.
Forbes v. Aspinall (1811), 13 East, (A) Buchanan v. Faber (1894), 4
323 ; Curling v. Long (1797), 1 B. & Com. Gas. 223.
P. 634, 636. (i) Hayes v. Milford Mutiuil Fire
(e) Wright v. Pole (1834), 1 Ad. & (1898), 170 Mass. 492.
E. 621 Menzies v. North British In-
; (k) Wilson V. Jones (1867), L. R.
surance (1847), 9 D. 694. 2 Ex. 139 Paterson v. Harris (1861),
;
(/) Flint V. Le Mesurier (1796), 1 B. & S. 354, 355.

Park, 563.
NATURE AND EXTKNT 125
a shareholder might not insure the company's property, but held

that in any case he could not, having insured as o'wner and then
sold the property to the company and become a shareholder, re-
cover on his original policy upon his interest as shareholder (f).
The American Courts have, on the contrary, held that a shareholder

may insure the property of the company without specifying his
interest (m). The Court of Appeal in New York held that a share-
holder in a shipping company who insured simply on a ship the
property of the company could recover the loss which he suffered
by reason of the decreased value of his shares arising from the loss
of the ship (n). An earlier case in Ohio (o), which has been cited
as authority for the proposition that a shareholder could not insure
simply on the company's property, is distinguished on the ground
that the conditions in the policy required the assured to have " an
unencumbered fee" simple in the property insured and that the
pohcy was void for breach of this condition (p). The American
decisions, however, are hardly consistent with the principle long
adhered to in the English Courts that insurance on profits must be
made eo nomine. When a shareholder insures he may insure
against loss or diminution of his shares from any cause or he may
insure from loss or diminution caused by the destruction of the
company's property by fire or by some other specified risk. The

shareholder may insure his capital and dividends or the dividends
only.
In some cases it may be necessary to disclose the nature of the In some cases
assured's interest on the ground that a material fact Avhich ^he assurecVs
it is
might
° have influenced the insurer in determining whether or not interest is a
1 T 1
material fact •
he should accept the risk at the rate agreed. It was on this ground which ought
that Story, J., thought the interest of a mortgagee was a special j°igciogccl.
interest which ought to be disclosed. When the interest of the

assured is that of an insurer on a reinsurance, it is a question for
the jury to say whether the fact that the contract was one of re-
insurance was material to the risk and ought to have been disclosed.
Apart from a finding of fact that in the particular circumstances it
(I) A. O. Peuchen Co. v. City Warren v. The Davenport Fire {18T I),
Mutual Fire (1891), 18 Ont. A. R. 31 Iowa, 464.
44g_ (n) Riggs v. Commercial Mutual
(m) Riggs v. Commercial Mutual (1890), 125 N. Y. 7.
(o) Phillips v. Knox County Ins.
(1890) 125 N. Y. 7; Mannheim In-
surance v. Hollander (1901), 112 Fed. (1870), 20 Ohio, 174.
Rep 549 Seaman v. Enterprise Fire
•
(p) Warren v. The Davenport Fire
and Marine (1884), 21 Fed. Rep. 778 ; (1871), 31 Iowa, 464.
;
was material the assured on a reinsurance is not bound to disclose

his interest (g).
The condi- The terms of the proposal or policy may require the assured to
tions of the
policy may
have an interest of a particular kind or to specify his interest, and
require the any such condition must be complied with as part of the contract
nature of the
interest to be between the parties. The ordinary form of fire policy provides
specified.
that " the interest of the insured if other than that of absolute
owner of the property must be stated." This clause has not been
Absolute much discussed in the Courts in this country. In America it has
ownership
" "
been held that absolute owner does not necessarily imply that
clause.
the assured must have the legal title vested in him. If he has an
equitable title, or is sole beneficial owner of the property, it is
sufficient (r). If, on the other hand, he holds the legal title as
trustee he is " absolute owner," notwithstanding that others may
have an equitable or beneficial right to the property (s). Unless
the conditions expressly provide that the property must be un-
incumbered or that incumbrances must be disclosed it is not
necessary to disclose incumbrances on the property.
The assured
is " sole
and unconditional owner," notwithstanding that he has
mortgaged his property or that there is a lien upon it (i).
The sole and unconditional ownership clause does not apply
where a limited interest is expressly specified, or, if it applies,
is a warranty merely of sole and unconditional ownership of
the interest specified {y). It has been frequently held in America
that the sole and unconditional ownership clause may be waived if
the agent who accepts the proposal is a general agent of the com-
pany and has knowledge of the actual interest of the assured {£).
Goods in
trust or on
The ordinary conditions of a fire policy provide that the policy
commission shall not extend to cover goods held in trust or on commission unless
to be insured
as such. expressly insured as such (a). It was suggested in London and
(q) Mackenzie v. Whitworth (1875), 48 Neb. 743 Traders' Insurance v.

;
L. R. 10 Ex. 142 ; New York Bowery Pacaud (1894), 150

111. 245.
V. Fire (1837), 17 Wend. 359. (z) Cross V. National Fire (1892),
132 N. Y. 133 ; Hartford Fire v.
Hartford Firev. Keating (1898),
(r)
Keating (1898), 86 Md. 130; Car-
86 Md. 130 ; White v. Home Insur- penter V. German American (1892),
ance (1870), 14 Low. Can. Jur. 301 135 N. Y. 298 Brooks v. Erie Fire
;
American JBashet Co. v. Farmville (1902), 76 App. Div. N. Y. 275;
(1878), 3 Hughes, 251. Dupuy V. Delaware Insurance (1894),
(s) Gill V. Canada Fire and Marine 63 Fed. Rep. 680 Welsh v. London
;
(1882), 1 Ont. 341. Assurance (1892), 151 Pa. 607.

(a) Waters v. Monarch Life (1856),
(t) Hanover Fire v. Bohn ;1898),
48 Neb. 743.
5 El. & Bl. 870 London and N. W.
;
Ry. V. Glyn (1859), 1 El. & El. 652 ;

(y) Hanover Fire v. Bohn (1898), Day V. Charter (1862), 51 Me, 91.
North-Western Railway v. Glyn (b) that this condition in only

applicable to an insurance beyond the interest of the assured,
and therefore if there was no absolute owner clause in the
policy a bailee who insiirod simply "on goods" could recover
in r(3Speot of hisown personal loss, notwithstanding the trust
clause. The words " goods ln^ld in trust or on commission " are
not to 1)0 road in a strictly legal, but rather in an ordinary com-
itiorctal sense (c). A bailee, such as wharlinger or carrier or mer-
cantile agent, holds goods " in trust " for the owner (d). In the
case of a miller who received grain from his various customers and
shot it into bulk under a contract to redeliver when demanded an
o(iuivalent quantity of grain or at the option of the miller the
then market price, subject to a charge for storage if the demand
should not be made within a certain timo, it was held that the
miller could not be considered as a " trustee " as the whole

property passed to him as money would to a banker who gave a
deposit receipt (c). In order to constitute " trust or on commis-
sion " there must be a right in the owner to the restoration of the
actual property (c). If the case had been that the assured was
Ijound to hold the ontins bulk of the wheat to be rc^dciivered to the
customers in the same proportion as their contributions, that might

have been a case of goods held in trust; but,as it was, the customer
had no right v'Mwr to the specific wheat or a share of the bulk, and
thoi'oforo the miller insured simply " on wheat, etc.," in
who had
his mill could recover, notwithstanding the
" in trust or on com-
mission clause."
If the insurance is not upon a spociliod interest, and if thorn is Natun^ of
no condition to the contrary, the fiict that the nature of the assured's chanRc ("mg
interest changes during the risk do(>s not affect the validity of the ^-ê lisi^.
contract (e). Where an owner, who had mortgaged his premises, in-
sun^d, and subsequently his equity of redemption was sold under

an execution and he was in possession as tenant to the mortgagee
at the time of the loss, it was hold that he could recover, notwith-
standing the change in the nature of his interest (/). If, however,
the contract is a more indemnity of the assured personally, a
(6) (1850), 1 El. & Kl. (152, Po. 55 Waters v. Monarch

j Life
(c)South Auxlralian Jnximmcrv. (1850) 5 El. & Bl. 870.
n J /> (1800),
/lomn L. R.
13 (' im
3 Ji> C. 101.
1 11 (e) Morlm v. FiHhimj Oo. J8.JS),
Handvll .
.^^^ '^^^^_ 3gg .
^^^^^^^
,,,^^,,^^^, ^
(d) Pittsburgh iSlvniyr v. Scottish ,./,(,«,«« J)/«too/ (1808), 4 Mass. :i;t().
I'nion (1805), 108 To. 522; Roberts (/) Strongy.Manitfacturers {IS30),
V. Firemen's Jniurancc (1804), 105 27 Mush. W.
128 INSUEABLE INTEREST
diminution in the value of his interest diminishes accordingly the

amount which he can recover, and if he insures upon a specified
interest he can only recover in respect of that interest.
Policy may But change of interest may be prohibited by the conditions of
prohibit
change of the policy. This is so impliedly when the policy requires the
interest. nature of the interest to be stated, in which case the insurance is
an insurance on the interest disclosed and on that interest only.

Condition In insurances on property the ordinary form of policy contains a
prohibiting
sale or trans- condition to the effect that the insurance ceases to be in force " as
fer of the
to any property hereby insured which shall pass from the insured
property
insured. to any other person otherwise than by will or operation of law,
unless notice thereof be given to and accepted by the company and
the subsistence of the insurance in favour of such other person be
declared by a memorandum endorsed hereon by or on behalf of
the company." This clause must be construed as referring not
necessarily to a transfer of the absolute property in land or goods,
but to a transfer of any interest which the assured may have
therein. If the assured is insured specifically in respect of
more than one interest in certain property, the passing of one

interest does not avoid the policy as to those that remain (gi).
Where, however, a mortgagor was expressly insured as such

and afterwards sold the equity of redemption, it was held
that although he retained an insurable interest in respect of his
liability for the mortgage debt the passing of the equity of re-
demption was a breach of the condition against transfer (h).
Where the assured is insured expressly in respect of a limited

interest, the passing of the interests of others in the property would
not avoid the policy under such a clause. If the insurance was
effected by a warehouseman expressly on goods in trust or on
commission, the passing of the property in the goods would not
affect the validity of his insurance. Where the insured sold half
of his interest as purchaser of land under an executory contract,
it was held that the policy was valid as to the half of the interest
retained {i). But where A, B, and 'C insured property as co-
partners and A afterwards transferred his interest to B and C,
it was held that the policy was avoided under the sale or transfer
clause (k). Where the condition was against " sale or conveyance,"
(g) Germania Fire v. Thompson (i) Manley v. The Insurance Go. of

(1877), 95 U. S. 547. North America (1869), 1 Lans. 20.
(h) Springfield v. Allen (1871), 43 (k) Tillon V. Kingston Mutual
N. Y. 389. (1851), 5 N. Y. 405. See Forbes and
IN PROPERTY 129
it was held that it applied to a voluntary sale only, and that a com-
pulsory sale on execution did not avoid the policy (l). Where
the assured insured as warehouseman, and the policy was declared
to be void " if any change takes place in the possession of the
subject matter of the insurance," it was held that a constructive
change of possession by the delivery of the warehouse receipt,
did not avoid the policy (m). Where transfer without the
company's consent by indorsement of the policy is prohibited, it is
not sufficient to obtain an indorsement " payable in case of loss
to B." Such an indorsement is not a consent to a transfer of the
property to B, but merely a substitution of B as payee (n).
Section III. —Insurable Interest in Property
Insurable interest in property is not confined to the absolute Not confined
legal ownership. Generally any person who is so situated that he 1° ^l owner.

will suffer loss as the proximate result of damage to or destruction
of the property has an insurable interest in it. But there must be
some direct relationship to the property itself, for otherwise the
interest too remote and therefore not insurable. In Lucena v.
is
Craufurd Lord Eldon said, " I am unable to point out what is

an interest unless it be a right in the property or a right derivable
out of some contract about the property," and if we add to
this, " or some legal liability to make good the loss," we get a
substantially accurate definition of insurable interest in property.

The trustee who holds the legal property and his beneficiaries (0) Trustees,
who have the equitable title can each insure (p). The trustee as ^^^°"*°'"'''
legal owner has an interest to the full value, and can therefore Beneficiaries,
insure in his own name without mentioning the beneficiaries,

even although he has no beneficial interest in the trust (q). An
executor or administrator may insure the whole estate of the
deceased (r). An executor's interest commences whenever he has
Co V Border Counties Fire (1873), Ves. Jur. 251, 253 ; Yallop, Ex parte
11 M.'278. (1808), 15 Ves. 60, 67.
(l) Strong v. Manufacturers (1830), [g) Lucena v. Craufurd (1806), 2
27 Mass. 40. N. R. 269, 324 Insurance Co. v.
;
(m) California Insurance v. Union Chase (1866), 5 Wall. 509, 513 Oak- ;
Compress (1889), 133 U. S. 387. man v. Dorchester Mutual (1867), 98

(n) Bates v. Equitable ', Insurance ItlLass. 5T ; Rhind -v. Wilkinson {IBld),
(1869) 10 Wall. 33. 2 Taunt. 237 London and North
;
Hill V. Secretan (1798), 1 B. &

(o) Western v. Glyn (1859), 1 El. & El.
P 315
; Butler v. Standard Fire 652, 663.
(1879) 4 Ont. App. 391 ; Pettigrewv. (r) Herkimer v. Rice (1863), 27
The Grand River Farmers' Mutual N. Y. 179IfiS, ; Parry v. Ashley
(1877), 28 U. C. (C. P.) 70. (1829), 3 Sim. 97.
17
(p) Houghton v. dribble (1810),
I.L.
9
accepted the and before his title has been legally com-
office
pleted by probate (s), and an executor de son tort has an insurable

interest because he has made himself responsible for the distri-
bution of assets (<)• A trustee in bankruptcy {u), an assignee
for creditors under a trust deed, and a receiver appointed by the
Court {x) have an insurable interest in the estate in their hands,
but the debtor also retains an insurable interest to the full value
since he has an interest in the preservation of the property which
is to be applied in satisfying his debts («/).
Legal title It is open to some doubt whether a bare legal title either to
but no trust
except an
land or goods gives the holder of the title an insurable interest.
obligation to It has been frequently said that the legal title alone is sufficient
convey.
to confer an insurable interest to the full value {z). This is no
doubt so where the holder of the title is in the proper sense a trustee
holding the property for the benefit of the beneficiaries, because
if a trustee insures and recovers the full value he is bound to
account to his beneficiaries ; but in the case of a vendor before
completion, or a mortgagee, although he holds the legal title he
is not in the proper sense a trustee, and if he insures and recovers
the full value he can frimd facie retain it for his own benefit (o).
The distinction between the insurable interest of the legal owner
who is a trustee and the insurable interest of the legal owner who
is merely under an obligation to convey has never been carefully
considered in this country ; but, on the other hand, the dicta to
the effect that the legal owner as such has an interest to the full
value have stood so long unchallenged that they would probably

now be followed as establishing the law (&).
Posssession The mere possession of property is probably sufficient to give

without
further
an insurable interest to the person in possession (c). Even if it
interest.
(s) Stirling v. Vaughan (1809), 11 10 A. C. 263 ; Insurance Co. v. Vpde-
East, 619, 629. graff (1853), 21 Pa. 513.
{«) Hamilton, In re (1900), 102 (o) Eayner v. Preston (1881), 18
Fed. Rep. 683 ; Oill v. Canada and Ch. D. 1.
Fire Marine (1882), 1 Ont. Rep. 341. (6) But see Bank N.S.W. v. N. B.
(m) Lingley v. Queen Insurance and Merc. (1881), 2 N. S. W. (Law)
(1868), 1 Hann. (N. Br.) 280. 239.
(x) Thompson v. Phoenix (1889), (c) Stirling v. Vaughan (1809), 11
136 U. S. 287. East, 619, 629 Lucena v. Graufurd
;
(y) Marks v. Hamilton (1852), 7 (1806), 2 N. R. 269, 323 ; Dohson

Ex. 323. V. Sothehy (1827), 1 Moo. & Mai.
Irving v. Richa/rdson (1831), 2
(z) 90, 93. In America the master
B. &Ad. 193 ; Castellain v. Preston of a vessel was held to have no in-
(1883), 11 Q. B. D. 380 ; Ebsworth v. terest.Barker v. Marine (1821), 2
Alliance Marine (1873), L. R. 8 C. P. Mason, 369 and see Routh v.
;
596; Lucena v. Graufurd (1806), 2 Thompson (1809), 11 East, 428, 434;

N. R. 269 Inglis v. Stock (1885),
; Boehm v. Bell (1799), 8 T. R. 154.
.
IN PROPERTY 131
is a wrongful possession as against the true owner, such as the

possession of a trespasser, it is a right recognised by law and
available against all the world except those who can show a better
title {d).
A person in possession of property may sue a third person

who has negUgently damaged or destroyed it, and may recover
from him the full amount of damage up to the total value of
the property (e) and from this itwould seem to follow that the
person in possession of property has on that ground alone an
insurable interest to the full value (/). Mr. Bunyon took this
view (g) ; but the authorities are not at all clear on the point, and
it is arguable that a person in possession may have only a
limited insurable interest corresponding to the market value of
his interest as against the owner or to his
in the property
responsibility to theowner for accidental damage to or loss of
the property (h). But even if possession is not by itself
sufiScient to give an insurable interest up to the full value,
possession by the assured is -prima, facie proof of ownership, and

therefore proof of possession only is sufficient in the first instance,
to estabhsh an insurable interest to the full value (i).
Where the assured has not even but a mere Mere possession use
revocable licence to use and enjoy the property jointly with ^^^
the owner, it is doubtful whether he has any interest at all.
In Goulstone v. Royal (k), Pollock, O.B., at nisi prius held that

a husband had an insurable interest and could recover the full
value of house property and household furniture which were
settled to his wife's separate use, but of which both spouses
enjoyed the actual useand occupation. In America it has
been held that where by the law of the state the husband
has a legal right to the joint use and occupation of his wife's
In
(d) America a trespasser (e) The Winhfield, [1902] P. 42.
upon property belonging to the (/) Marks v. Hamilton (1852), 7
State who had erected a house Ex. 323.
thereon without any shadow of title {g) Bunyon on Fire Insurance,
or hcenoe was held to have no insur- 3rd Ed. p. 20.
able interest. Sweeney v. Franklin (h) Bowen, L.J., in Castellain v.
Fire (1853), 20 Pa. 337 ; and in Preston (1883), 11 Q. B. D. 380,
Canada a person against whom 398-401.
judgment for delivery up of posses- (i) Lingley v. Queen Insurance
sion had been obtained in an action (1868), 1 Hann. (New Br.) 280;
for ejectment was held to have no Stevenson v. London and Lancashire
insurable interest. Sherboneau v. Fire (1866), 26 U. C. Q. B. 148 ; The
Beaver Mutual (1870), 30 U. C. Q. B Mayor of New York v. The Brooklyn
472 ; Lingley v. Queen Insurance Fire (1864), 41 Barb. 231.
(
1868), 1 Hann. (N. Br.) 280. (fc) (1858), 1 F. & F. 276.
property (T) or has a vested interest in it as tenant by the

curtesy (m) he has an insurable interest ; but where by the law
of the state he has no right but merely occupies jointly with
his wife at her pleasure, he has no insurable interest (n).
Vendor and Persons who as purchasers have entered into a legal contract
Purchaser.
for the purchase of property may have an insurable interest even
although the legal property or title has not passed to them. The
loss of, or damage to, the property may extinguish or diminish the
value of their contractual right, and their insurable interest is
commensurate with the loss which they may thus suffer. The
contract must bevalid and subsisting in order togivethe purchaser
an interest; but he has an interest none the less by reason that the
contract is unenforceable or voidable. In like manner the vendor
has an interest so long as he is in such a position that loss or
damage to the property would result in loss to him. The vendor
and purchaser may in certain circumstances each have a con-
current interest enabling each to insure and recover the full
value (o). Thus, if the risk has passed to the purchaser but the
vendor is unpaid with a lien for the purchase money, the purchaser
has an interest to the full value in respect of his risk and liability
to pay the full price for the property which may become valueless,
and the vendor has an interest to the full value in respect of his
lien because the loss of the property means the loss of his security
and the purchaser may be insolvent. How far the insurers who
have paid on either interest may mitigate or extinguish their
loss by subrogation to the rights of the assured is another matter,
which will be considered hereafter. In considering the insurable

interest of vendor and purchaser under a contract for sale, it will
be more convenient to consider separately the interest in relation
to real property and then the interest in relation to personal
chattels or goods.
Contracts to A valid contract for the sale of real property passes the risk
'^^^^
immediately to the purchaser unless the contract is expressed
property.
otherwise ( p). The title or property does not pass until there
{I) Webster v. Dwelling House Ins. 55 W. Va. 63; Clark v. DwelUng

(1895), 53 Ohio, 558 ; Merrett v. House Insurance (1889), 81 Me. 373 ;
Farmers' Insurance (1875), 42 Iowa Trott V. Woolwich Mutual (1891), 83

11. Me. 362.
(m) Harris v. York Muttcal (1865), (o) Andrews v. Patriotic (1886),
50 Pa. 341 ; Caldwell v. Stada- 18 L. R. Ir. 355.
cona Fire and Life (1883), 11 Can. ip) Paine v. Mellor (1801), 6 Ves.
S. C. 212. 349 ; Poole v. Adams (1864), 10 L. T.
(n) Tyree v. Insurance Co. (1904), 287.
IN PROPERTY 133
isa formal convoj-anoe by deed, but any loss or damage arising

botwoon contract and completion falls upon tho purchaser, and
lio must take a convoyancc* of the daimigod property aiul pay
the full contract prico. Tho passing of the risk givos (ho pur-
chaiôr an insurable interest, and ho may at unco insure^ for tho
full valno (5). The contract may be voidable or such that
oithev parly may resist a claim for specific performance, but
the purchaser's interest is not thereby atfoetod so long as the
contract in fact subsists (r). The insurers cannot rely on tho fact
that the vendor might have refused to perform tho contract (s).
The sale may bo subject to a contingency (t) or to the porfonuanco

of certain conditions by tho purchaser, but tho purchasi-r has an
interest notwithstanding. In an American case tho vendor
had agreed to sell and con\oy on a certain date if thi- purciiaser
had paid the purchase monoy by certain lixed instalments. The
purchaser insureil tho payment of the instalments was hi arrear,
;
but the \ondor had taken no steps to cancel tho contract antl the
purchaser was hold to have an insurable interest («). The vendor
has an insurable interest so long as the purchase money is unpaid,
and ho has a lien for tho whole or part thereof (a;). Even if the
purchase money is paid and the purchaser is in possession the
^•endor has probably an interest merely on tho ground that
tho legal title has not passed {y). But if the insurance was a
contract of personal indemnity the assured would be bound to
set off tho price rocoi\ed against the claim, and consequently
might roco^•or nothing (z). If tho property has been conveyotl
and the \endor has been paid, the vendor has clearly no further
interest and cannot recover on an indonmity insurance, even
{g) While v. HomeIimurauri'iiSIO), (11) Oilman v. Dwelling House

14 Lr. 0. Jill-.301 Milliiioii v.
; (1S8!I), 81 Me. 488.
/:<iiiitahlc (1857), Ki V. C. Q. H. (.r) Colliiiijritlgc v. Royal Krclnnujc
:!14. (1877). 3 Q. B. D. 173; AV(/< v.
;•
(r)]yaiiHr\-.MilfordMtiti)al{mn), Insurance
Fluviti.r (1898). 20 On(.
153 Mass. 335 Dupinj v. Dela-
; A. R. 277 Ottawa : Agrieitlltiral In-
i('orc(1894), 03 Fed. Hop." 080 ; Aetna si/ra/icc v. ^'/iOi'Wdii (1879), 5 Can. S. 0.
Fire V. Tyler (1836), 10 Wend. 385; 157.
M-Oirneii y. Phamix Fire (1828), 1 (y) Brott, L.J., in CaMellaiii v.
Wond. 85; Carpenter V. The German Preston (1883), 11 Q. B. D. 380;
Anieriean (1802), 135 N. Y. 298; Insurance Co. y. Vpdenraff (1853), 21
Brooks V. Krie Fire (1902), 70 App. I'lv. 513; Keefcr v. The Pluvni.c {IQOO),
Div. N. Y. 27(i. 31 Cixn. S. C. 144. But soo contra
(s) Columhian Insurance v. Law- Bank- of \. ,S. W.y. North British and
rence (1828), 2 IVt. 25 Pupui/ v. ;
^êreanlile (1881), 2 N. S. W. (l.nw),
Delmmre. (1894), 63 Fed. Rep. 080. 239 ; and soo supra, p. 130.
tt) Gilbert v. Inattrauce (1840), 23 (z) Castellaiu v. Frc^tan (1883), 11
Wond. 43. Q. B. D. 380.
although the insurance was effected before the sale Where

(a).
the owner of a house contracted with a house-breaker who agreed

to pull it down and take the material for a certain sum it was
held, notwithstanding such contract, that the owner had an
interest to the full value of the premises and was entitled to
recover on his policy the whole damage by fire (6).
Contracts to Immediately a valid contract for the sale of goods has

purchase
goods. been effected the buyer has an interest in respect of the
Buyer's profits which he may make on a resale. Profits, however,
interest.
must be insured eo nomine and a purely executory con-
tract for sale probably gives him no interest on which he can
insure simply on goods (c). If neither property nor risk has
passed to him, if he has not possession, and if he has not paid the
price or any part of it, the only loss which can fall upon the buyer
is the loss of profit on the transaction. If the goods are lost
or damaged, he is not bound to pay the price, and the
loss falls upon the seller and not upon the buyer. Unless other-
wise agreed, the risk passes to the seller when the property in
the goods passes to him, and if both property and risk have passed,
the buyer has undoubtedly an insurable interest to the full value,
because loss or damage falls upon him and he is liable to pay the
full price notwithstanding {d). But by the terms of the contract
the property may pass without the risk, or the risk may pass with-
out the property. If the property alone passes without the risk
the buyer has probably an insurable interest by reason of the
legal title alone The passing of the risk before the passing
(e).
of the property gives the buyer an insurable interest because he

becomes liable to suffer on account of the loss of or damage to the
goods, notwithstanding that he has no actual property in them (/).
Where either the property or the risk has passed the insurers
cannot call upon the buyer who has insured to exercise a possible
(o) Sadlers' Co. v. Badcock (1743), B. & C. 219 ; Colonial Insurance v.

2 Atk. 554 ; The Ecclesiastical Com- Adelaide (1886), 12 A. C. 128.
missioners V. The Royal Exchange Ass. (e) Inglis v. Stock (1885), 10 A. C.
(1895), 11 T. L. R. 476. 263 ; Colonial Insurance v. Adelaide
(6) Ardill v. Citizens Insurance (1886), 12 A. C. 128.
(1893), 20 Ont. A. R. 605. ( /) aider v. Ocean Insurance (1838),
(c) Andersonv. Morice(18Ti),l:Bj. 37 Mass. 259 ; Inglis v. Stock (1885),
10 C. P. 58, 609 ; (1876), 1 A. C. 713 ; 10 A. C. 263 (1884), 12 Q. B. D. 564 ;
;
Warders. Norton (1812), 4 Binn. 529 ; Neale v. Eeid (1823), 1"B. & C. 657 ;
Soxv. Provincial Insurance (1868), 15 Castle V. Playford (1872), L. R. 7 Ex.
Grant, Ch. App. 337 but see Bohn
; 98 ; Joyce v. iSiwann. (1864), 17 C. B.
Manufacturing Co. v. Sawyer (1897), N. S. 84, 104 ; Anderson v, Morice
169 Mass. 477. (1876), 1 A. C. 713.
(d) Fragano v. Long (1825), 4
'
IN PROPERTY 135
option to be released from his contract, e.g. to reject defective

goods or a short delivery, so that the insurers may avoid liability (gi).
Payment or part payment will also give the buyer an insurable
interest even if neither property nor risk has passed and for this
reason that the seller may become insolvent, and if so the buyer
might not be able to recover the money he has paid in the event
of the goods being lost or damaged (h).
The seller of goods iu likemanner retains an insurable interest Seller's
"^ ^^^^
so long as he is in a position to suffer loss by their destruction
or deterioration in value (i). So long as the risk remains with
him he has an interest whether the property has passed or not (k),
and his interest is for the full value of the goods, and not merely
for the purchase price, where the actual value exceeds the
latter (Z). And even when risk and property have passed the
seller has an interest so long as he retains possession. If he is
unpaid in whole or in part he has an interest in respect of his lien

for the purchase money
(m). If he has been paid he has such
interest as arisesfrom bare possession {mm). When possession,

risk, and property have all passed to the buyer the unpaid seller
has no longer an insurable interest merely because the destruc-

tion of the goods may affect the solvency of the buyer, and
thereby lessen the seller's chance of payment in full {n).
In America, where the purchaser of furniture under a hire- Hire-
purchase agreement was not bound by the agreement to pay any agreement.
further instalments in case of loss the purchaser was held to
have an interest to the amount only of the instalments paid (o) ;
but where the whole risk was on the purchaser he could recover
the full value, notwithstanding that the property or title
remained with the seller (o).
When the seller dehvers the goods to a common carrier whether Stoppage in
by land or sea for delivery to the buyer, the carrier takes

possession as agent for the buyer, but the seller retains the right
{g) Lord Blackburn in Inglia v. (m) London and North Western v.

Stock (1885), 10 A. O. 263, 274 ; Glyn (1859), 1 El. & El. 652. As to
Colonial Insurance V. Adelaide {\%&&), when the goods are deemed to be
12 A. C. 128. in transitu, see Kendall v. Marshall
[h) Cumberland Bone Co. v. Andes Stevens (1883), 11 Q. B. D. 356, 365.
Insurance (1874), 64 Me. 466. {mm) Vide supra, p. 130.
{i) Boston Ice Co. v. The Royal (n) Tabbut v. American Ins. {I90i),
(1866), 94 Mass. 381. 185 Mass. 419.
{k) Reed v. Cole (17841, 3 Burr. (o) Ryan v. Agricultural (1905),
1512. 188 Mass. 11 Reed v. Williamsburg
;
(l) Stuart V. Columbia (1823), 2 City Fire (1883), 74 Me. 537.

Cranch, 442.
to stop in transitu in the event of the buyer's insolvency (p).

Stoppage in transitu has the effect of a resumption of possession
by the seller so that, as long as the goods are in the hands of the
carrier, the seller has probably an insurable interest whether he
has in fact exercised the right or not (q). As stoppage in transitu
does not cancel the contract it does not necessarily determine

the buyer's interest (g). He has the same interest after the
stoppage as if the goods had remained in the possession of the
seller. The buyer's interest may be determined by stoppage in
transitu because the passing of the property and risk may have
depended on dehvery (r) ; but, on the other hand, the buyer's
insurable interest is not necessarily by stoppage in
affected
transitu because the property and risk may have passed to him
independently of delivery.
Limited Prima facie the owner of a limited estate in buildings has
estate in real
propertj-.
only an insurable interest to an amount sufficient to compensate
him for the loss of his own estate. Thus a life tenant has only an
interest equal to the value of his life interest (s). He is not a
trustee of the property for the remainderman and entitled as such
to insure and recover the full value (t). A partner in a firm who
insures the real property of the partnership has only an interest
equal to the value of his beneficial share in the property (u). A
joint tenant or tenant in common or a remainderman has similarly
an interest limited to the value of his estate (w). How far the pro-
prietor of a limited estate may insure beyond his own interest,
either on his own behalf or on behalf of others interested, is another
question, and will be separately considered (a;).
Landlord and The lessee of premises has an insurable interest in them on one
tenant.
or more grounds. The mere fact of possession may give him an
ip) Kymer v. Suwercropp (1807), 1 (1852), 64 Mass. 37 ; but see Clement

Camp. 107 Parsons, Ins. 232 ; Ar-
; V. British American Assurance (1886),
nould, Ins. 7th ed. s. 286, p. 346; 141 Mass. 298 ; Forbes ds Co. v. Border
Phillips, Ins. 197. Counties Fire (1873), 11 M. 278.
(9') Clay V. Harrison (1829), 10 (w) Mr. Bunyon (Fire Insurance, 3rd
B. & C. 99. Ed. p. 22) was of a contrary opinion,
(r) Mollison v. Victoria (1883), 2 but he only cited a case of marine
N. Z. (S. C.) 177. insiu:ance. Page v. Fry (1800), 2 B. &
(«) Bowen, L.J., in Castellain v. P. 240. This is not really an autho-
Preston (1883), 11 Q. B. D. 380, 401 ; rity for the proposition he makes.
Beekman v. Fulton Insurance (1901), The case only decided that under 19
66 N. Y. App. Div. 72. Geo. 2, u. 37, a person with a limited
{t) See, however, contra, Welsh v. interest such as that of a joint owner
London Assurance (1892), 151 Pa. 607; of goods could insure beyond his
Caldwell v. Stadacona Fire and Life interest in his own name and on his
(1883), 11 Can. S. C. 212. own account.
(m) Converse v. Citizens' Mutual (x) Infra, pp. 144, 145.
IN PROPERTY 137
interest to the full value (xrc). But, even assuming that posses-
sion alone is not sufficient, the tenant's right of occupation under
the lease gives him an interest in the premises which is capable
of valuation {y). If he is liable to pay rent during the remainder
of the term, notwithstanding the destruction of the premises, his
interest in respect of his right of occupation will be much greater
than it would be if under the lease the liability for rent ceased.
In England the tenant, apart from express stipulation, remains
liable for rent, notwithstanding the accidental demolition of the
premises (z). In Scotland the tenant may abandon the lease and
avoid further liability for rent if the fire has done such damage as
to render the premises for a substantial time practically useless
for the purpose for which he took them {a). If the tenant is not
liable for rent his interest in respect of his right of occupation
is comparatively small and the measure of it would prob-
ably be the difference between the rent he was previously
paying and the rent which he would have to pay for similar
premises elsewhere, calculated for the remainder of the term, and
the cost of removal. He cannot recover for loss of business
profits consequent upon the destruction of the premises unless he
has specifically insured on such profits (h). A tenant may also
have an insurable interest by reason of his liability under the
lease (e). If he has covenanted to repair he has an interest to
the extent to which he may become liable on the covenant (/),
and if he has covenanted to insure he has an interest, because
if he does not insure he will be liable for the loss as damages

for breach of his covenant (g). Where the lessees of a colliery,
having covenanted to keep the premises in repair and to insure,

insured " as lessees " on colliery plant " this to insure all their
working interest," it was held that they had an interest to the full
value and that the risk was sufficiently described (h). Probably
(xx) Vide supra, p. 130; Schaefferv. (e) Bowen, L.J., in Oastellain v.

Anchor Mutml (1901), 113 Iowa, 652 ; Preston (1883), 11 Q. B. D. 380, 400.
Simpson v. Scottish Union (1863), 1 (/) OHwer v. Greene (1807), 3 Mass.
H. & M. 618, 628. 133 ;Berry v. American Central
(y) Bowen,
L.J., in Caetellain v. (1892), 132 N. Y. 49 Joj/ce v. (Swawn
;
Preston (1883), 11 Q. B. D. 380, 400. (1864), 17 C. B. N. S. 84, 104.

(z) Marshall v. Schofield (1882), 47 (g) Heckman v. Isaac (1862), 6
L. T. N. S. 406. L. T. 383 ; Bartlet v. Goodwin
(a) Duff V. Fleming (1870), 8 M. (1816), 13 Mass. 267 Lawrence v.
;
769 ; Allan v. Markland (1882), 10 St. Mark's Fire (1865), 43 Barb.

B. 383. 479.
(6) Wrightv. Pole (1834), 1 Ad. E. & {h) Imperial Fire v. Murray (1873),
621 ; Memies v. North British In- 73 Pa. 13.
surance (1847), 9 D. 694.
a lessee liable on a covenant to repair could insure generally on

the property without specifying his interest unless the conditions
of the policy expressly required the interest to be stated. The
insurable interest of the landlord is not diminished by the fact
that the premises are not in his possession and are let for a term
of years. If he is absolute proprietor in fee simple he can insure
and recover the full value notwithstanding the lease or any
covenants to repair or insure by which the lessee may be bound (i).
The landlord is not necessarily protected by the covenants of his
tenant who may be insolvent. The only benefit which the in-
surers can obtain from the lease is the right of subrogation to the
landlord's rights against the tenant (fc).
Consignee of A person to whom goods are consigned as agent for the owner
^°° ^'
has no insurable interest in them if he is merely a bare con-
signee {I). A bare consignee is a consignee to whom the goods
have been forwarded but who has not yet obtained possession,
and who has neither the legal title to the goods nor any pro-
spective lien for advances already made. If the consignee has
obtained the legal title to the goods by indorsement to him of the
documents of title or by indorsement to bearer, he has probably

an interest to the full value (m). If he has made advances to
the owner and is to hold the goods as security for repayment he

has an interest to the extent of his advances even although he
has not yet obtained either the legal title or possession {n).
And where the owner being indebted to A consigned goods to

C with instructions to pay the proceeds to A, it was held that A
had an insurable interest (o). If the consignee has obtained
possession, that alone may be sufficient to give him an interest
to the full value irrespective of legal title or lien. Although a

bare consignee has no interest to insure on the goods them-
selves he may insure specifically on his comnaission or other
profits ( p ) which he expects to make, as agent for sale or
(i) Hobbs V. Hannam (1811), 3 v. Hamilton (1811), 14 East, 522;

Camp. 93. Parker v. Beasley (1814), 2 M. & S.
(k) Bowen, L.J., in CasteUain v. 423 ;Ruseell v. Union (1806), 1
Preston (1883), 11 Q. B. D. 380, 406. Wash. C. C. 409 EbswoHhv. Alliance
;
{l)Seagrave-v.VnionMarine(l86&), Marine (1873), L. K. 8 C. P. 596;

L. R. 1 C. P. 305; iMcena v. Crau- Aldrich v. The Equitable Safety {18i6),
furd (1806), 2 N. R. 269, 306, 307. 1 Wood. & Min. 272.
(m) Mbsworth v. Alliance Marine (o) Hill v. Secretan (1798), 1 B. &
(1873), L. R. 8 C. P. 596 ; Sutherland P. 315.
V. Pratt (1843), 11 M. W. 296. & (p) Lucena v. Craufurd (1806), 2
(n.) Carruthera v. Sheddon (1815), N. R. 269, 315; Flint v. Le Mesurier
6 Taunt. 14; Wolff v. Horncastle (1796), Park. 563 ; PMJnamv.Mercan-
(1798), 1 B. & P. 316 Robertson iiZe Morine (1843), 46 Mas. 386.
IN PEOPBRTY 139
otherwise, provided that he has been in fact employed for this

purpose and has not merely an expectation of employment (q).
On the same principle any person who has a contract to render
service in cormexion with insurable property, whether goods or
realty, may insure on his expected profits or benefits (r).
Probably possession is sufficient to give a bailee an insurable Bailee of

^"
^°°
interest to the full value of the goods held by him (s). But
assuming that possession alone is not sufficient he has clearly
an insurable interest to the extent of his lien (i) and to the extent
of his hability to the owner (u).
The mortgagor of real property has an insurable interest to Mortgagor
the full value, notwithstanding the mortgage. He may be hope-

lessly insolvent and have no prospect of ever redeeming the
security, but so long as he has the equity of redemption the loss
of the property means a reduction of his assets to the full value,
and therefore he has interest to that extent (x).
Even if the mortgagor has sold his equity of redemption he
has by reason of his personal covenant an interest to the extent of
the debt charged upon the property because the loss of the pro-
perty destroys the possibility of the debt being satisfied out of
the property (y). On the same principle, where an estate was
mortgaged to to secure a promissory note and A assigned the
A
mortgage to and indorsed the note to him, it was held that A
B
still retained an insurable interest in the property by reason of
his liability on the indorsement {z).

The fact that the transfer of the property is ex facie absolute
makes no difference to the mortgagor's interest if in substance
the transaction is a mortgage and not a sale (a).
(q) Buchanan v. Faher (1894), 4 (1872), L. B. 8 C. P. 18; Hill v.

Com. Cas. 223. Scott, [1895] 2 Q. B. 713 ; Crowley v.
(r) ffinyv. GZouer (1806), 2 N. B. Cohen (1832), B. & Ad. 478;
3
206; Cross v. National (1892), 132 California Insurance v. Union Com-
N. Y. 133; Traders' Insurance v. j)re«s (1889), 133 U. S. 387 (Samgre v.
;
Pacaud (1894), 150 111. 245 ; Bdbinson Corn Exchange (1867), 36 N. Y. 655.
V. N. T. Co. (1805), 2 Caine, 357. (so) Smith v. Lascelles (1788), 2
(s) Vide supra, p. 130 ; Waters v. T.n. 1ST ; Smiths. TheIioyal(lS61),
Monarch Life {1S6G), 5^1. &BI. 810; 27 U. C. Q. B. 54; Insurance Co.
London North Western v. Olynn
dk v. Stinson (1880), 103 U. S. 25.
(1859), 1 & El. 652; Roberts v.
EI. (y) Hanover Fire v. Bohn (1896),
Firemen's Insurance (1894), 165 Pa. 48 Neb. 743 ; Springfield v. Allen
55 ; Western Insurance v. Home Ins. (1871), 43 N. Y. 389 ; Pettigrew
(1891), 145 Pa. 346; Fire Insur- v. The Orand River Farmers' Mutual
ance v. Merchants (1886), 66 Md. (1877), 28 U. C. C. P. 70, 74.
339. (z) Williams v. Roger Williams In-
(t) Pittsburgh Storage Co. v. In- surance (1871), 107 Mass. 377.
swranceOo. (1895), 168 Pa. 522. {a) Alston v. Campbell (1779), 4
(u) Stephens v. The Australasian Brs. P. C. 476 ; Hibbert v. Carter
140 • msUEABLE INTEREST
Mortgagees, legal and equitable, have an interest to the

amount of the debt secured on the property (h), and if a mort-
gagee has covenanted to insure then he has an interest to the full
amount in respect of that hability. If he is a first mortgagee, and
holds the legal title to the property, he probably has, by reason
of the legal title, an insurable interest to the full amount (c). A
mortgagee has no insurable interest in the rents and profits of
the mortgaged property unless he is in possession (d).
The interest of a mortgagee is the possible loss which he as an

individual may suffer from destruction of or damage to the pro-
perty insured, and where there are several successive mortgagees

they may, in the aggregate, recover more than sufficient to rein-
state the premises. Thus, in Westminster Fire v. Glasgow Pro-

vident (e), the premises and site before the fire were sufiicient to
satisfy all the incumbrancers who were insured in different ofiices
to the amount of their several debts. On a fire occurring the

offices who insured the prior incumbrancers paid them an amount
sufficient to reinstate the premises. The incumbrancers did not
reinstate, but retained the insurance money, and the site was no
longer of sufficient value to satisfy the remainder of their debt.
It was held in the House of Lords on appeal from the Court of
Session in Scotland that the postponed incumbrancers had an

insurable interest and could recover theamount of their debt.
In this case the total of the insurance moneys paid, although
more than sufficient to reinstate the premises, was not more-
than the difference between the market value of the site and
premises before the and their market value after the fire,
fire
and therefore the companies were not, in fact, called upon to pay
more than the actual damage which they might have had to pay
on a policy issued to an absolute owner where there was no clause
entitlingthem to reinstate in lieu of paying damage. A sole
mortgagee would equally have been entitled to recover the
difference of the value of the site and premises beforehand after
(1787), 1 T. R. 745 ; Hutchison v. & P. 240 ; Burton v. Oore District

Wright (1858), 25 Beav. 444. Mutual Fire(l?,&b), 12 Grant, Ch. App.
(6) Irving v. Richardson (1831), 2 156; Glover v. Black (1763), 1 Wm.
B. & Ad. 193; Carpenter v. Providence BI. 396.
Washington (1842), 16 Pet. 495; Irving v. Richardson (\%Zl), li
{c)
Smith V. Columbia Insurance (1851), B. &
Ad. 193; Ehsworth v. AlUanxe
17 Pa. 253 ; Westminster Fire v. Marine (1873), L. R. 8 C. P. 596.
Glasgow Provident (1888), 13 A. C. {d) Westminster Fire v. Glasgow
699 ; Waters v. Monarch (1856), 5 El. Provident (1888), 13 A. C. 699.
& BI. 870 ; Page v. Fry (1800), 2 B. (e) (1888), 13 A. C. 699.
IN PROPERTY 141
the loss. A sole mortgg,gee could never recover more than such
difference in value, but successive mortgagees might possibly
more(/). If, for instance, the value
in the aggregate recover
and premises before loss was not sufficient to satisfy
of the site
both the prior and postponed mortgagees, postponed mort-
gagees would probably still have an insurable interest to the
amount of their debt, because if prior mortgagees were paid off
their security would then be available. By the fire they would
lose their contingent and would therefore on general
security,
principle be entitled to recover the amount of their debt from
the insurers, notwithstanding that the prior mortgagees had
already been paid the full amount of the damage.
The insurance of a mortgagee's interest is not a mere guarantee
of his debt, but an insurance of his security, and he is entitled to
have his security maintained undimiaished in value by reason of
fire or other risks insured against so that there may be no chance of
his suffering loss in the event of his having recourse to his security.
Thug it was held in America that a mortgagee who insured as such
on the mortgaged property could recover up to the full amount of
his debt notwithstanding that after the fire the damaged premises
were still of sufficient value to satisfy his debt {g). The mortgagee
was entitled to say " My security, although sufficient, is diminished
and have insured against such diminution " {g). This appears
I
to be undoubtedly sound because property is always liable to
great diminution in market value, and the mortgagee is entitled
to have his ample margin maintained as a safeguard against the
risk of possible depreciation.
A mortgagee of real property cannot insure and recover on
the mortgagor's interest as well as his own unless the mortgagor is
expressly in the pohcy as a person for whose benefit the

named
insurance made. If, however, the mortgagee has the legal title,
is
or if he has covenanted with the mortgagor to insure, he has an

interest to the full amount, and apart from the effect of express
conditions an insurance simply on the property would entitle him
to recover the full amount on his own interest. But where a
mortgagee who had covenanted to insure insured in his own
name " as mortgagee against all loss or damage not exceeding
(/) Glasgow Provident v. West- New York Bowery (1858), 17 N. Y.

miw«<erîre (1887), 14 R. 947, 964. 428, 441. Contra Mathewson v.
(g) Excelsior Fire v. The Royal Western Assurance (1859), 10 Low.
(1873), 55 N. Y. 343 Kernochan v.
;
Can. R. 8.
$6000 as shall happen by fire to the property insured," it was held

by the Supreme Court of New York that the terms of the contract
whereby the assured was insured " as mortgagee " limited the
.insurance to an insurance of the mortgagee's security, and that he
was not uisured in respect of his liabihty on the covenant to
insure (h).
Where both mortgagor and mortgagee are named in the

pohcy, it is a question of construction whether the insur-
ance is on behalf of one only or of both. The distinction may
be important, not only because no more can be recovered
than the amount of the interest of the person or persons on
whose behalf the insurance is made, but because the insurers
may have a defence against one which would not be avail-
able against the other. Thus, where a mortgagee has insured,
if he insured on his own behalf only, he could not recover on the
policy after repayment of the debt and reconveyance of the
property, but if he insured on behalf of both he could still recover
on behalf of the mortgagor. Where A,
a mortgagee, effected an
insurance on the mortgaged property " owned by B and now
insured to cover a mortgage on the said property," it was held
that the mortgagee insured on his own behalf alone and that the
mortgagor could take no benefit (i). Where the. mortgagor insures,
and the loss is made payable to the mortgagee, this alone does not
import an insurance on behalf of the mortgagee (k). The mort-
gagee may be only payee of the insurance moneys otherwise
payable to the mortgagor, and on an action by the mortgagee all
defences which would be available to the insurer in an action by

the mortgagor would be available against the mortgagee (fe).
Thus, if the mortgagor had broken the condition against assign-

ment of the property the mortgagee could not recover (Z). On
the other hand, the mortgagee, on such a policy, could recover as
payee, notwithstanding that the mortgage debt had been dis-
charged and that he had ceased to have any insurable interest (m).
But pohcy made " payable to the mortgagee in

in a mortgagor's
case of loss," the other terms and conditions of the contract may
show that the insurance was on behalf of the mortgagee and was
(h) Kernochan V. New Yorh Bowery {!) Cfroavenor V.Atlantic Fire (1S58),
(1858), 17 N. Y 428. 17 N. Y. 391.
(i) Smith V. Colurribian Insurance
(1851), 17 Pa. 253. (m) Cone v. Niagara Fire (1875),
(k) Carpenter v. Providence Wash- 60 N. Y. 619.
ington (1842),^16 Pet. 495.
IN PROPERTY 143
in fact such that he could sue and recover on it on his own interest
as principal and not merely in the mortgagor's interest as payee (n).
When chattels or goods are mortgaged by a bill of sale the legal
property passes, and the mortgagee has probably an insurable
interest to the full value ; so also when the mortgage is by transfer
of a document of title such as a bill of lading or a warehouseman's
receipt (o). If chattels or goods are pledged or pawned the general
property or title remains in the pledgor, but the pledgee has an
insurable interest to the amount of his debt, and probably also in
respect of his possession to the full value. Equitable charges
upon personal property which are valid as between grantor and
grantee probably give an insurable interest to the amount of the
debt although the charge void as against other creditors {p).
is
The mortgagor or pledgor of goods retains an insurable interest

to the full value so long as he has the right to redeem (q).
Although a creditor who holds his debtor's property in security Creditor in
has an interest in it to the extent at least of the amount charged, property.

a creditor has no insurable interest in his debtor's property merely
as such on the ground that the loss of it diminishes his chance of
obtaining ultimate satisfaction of his debt (r). The interest is
too remote and too uncertain to make it insurable. The creditor
must have a right to have his debt satisfied directly from the
proceeds of the debtor's property before he is in a position to
insure it (s). Any legal or equitable lien or right to proceed in
rem gives the creditor an interest (i). Where the creditor has got
judgment and the property has been seized in execution the
creditor has an interest (m), but the judgment alone does not give
(n) Springfield v. Allen (1871), 43 (r) Buchanan v. Ocean (1826), 6

N. Y. 389 Hanover Fire
; v. Bohn Cowan 318 Vancouver National
;
(1896), 48 Neb. 743. Bank v. Land Union (1907), 153 Fed.

(o) Sutherland v. Pratt (1843), 11 Rep. 440; Moran Galloway <& Co.
M. & W. 296 ; Wilson v. Citizens v. Uzielli, [1905] 2 K. B. 555 ; Molli-
Insurance (1875), 19 Lr. Can. Jur. son v. Victoria (1883), 2 N. Z. S. C.
175 ; Sewell v. Burdick (1884), 10 177 ; Wilson v. Jones (1867), L. R.
A. C. 74 ;Todd v. Liverpool Globe 2 Ex. 139.
Insurance (1868), 18 U. C. (C. P.) 192. (s) Stainbank v. Penning (1851), 11
{p) Clarke v. Scottish Imperial C.B. 51 Stainbankv. Shepard {1853),

;
(1879), 4 Can. S. C. 192 ; Davies v. 13 C. B. 418 Heald v. Builders In-

;
Home Insurance (1866), 3 U. C. Err. surance (1872), 111 Mass. 38.

&App. 269; Tf&onv. Maj-iOT (1856), (t) Briggs v. Merchant Traders
11 Ex. 684 ; Johnson v. Union Fire (1849), 13 Q. B. 167; Franklin Fire v.
(1884), 10 Vict. L. R. 154 ; Car- Coates (1859), 14 Md. 285 ; Moran
ruther8V.'Sheddon(l8\&),&TaxiD\,.li:. Galloway d; Co. v. Uzielli, [1905]
{q) Heald v. Builders Insurance 2 K. B. 555.
(1872), 111 Mass. 38; Parsons v. (u) Donnell v. Donnell (1894), 86
Queen Insurance (1878), 29 U. C. Me. 518; International Trust v.
0_ p. 188. Boardman (1889), 149 Mass. 158.
him an interest in all the debtor's property (x). In America it
has been suggested that, where the whole of the debtor's property-
is not sufficient, or barely judgment creditor,
sufficient, to satisfy the
he has an insurable interest and it has been there held that the
(y),
creditor of an insolvent deceased has an insurable interest in the

insolvent estate because the creditor's right is no longer merely
in personam but in rem against the deceased's estate (z).
Contractor. Where a contractor undertakes work and his right to payment
is dependent upon completion he has an insurable interest in the
subject matter whether it be in his possession or not because the

destruction of the subject matter prevents him from earning
the contract price. He has an insurable interest to the extent of
the value of the work and materials expended and on his expected
profits which, however, must be specifically insured. In general
where the contract is to supply a chattel or complete certain work
for a price payable on completion the contractor cannot recover
any part of the contract price until completion (a), but the terms
of the contract may be such as to entitle the contractor to a
quantum meruit at any time for the work which he has done (6)
and which accident prevents him from completing, and in such
cases he would have no insurable interest except on expected
profits for future work. A printer who undertakes to print an
edition of a book is by the custom of the trade not entitled to
any remuneration until the whole edition contracted for has
been completed (c). A contractor will also have an insurable
interestupon property to the full extent of his charges for work
done if lien upon the property for such charges (d).
he has a A
contractor in respect of a chattel may have an insurable interest
as a bailee apart from his insurable interest as contractor.
To what It is often a difficult matter to determine to what extent and

extent can
the owner of
in what manner a person who has got a limited interest in property
(x) Grevemeyer v. Southern Mutual (1829), 9 B. & C. 92 ; Coohv. Jennings

Fire (1869), 62 Pa. 340; Light v. (1797), 7 T. R. 381 ; Metcalfe v.
Countryman's Mutual Fire (1895), Britannia Iron Works (1877), 2
169 Pa. 310. Q. B. D. 423.
{y) Rohrbach v. Germania Fire (6) Menetone v. Athawes (1764),
(1875), 62 N. Y. 47. 3 Biirr. 1592 ; Roberts v. Havelock
(2) Herkimer v. Rice (1863), 27 (1832), 3 B. & Ad. 404.
N. Y. 163, 173 Rohrbach v. Germania
; (c) Oillet V. Mavman (1808), 1
Fire (1875), 62 N. Y. 47 Creed v. ; Taunt. 137, 140; Adlard v. Booth
Sun Fire (1893), 101 Ala. 522. (1836), 7C. & P. 108.
(a) Sumpter v. Hedges, [1898] 1 (d) Insurance Co. v. Stinson (1880),
Q. B. 673 ; Appleby v. Myers (1867), 103 U. S. 25.
L. R. 2 C. P. 651 ; Sinclair v. Bowles
IN PROPERTY 145
may insure and recover a greater sum than the actual money
it for a limited
value of his own

interest. Very different considerations apply to beyond tho''^''
the case of insurance on real property and to that of insurance on Y^^^'^
°^ ^^
personal chattels or goods, and these therefore will be considered
separately.
In the case of buildings the statute 14 Geo. 3, c. 48, applies, On real
and this in terms prohibits the assured (1) from recovering more
than the amount or value of his interest, (2) from recovering on
behalf of any person whose name is not inserted in the policy.
This in effect restricts the possibility of insurance on buildings
to a contract to pay on the interest of the person or persons named
as the assured in the policy. A policy containing a contract to
pay in respect of other interests would be to that extent void.
It is therefore necessary in each case to consider what the
amount or value of the assured's own insurable interest really is,
and if it is less than the full value an intention to insure for the
full value will not avail him because it is to the extent of the
excess an insurance against the statute and therefore void (/).

The insurable interest, however, of a person insuring property
is, as we have seen, not necessarily limited to the actuarial value
of his interest as a marketable asset (g). Possession or legal title
alone may give him an insurable interest to the full value of the
property, and if any direct loss or legal liability may fall upon him
as the result of the damage to or destruction of the property, he
has an insurable interest to the amount of such possible loss or
liability. But even where the assured's interest in the property

would not otherwise be sufficient to entitle him to insure for
the fuU value the statute 14 Geo. 3, c. 78, imposes upon every
person who insures house property a statutory hability which
apparently justifies him in insuring to the full value no matter
how small his insurable interest apart from this liability would
have been. This statute enacts that where houses or other
buildings are insured and a loss arises the company insuring shall,
on the request of any person interested therein, cause the insur-

ance money to be appHed in reinstatement instead of paying it to
(/) See, however, Bowen, L.J., in v. Phoenix (1898), 29 Ont. B. 394;

Castellain v. Preston (1883), 11 Caldwell v. Stadacona Fire and Life
Q. B. D. 380, 406; Johnson v. New (1883), 11 Can. S. C. 212.
Zealand Co. (1884), 10 Vict. L. K. (?) Simpson v. Scottish Union
154 Howes v. Dominion Fire (1883),
;
(1863), 1 H. & M. 618, 628 ; Bowen,
8 Ont. A. R. 644 Welsh v. London
; L.J., in Castellain v. Preston (1883),
Assurance (1892), 151 Pa. 607 Keefer ; 11 Q. B. D. 380, 400.
I.L. 10
146 INSUEABLE INTEREST
the assured. The assured who has a limited interest is thus placed,
in this position. If he insures only to such amount as would if
payment were made in cash give him an indemnity in respect of
the value of his interest at stake he will not in fact obtain an

indemnity if other persons interested require the insurance money
to be applied in partial reinstatement. He can only secure a
certain indemnity by insuring to the full value of the property
and therefore, in a sense, has an insurable interest to that
amount {h). If reinstatement is claimed by the company or
insisted upon by some third party interested, the company will

be liable to reinstate up to the full amount of the insurance. On
the other hand, if the company elects to pay in cash and no demand
has been made by any third party for reinstatement, the company
might probably decline to pay more than the value of the
assured's insurable interest calculated independently of the
peculiar interest given by the statute. It is still a matter of
considerable doubt whether the Act of 14 Geo. 3, c. 78, has any
application to insurances on premises outside the area of the Bills
of Mortality in London {i).
On goods. Insurance on personal chattels or goods rests on quite a different

footing as regards the right of the limited owner to insure and
recover on interests other than his own. The statute 14 Geo. 3,
c. 48, does not apply, and therefore the amount insurable is
not limited by statute to the amount or value of the assured's

and further as there is no obligation to insert in the policy
interest
the name or names of all persons on whose behalf the insurance is
made the nominal assured can insure not only on his own behalf
but on behalf of other persons interested.
Insurance The right of the nominal assured to insure on his own behalf
beyond
interest on
beyond his own limited interest and the right to insure on behalf
assured's and for the benefit of other persons must be distinguished. Firstly,
0^(11 behalf.
as regards the legality of an insurance by the nominal assured on
his own behalf only but beyond his interest this was very fully
;
discussed in relation to a marine policy in the following case.
Ebsworth v. Alliance Marine (1873), L. E. 8 C. P. 596
Ebsworth v. The plaintifis were merchants in London to whom cotton had been con-
Alliance signed by the owners in India for sale in England. The consignors had drawn
Marine.
(h) Andrews v. Patriotic (1886). 18 liability by subrogation is considered
L. R. Ir. 355, 356. The right of the elsewhere.
insurers to reduce their ultimate (i] See infra, p. 696.
IN PROPERTY 147
on the plaintifis for £3000, and discounted the bills to the N. Bank to whom
they had indorsed the bills of lading. The plaintiffs had accepted the bills
for payment against the shipping documents and would have received the
bills of lading indorsed to them on payment of their acceptances. The
plaintiffs declared the shipment under an open policy which they had pre-
viously effected in their own names " and in the name or names of all and every
person or persons to whom the same doth may or shall appertain in part or
in all " "on cotton from Bombay to London by ship or ships." The cotton
was totally lost. The plaintiffs sued on the policy averring interest in them-
selves only. The action was tried before Keating, J., who gave judgment for
them for the whole value of the cotton. On motion to enter judgment for
the defendants the Court of Common Pleas was equally divided, Bovill, C.J.,
and Denman, J., being of opinion that the judgment should stand, and Keating
and Brett, JJ., being of opinion that the plaintiffs were only entitled to recover
the amount of their acceptance. Bovill, C.J., and Denman, J., took the
view that a consignee who had any insurable interest in the goods consigned
to him could recover the full value if on the construction of the contract of
insurance the insurers had agreed to pay to him the full value in case of loss,
and not merely to indemnify him in respect of his individual interest. Keating
and Brett, JJ., took the view that a consignee who had only a limited interest
in the goods could not on his own behalf recover more than the amount of his
individual interest because a contract to pay in excess of his interest would
be pro tanto void as a gaming or wagering policy.
Now the case of insurance upon goods against land risks

stands very much on the same footing in this respect as a marine in-
surance did under 19 Geo.2,c.37. TheGaming Act, 1845, is the only
Act which applies, and if an insurance would in excess of interest
be void under 19 Geo. 2, c. gaming
37 as a policy made by way of
or wagering, it would be equally void as a gaming contract under

the Gaming Act, 1845. The decisions in Waters v. Monarch Life (n)
and London <& North Western v. Glyn (o) are probably sufficient
authority for the proposition that a bailee being in possession of
the goods of others may on his own behalf insure them to the full
value, notwithstandiug that his liability is limited to the conse-

quences of his own negligence, and that his lien or other beneficial
interest in the goods is (p). A

of comparatively small value
bailee is responsible to the owner for due diligence in the custody

of the goods and it may be of considerable advantage to him to be
able, in the event of loss, to hand over the full value to the owner,
and so to avoid any possible question of his own negligence. He
is thus intimately concerned in the safety of the whole goods and
(n) (1856), 5 El. & Bl. 870. (1828), 1 Hall (N. Y.) 94 ; Fire In-
(o) (1859), 1 El. & EI. 662. surance v. Merchants (1886), 66 Md.
(p) Baxter v. Hertford Fire (1882), 339.
1 1 Biss. 306 De Forest v. Fulton Fire
;
not merely in the preservation of his own individual interest,

and even if possession alone does not give an insurable interest
in the strict sense to the full value, yet the interest of any bailee
is no doubt sufficient to prevent an insurance to the full

amount from faUing into the category of gaming contracts (q).
The contract is not made by' the bailee with a view to speculating
on the interests of others, but with a view to placing himself in an
advantageous position with relation to the owner. Probably a
consignee may be said to insure for somewhat similar reasons,
although his motive for insurance is not so strong, because he has
not any responsibility in respect of the custody. The decision of
Bovill, C. J.,and Denman, J., in Ebsworth v. Alliance Marine may
thus be supported on the ground that a consignee as agent for the
owner is so intimately concerned in the safety of the whole goods
beyond his individual interest that the contract in excess of that
interest is not necessarily a contract by way of gaming (r). But
where a person with a limited interest has no concern in the
safety of the goods beyond his own interest it is difficult to escape
from the conclusion that an insurance on the whole for his sole
benefit must be to the extent of the excess a mere wager and
therefore illegal (s). Whether or not a person with a limited
interest has insured beyond his own interest and liabihty is a
question of fact to be determined on a construction of the policy
and the surrounding circumstances (t).
Waters v. Monarch Life (1856), 5 El. & Bl. 870

Waters v. The assured was a warehouseman and therefore not an insurer of the goods
Monarch Life, in his possession,but merely responsible to the owners for due diligence in
their custody. He
effected a floating policy on goods in his warehouse,
" £400 on goods in trust or on commission," and the insurers
promised to
" make good to the assured all such damage and loss as shall
happen by fire
to the property hereinbefore mentioned." The Court of Queen's Bench held
(g) Boehm v. Bell (1799), 8 T. R. H. & H., and they were held entitled
154; Robertson v. Hamilton (1811), to recover the whole alleging interest
14 East, 522 ; Roberts v. Fire- in themselves only.
man's Ins. (1894), 165 Pa. 55 ; Western (s) It would be valid and enforoe-
Assuranee v. Home Insurance (1891), able to the extent of the actual in-
145 Pa. 346. terest, notwithstanding the illegality
(r) On this ground also Paje V. i^?-2/ as to the rest: Crompton, J., in
(1800), 2 B. & P. 240, may be sup- Rourke v. Short (1856), 5 El. Bl. &
ported. There H. & H., merchants, 904, 912.
had bought a cargo through their (t) Castellain v. Preston (1883), 11
agents, and the cargo was invoiced Q. B. D. 380, 398 Waters v.
;
to and paid for by H. & H. H. & H. Monarch Life (1856), 5 El. &
Bl. 870 ;
had agreed with another house to Irving v. Richardson (1831), 2 B. &
take the cargo for their joint account. Ad. 193.
The cargo was insured on account of
,
IN PROPERTY 149
he was entitled to recover the full value of his customer's goods notwith-
standing that he was not liable to them to make good the loss.
London & North "Western v. Glyn (1859), 1 El. & El. 652
The assured were common carriers, and therefore in general insurers of the London &
goods carried by them, but liability for the loss in question did not in fact fall ôrVi Western
upon them, as the goods were over the value of £10 and had not been declared.
They insured " on goods their own and in trust as carriers " situated in their
warehouse. The insurers covenanted to make good " to the assured all
damage and loss which the assured shall suffer by fire on the property herein
particularised." The insurance was therefore much more in the nature of a
strict personal indemnity than it was in Waters v. Monarch Life (u). The
Court of Queen's Bench, however, held that on the construction of the policy
the intention was to cover the interest both of the assured and the owners,
and therefore that the assured were entitled to recover, in case of loss, the full
value both of their own goods and of those held by them as bailee. Crompton, J.
said, " Who are the assured, and what is their loss ? I answer first that the
assured are the plaintiffs, both as trustees and as carriers second, the loss
;
is the loss of trust property, that is to say, as property in which the plaintiffs
are beneficially interested to the extent of their lien and as to the residue of
which they are trustees for the true owners."
Insurance, therefore, by a bailee on " goods in trust " seems

to rebut the presumption that the contract is to indemnify the
assured in respect only of his own interest, and these words, standing
alone, indicate an intention that the assured shall be treated as if
he were a trustee, and therefore entitled to recover the full value

for the benefit of his beneficiaries The words, however, may
(a;).
be so qualified as to restrict the insurance on the goods to a

persona] indemnity to the bailee.
Worth British Insurance v- Moffat (1871), L. R. 7 C P. 25

Merchants insured on " merchandise the assured's own in trust or on North British
commission for which they are responsible," situated in certain bonded ware- '™*"™"''«
v.
houses. Tea had been deposited in one of the bonded warehouses by the
importer, and the assured had purchased the tea and resold it. At the time
of the loss they held the delivery warrants indorsed in blank, this being for
the convenience of the purchaser in order to obtain a clearance on his
behalf. The Court of Common Pleas held that they could not recover.
The property and risk in the tea had passed to the purchaser and the assured
were not responsible for the loss and had only insured in respect of their
responsibility.
The above decision ought, perhaps, to be supported rather on
the ground that the goods in question were not goods to which
(m) (1856), 5 El. &
Bl. 870. (1828), 1 Hall. (N. Y.) 94 Fire ;
(a;) Hough v. People's Fire (1872), Insurance v. Merchants (\%&&),Qi&îA.

36 Md. 398 ; Home Insurance v. 339 Bobbins v. Fireman's Fund
;
Baltimore Warehouse Co. (1876), 93 (1879), 16 Blatohf. 122.

U. S. 527 ; De Forest v. Fulton Fire
the policy applied, since all responsibility of the insurer had

ceased. If the goods had been in the possession of the insurers
as bailees they would have been responsible for them to the extent
of due diligence, and the goods would therefore have been within
the description. Whether in such a case their right to recover
would have been limited to the extent of their liability is open to
question. If a person with a limited interest in goods insures

simply " on goods " without any words to indicate that it is his
intention to insure beyond his own interest or liability he

cannot recover more, because the contract will be deemed to
be one of personal indemnity, even although the promise is in
form a promise to make good the loss or damage to the goods.
Insurance of Although a person with a limited interest in goods not
goods on
behalf of in his possession and with respect to which he has no concern
others than or responsibility beyond his own interest cannot insure them
the nominal
assured. to the full value on his own behalf, he may do so on behalf of
others interested, and the names of the persons on whose behalf
the insurance is made need not be inserted in the policy
nor disclosed to the insurers (y). Such insurances are con-
stantly effected on marine risks where the insurance is commonly
in the names of the brokers " as well in their own name as
for and in the name or names of all and every other person
to whom the subject matter of this policy does may or shall
appertain in part or in all." Such a form would be equally
effective in the case of insurance on goods on land, and the
insurance might be effected not only in the name of a limited
owner but in the name of one who had no interest in the goods at
all. The question as to how far a poUcy on goods is available for
the benefit of persons not named therein is generally stated as
being a question of intention at the time the insurance is made.
But a secret intention in the mind of the person nominally insured
is not in itself sufScient to permit him or the others interested to
recover on their behalf. First, the policy itself must contain

some such clause as above to indicate that the contract is some-
thing more than a contract of mere personal indemnity on the
interest of the person named (a). Second, the persons for whose
(y) Glasgow Assurance v. Symond- to insure on behalf of others, those

son (1911), Com. Cas. 109. others could not ratify unless the
(o) Otherwise the contract would contract was expressed to be made
be deemed to be in the interest of on behalf of a principal. Keighley
the person named only. If, too, the Maxsted v. Durant, [1901] A. C. 240.
nominal assured had no authority
IN PROPERTY 151
benefit the insurance is made must be in existence and ascer-

tainable at the time the contract is made (b). Third, there
must be an intention to insure on their behalf (c). Fourth,
they must have authorised or have subsequently ratified the
contract (d).
It is immaterial that the insurance was originally effected

without the knowledge of the person subsequently ratifying
it (e). In marine insurance ratification after knowledge of a loss
is a good ratification of the contract made without the principal's
authority ; but in a fire case it was held that the rule is anomalous
and peculiar to marine insurance, and that in the case of risks
other than marine, the contract must be ratified before loss (ee).
Any concealment, misrepresentation, or fraud by the nominal

assured in connexion with the effecting of the insurance would
avoid the policy, but after the insurance was effected a breach
of condition by the nominal assured would not necessarily
avoid the contract with the principal who had complied with the
conditions, and, conversely, a breach by the principal would not
avoid the policy in so far as the nominal assured intended to
insure his own But where an agent insured in his own
interest. .
name and and intended the insurance

for all others interested,
to be for the benefit of his principal only, and the principal was
unable to recover because his own act had caused the loss, it
was held that the agent who had in fact a limited interest could
not avail himself of the insurance to recover on that interest
because he had not intended to insure it (/). Where a pohcy
on goods is effected by a nominal assured for the benefit of
others interested, action in respect of their interest may be
brought either by the nominal assured or the persons in fact
interested {g). But the plaintiff must allege in his claim the
persons for whose benefit the insurance was in fact made (h).
The insurance cannot be made

(6) (1814), 2 M. & S. 485 Williams ; v.
on behalfof any unknown person North China Insurance (1876), 1 C.
who may in the future acquire an P. D. 757.
interest. Watson v. Swann (1862), (ee) Orover v. Mathews (1910), 26
11 C. B. N. S. 766; Ehsworth v. T. L. R. 411.
^ZZionce iWorine (1873), L. R. 8 C. P. {f) Conway v. Gray (1809), 10
596. East, 536.
(c) Boston Fruit Co. v. British (g) Hagedorn v. Oliverson (1814), 2
Foreign Marine, [1906] A. C. 336. M. & S. 485 ; Sutherland v. Pratt
(d) Mouth V. Thompson (1811), 13 {184:3], 12 M. &W.
16; Fire Assurance
East, 274 Williams v. Nor0i China
; v. Merchants (1886), 66 Md. 339.
Insurance (1876), 1 C. P. D. 757. {h) Cohen v. Hannam
(1813), 5
(e)Botah V. Thompson (1811), 13 Taunt. 101 ; Bell v. Ansley (1812),
East, 274 ; Hagedorn v. Oliverson 16 East, 141.
152 INSUEABLE INTEEEST
Section IV. —Insurable Interest in Lives
Effect of Insurances on lives are within the statute 14 Geo. 3, c. 48,

Life Assur-
ance Act,
and therefore a claimant on a life policy must show (1) that the
1774. person on whose behalf it was made had an interest in the life,
(2) that the policy is expressed as haviag been made on behalf of
the person or persons on whose behalf it was in fact made, and (3)
that the amount claimed is no greater than the amount of such
person's interest.
Interest must be shown to have subsisted at the date on which
the contract was made but since the contract is not in its nature a
contract of indemnity no interest need be shown at death even
although the insurance is avowedly made for the purpose of pro-
tecting the assured against loss consequent upon the death (/c).
How far an insurance made upon interest which is limited to a

definite period would be valid in excess of that period has already
been considered (l).
The statute applies and the same interest is required to be

shown in the case of insurance against death in an accident policy
as in an ordinary life policy (m). An endowment assurance
policy is also within the statute (n).
Interest cannot be dispensed with by consent of the parties,
and accordingly an " incontestable " " honour " or " p.p.i. "
policy does not preclude the insurers from pleading in defence
that the contract was void for want of interest (o).
Interest pre- In three cases of life insurance insurable interest is presumed
sumed in
certain cases.
and no proof of pecuniary interest is necessary. These are,
(1) insurance by an individual on his own life (p), (2) insurance
by a man on the life of his wife (q), (3) insurance by a woman on

the life of her husband (r). In these cases the interest of the
assured one much higher than a pecuniary interest and is not
is
capable of pecuniary valuation, and therefore there is no hmit
(k) Dalby v. India and London 146. Vide infra, p. 793, as to the
Life (1854), 15 C. B. 365 Law v. ; right of the assxired to demand re-
London Indisputable (1855), 1 K. & J. payment of premiums on policies
223 ; Connecticut Mutual Life v. effected without interest.
Schaefer (1876), 94 U. S. 457. (p) Wainioright v. Bland (1835),
(Z) Supra, p. 114. 1 Mood. & Rob. 481.
(m) Shilling v. Accidental Death (?) Griffiths V. Fleming, [1909] 1
(1858), 1 F. & F. 116. K. B. 805 Wight v. Brovm (1849), 11
;
(n) Brophy v. North American Life D. 459.

(1902), 32 Can. S. C. 261. (r) Reed v. Royal Exchange (1795),
(o) Anctil V. Manufacturers Life, 2 Peake Add. Cas. 70 Married ;
[1899] A. C. 604 ; but see Turnbull v. Women's Property Act, 1882, 45 &
Scottish Provident (1876), 34 S. L. B. 46 Vict. c. 75, s. 11.
IN LIVES 153
upon the amount which may be insured or upon the number of

poUcies which may be effected (s).
Wainwright v. Bland (1835), 1 Mood. & Eob. 48

The policy sued upon was in form an insurance for £3000 by a lady upon Wainwright v.
her own life for her own benefit for a period of two years. She had no property Bland.
of any kind except a pension of £10 per annum. The jury found that the
policy was not in fact the lady's own policy, and therefore the question as to
the lady's interest in her own life proved to be immaterial, but it was contended
by the defendants that even if the insurance was in fact an insurance made
by the lady on her own behalf her representatives could not recover unless
they could show that she had some particular interest in the continuance of
her life for the two years for which the policy was effected. Lord Abinger
ruled against the defendants on tliis point, " It is contended for the defendants
that a person effecting an insurance upon his own life for a limited time is
bound to show that he had some particular interest in the continuation of life
up to that period although it is admitted that this would not be so in the
;
case of an insurance for the whole term of life but I am not aware of this
;
distinction having been ever taken, and it does not appear to me there is
any force in it. If a party has an interest in his whole life, surely he must
have an interest in every part of it."
Reed v. Royal Exchange (1795), 2 Peake Add. Cas. 70

This was an action by a woman upon a by her on her Reed v. Royal
policy effected
Exchange.
husband's life. Upon the plaintiff's counsel offering to prove that there was
a pecuniary interest, in that her husband was entitled to a life interest to a
large amount. Lord Kenyon said that no evidence was necessary, since every
wife had as such an interest in her husband's life.
Griffiths V. rieming, [1909] 1 K. B. 805
Upon two separate applications signed by a man and his wife respectively, Griffiths V.
Fleming.
a company issued a policy to the man and wife jointly as grantees, and by the
policy undertook to pay £500 to the survivor of the grantees upon the death
of such of them as should first die. The annual premium was £21, and of the
first premium the wife paid £10 and the husband the remainder. Shortly
after the policy was issued the wife died. The company denied liability on
the ground that the husband had no insurable interest in the life of his wife.
The claimant alleged that he had interest, and gave evidence of domestic
services rendered by his wife, and of having had to provide hired service
in lieu thereof. He further alleged that the policy contained two insurances
which were valid under section 11 of the Married Women's Property Act, 1882,
one by the wife on her own life for the husband's benefit and the other by the
husband on his own life for the wife's benefit. Pickford, J., held that the
husband had an insurable interest in the wife's life by reason of the household
services rendered. On appeal the majority of the Court held that the applica-
(s) M'Farlane v. Royal London Accidental Death (1857), 2 H. & N.

(1886), 2 T. L. K 755; Shilling v. 42.
tions made by the husband and wife respectively were proposals for insurance
each on his or her own life for the benefit of the other within the meaning of
section 11 of the Married Women's Property Act, 1882, and that if the policy
did not give proper effect to the proposals it could have been rectified, and if
the husband had taken out administration to his wife he could have brought
his action under the section and no question of insurable interest would have
arisen. Upon
the question of insurable interest the whole Court were of
opinion that a husband has without proof of pecuniary interest an insurable
interest in the life of his wife, just as much as a man has an interest in his
own life and a wife has an interest in her husband's life. Differing from
Pickford, J., they thought it would have been difficult to support the case
on the ground of pecuniary interest if that had been necessary. The decision
in Barnes v. London, Edinburgh and Glasgow Life (ss) was open to considerable
doubt. Pecuniary interest was as a rule necessary to give a man an interest
in the life which he insiired, but the case of insurance on the assured's own life
or on the life of the wife or husband of the assured was not within the mischief
at which the statute was aimed. The statute was to prevent " a mischievous
kind of gaming," and a man was not likely to gamble on his own life or on the
life of his wife, or a woman on the life of her husband. In these cases there
was an interest much higher than a mere pecuniary interest, and therefore
the law permitted insurance to any amount irrespective of pecuniary interest.
Pecuniary Where a life insurance is effected on the life of some person

interest must
be proved
other than the assured and not being his or her wife or husband
except in a pecuniary interest must be shown, and the assured cannot
cases where
interest is recover more than the value of the pecuniary interest at the time
presumed.
the contract was made (t). If he insures in more than one
company his total right to recover is limited to the amount of
which he had at the date of insurance.

interest If he recovers
from one company he can only recover from another the balance
if any necessary to complete a sum equivalent to his insurable
interest at the time the policy in that other was effected (m).
Pecuniary The pecuniary interest which it is necessary to prove in order
interest must
to establish an insurable interest must be definite (a;). It must
be definite
and capable be capable of valuation (y) and of such nature that the law will
of legal
valuation. take cognisance of it {z). The assured must show that he will or
may lose some legal right (a) or be placed under the burden of
some legal liability (b) in consequence of the death of the person
whose life is insured. A mere expectancy or hope of future
(s«) [1892] 1 Q. B. 864. (y) Simcock v. Scottish Imperial

(t) Dalby v. India and London (1902), 10 S. L. T. 286.
Life (1854), 15 C. B. 365. (z) Hebdon v. West (1863), 3 B. & S.
(u) Hebdon v. West (1863), 3 B. & S. 579.
579 ; Simcock v. Scottish Imperial (a) Hebdon v. West (1863), 3
(1902), 10 S. L. T 286 B. & S. 579.
(x) Halford v. Kymer (1830), 10 (6) Tidswell v. Ankerstein (1792),
B. & C. 724. Peake, 151.
IN LIVES 155
pecuniary benefit from the prolongation of the hfe insured (c), or

mere moral obligations or duties owed by the person whose life is
insured to the assured (d) is not sufficient to sustain an insurable
interest. If the death of the life insured will involve the
assured in any habiUty no answer for the insurers to show
it is
that he will also derive some compensating benefit from the same
event since the insurance is not a contract of indemnity and the
insurers cannot set off the assured's gain against his loss (e).
Hebdon v. West (1863), 3 B. & S. 579

A became indebted to a bank B
was the senior and managing Hebdon
of which v.
partner. B agreed orally with A that the latter should be employed in the ^Vest.
bank for a period of seven years at a salary of £600, and that the debt against
him would not be enforced in B's lifetime. A accordingly insured B's life.
It was held that A had an interest under the agreement to the extent of seven
years' salary, notwithstanding that the oral agreement was not enforceable
by reason of the Statute of Frauds. It was held that A had no interest in
respect of the promise of B not to enforce the debt due to the bank. Such a
promise was of no legal value and the mere expectation of pecuniary advantage
from the continuance of B's hfe, however reasonable, did not create an insurable
interest.
Simcoek v. Scottish Imperial (1902), 10 S. L. T. 286

A pork butcher employed as his shop foreman a man whom he had known Simcoek v.
for twenty-three years, who was skilled in his trade, and in whom he had great Scottish
personal confidence. He was engaged on the usual terms at a weekly salary

of from 36 to 40 shillings. The employer insured his foreman's life first
for £250 in the Provident Life, and afterward for £250 in the Scottish Imperial.
On the death of the foreman the Provident Life paid £250 on their policy.
The Scottish Imperial declined to pay on the ground of want of insurable
interest. In an action upon their policy the Court held that although the
foreman's services were very valuable to his employer the expectation of future
services did not constitute an insurable interest. The utmost limit of insurable
interest was the value of one week's services. The poHcy in the Provident
Life covered any possible interest in the life at the time when the policy sued
on was issued and the value of such interest had been paid. The claim therefore
failed as being contrary to the statute.
Tidswell v. Ankerstein (1792), Peake, 151 ]
Abequeathed an annuity to certain beneficiaries, and named B as the Tidswell v.

executor of his will ; B was held to have an insurable interest in the life of -^KKersieMi.
A his testator, because an insurance would enable him to pay the annuity to
the beneficiaries without the risk of incurring a devastavit if the testator's estate
was not sufficient to pay the testator's creditors and provide for the annuity-
(c) Hebdon West (1863), 3 B. &

v. (d) Hebdonv. West (1863), 3 B. & S.
S. 579 ; Simcoek
v. Scottish Imperial 579.
(1902), 10 S. L. T. 286 Turnbull v.
; (e) Branford v. Saunders (1877), 25
Scottish Provident (1876), 34 S. L. B. W. R. 650.
146.
Branford v. Saunders (1877), 25 W. R. 650

Branford v. A and B
were entitled to certain property for tlieir joint lives and the life
au ers.
^j ^j^^^ survivor with a joint power of appointment and ultimate remainder to
A in fee. They
mortgaged the property for £750, and as collateral
jointly
security jointly executed abond for £600. A insured B's lite for £600, and
on B's death it was held by the Exchequer Division that although A would
become entitled to the whole property he would also become severally liable
to pay the whole £600, and in respect of that liability he had an insurable
interest to the extent of £300.
Right to A person who has a vested interest in possession or contingency

expectant or
dependent on the life of another may insure such life (/), but if
contingent on there is no vested interest, but a mere spes successionis, the expectant
another. heir Cannot insure the life on which his succession depends (g).
An expectant heir who has raised money on his expectancy and

has covenanted to convey the estate or repay a loan on the death
of the person from whom he expects benefit has an interest in the
life arising out of his liability on the covenant and may accordingly
insure to cover such liability.
Cook V. Field (1850), 15 Q. B. 460

Cooh V. Field. A, who expected that an estate would be bequeathed to him byS, covenanted
with B on the death of S he would convey to
in consideration of £2000, that
him the he succeeded to it, and if he did not would repay him £2000.
estate if
5 died, but did not bequeath the estate to A. On action by B against A on

the covenant to repay £2000 it was contended that the contract between A
and B
was an insurance and was void under the statute for want of interest
in the life of S.The Court of Queen's Bench held that the contract was not
an insurance within the statute, but even if it had been they were of opinion
that B had an insurable interest in the hfe of S.
On the question of insurable interest the above decision seems

very doubtful. A's expectancy would not give him an insurable
interest and B was merely an assignee of the expectancy. The
death of S involved B in the loss of no vested interest nor in any
liability, and therefore an insurance by B with independent in-
surers on the life of S would probably have been void {h). But
(/) Parsons v. Bignold (1843), 13 right to perpetuate testimony. A

Sim. 518 Hensonv.Blackwell {184:5),
; next of kin or heir apparent of a
4 Hare, 434 ; Everett v. Deshorough lunatic in possession could not file
(1829), 5 Bing. 503 ; Swete v. Fairlie a bill to perpetuate testimony, as his
(1833), 6 C. & P. 1. interest was a bare expectancy, but
{g) Halford v. Kymer (1830), 10 B. if such person had entered into any
6 C. 724. contract with respect to his expect-
(ft) Mr. Bunyon (Life Insurance, ancy the contract gave him a
2nd Ed. p. 18) thought the decision sufficient interest. Dursley v. Fitz-
might be supported on the analogy hardinge (1801), 6 Ves. 251. This,
of the rules of equity relating to the however, although supporting the
IN LIVES 157
probably A
had an insurable interest in the life of S by reason of
his Hability toB which arose on his covenant on the death of S
and he could have insured and assigned the policy to B in security
for the fulfilment of his contractual obligation.
There is some difference of opinion as to whether a person indirect
'"*^'^^^*-
who is pecuniarily interested in the success of some business or
adventure may insure the life of a person who manages or controls Manager o£
"'''°'^®-
the business and upon whose personal ability success or failure
may depend.The cases above cited would seem to support the
view that such an interest is too vague and not sufficiently capable
of valuation to support a Hfe policy. It has been held in America Partner,
that a partner has no insurable interest in the life of his co-partner

in business except in so far as he may be indebted to him or to the
firm,(fc)and that a firm has no interest in thelives of the individual
partners (l). But on the other hand there is a decision to the
effect that a person who has advanced funds to conduct the
business of a company may have an insurable interest in the life

of the manager and promoter (m).
A creditor has an insurable interest in the life of his debtor (w). Creditor in life
°^'
On the debtor's death he loses his right of action against the ° '^
debtor and this loss is sufficient to support the insurance even

although the debtor's estate is solvent and there is abundant
prospect of the debt being ultimately paid in full. The amount Extent of
insurable has never been definitely decided in this country. It
is clear that the creditor has an interest at least to the amount of
the debt and interest due thereon at the time of insurance (o),
but an insurance Umited to this amount would not fully protect
him because the future interest and cost of insurance up to the
time of the debtor's death are not provided for. In America this American
question has been carefully considered and the Supreme Court of
Pennsylvania (p) has decided that the creditor has an interest to
view that a vendor of an expectancy Hardisty (1857), 8 E. & B. 232;

would have an interest in respect Rawlins v. Desborough (1840), 2
of his liability, does not seem to give Mood. & R. 328 ; Hebdon v. West
any support to the view that the (1863), 3 B. & S. 579 ; Godsall v.
purchaser would have any interest. Boldero (1807), 9 East, 72 Dalhy v.;
(k) Powell v. Dewey (1898), 123 The India and London Lije (1854),
N. C. 103 Connecticut Muttial Life
;
15 C. B. 365.
v Luchs (1882), 108 U. S. 498. (o) Cammock v. Lewis (1872), 15
(I) Cheeveav. Anders (1894:), STTex. Wall. 643.
287. (p) Ulrich v. Eeinochl (1891), 143
(m) Mechanicka National Bank v. Pa. 238 ; Schaffer v. Spangler (1891),
Comms (1903), 72 N.H. 12. 144 Pa. 223; Equitable Life v.
(n) Von Lindenau v. Desborough Hazlewood (1889), 75 Tex. 338.
(1828), 3 C. & P. 353; Wheelton v.
insure to an amount sufficient to cover the debt, premiums and

interest for a period equivalent to the debtor's expectancy of life
calculated according to the tables of mortality. If the debtor

dies before the end of the period of expectancy the creditor will
recover more than his possible loss, and if, on the other hand, the
debtor survives the period the creditor may recover less than his
loss, but the Court thought that would be opening the door to
it
speculative insurance to permit insurance to an unlimited amount

on the ground that no definite hmit could be placed on the duration
of the debtor's life, and if the line had to be drawn somewhere the
period of the debtor's expectancy of Hfe appeared to afford the
only logical basis for arriving at the quantum.
Joint debtors. If a creditor has several joint debtors he may insure the life
of any one for the whole debt, notwithstanding that each of the
others is fully able to satisfy his claim (q).
Statute- no objection to a creditor's interest that the debt cannot

It is
barred debt.
be recovered by reason of the Statute of Frauds affording a possible
defence to an action (r). And similarly debts to which the Statutes
of Limitation (s) or the Infants' Eehef Act (i) may be pleaded
in defence afford a good insurable interest because in all such
cases the debt continues to subsist as a legal right although it
cannot be directly enforced by action.

Discharge in In America it has been held that a discharge in bank-
bankruptcy.
ruptcy although affording a personal defence to the debtor does
not extinguish the debt, and that therefore the insurable interest
of the creditor survives the discharge (u) ; but in EngUsh law a

discharge in an English Court extinguishes the debt for all purposes
if the debt was contracted in England, and therefore the insurable
interest of the creditor would cease (x). If, however, the debt was
contracted in another country the discharge in an English Court
might not bar the remedy abroad, and consequently the insurable
might be held to survive the discharge (y).
interest of the creditor
Debts of Where no debt subsists in law a mere moral claim will not
honour.
(j) Morrell v. Trenton Mutual Life (u) Ferguson v. MaasachusaeUs

(1852), 64 Mass. 282 Hebdon v.; MutualLife (1884), 32 Hun. 306, 312 ;
West (1863), 3 B. & 579.

S. Manhattan lAfe v. Henneasy (1900),
(r) Hebdon V. West (1863), 3 B. & S. 99 Fed. Rep. 64.
579 ; Milford Mutual Fire
Wainer v. (x) Heather v. Webb (1876), 2 C.
(1891), 153 Mass. 335 ; Dupuy v. P. D. 1 Ellis V. M'Hetvry (1871),
;
Delaware (1894), 63 Fed. Bep. 680. L. R. 6 C. P. 228.

(s) Bawls V. American Mutual iy) Ellis V. M'Henry (1871), L. R.
(1863), 27 N. Y. 282. 6 C. P. 228.
(t) i3tt>2/ej'v.£dte(1788), 2Park914.
IN LIVES 159
support an insurance. Thus a gambling debt (z), which is not only

unenforceable but absolutely void or a promise given without good
consideration (a), affords no interest. A creditor has no interest
in the hfe of his debtor's wife, even although he looks to her to
provide payment of his debt (6).
Eelationship other than that of husband and wife does not in Relationship
itself constitute an insurable interest. Unless there is some that'of'^*"

pecuniary interest a parent has no insurable interest in the life husband or
of a child nor a child in the life of its parent, and a fortiori no tutes no
psurablo
interest arises from the mere fact of more remote relationships
^
(c).
' ^ interest.
Interest in the life of a child or parent or other relative has
been claimed (1) on the ground of liability for funeral expenses,
(2) on the ground that there has been expenditure upon the
maintenance or education of the person whose life is insured,
(3) on the ground that the person whose life is insured was rendering
valuable domestic services to the assured, and that the death of

such person would necessitate the payment of a hired servant,
(4) on the ground that the person whose life is insured contri-
buted to a common fund for support of the whole family. These
several claims to insurable interest will be considered
separately.
Unless the duty of burying a relation is one which can be Funeral
legally enforced it is mere
clear that the moral obligation to do ^^P®"^®^-
what is right and proper does not create an insurable interest.
A man is legally bound to bury his child which dies while still a
member of his household. If he does not do so the guardians
may order the burial and recover the cost from the parent if able
to pay (d). This legal liability on the parent creates a good
insurable interest in the life of a child to the extent of reasonable
funeral expenses (e). But apparently a man has no legal obliga-
tion to bury any relative other than his wife or child, and therefore
he has on this ground no insurable interest in the life of a parent,
grandparent, grandchild, uncle or aunt, brother or pister (/).
Under the Friendly Societies Act, 1896, the insuring of money insurance for
in friendly
(z) Divyerv.Edie{n88),2FaTkQli. (d) Meg. v. Vann (1851), 5 Cox 0.

(a) Hebdonv. West (1863), 3 B. & S. C. 379.
579. (e) Weibber V. Life Insurance {1895),
(6) Hintonv. Mutual Beserve {1904), 172 Pa. 111.

136 N. C. 394. (/) Harse v. Pearl Life, [1903]
(c) Halford v. Kymer (1830), 10 2 K. B. 92 ; SUlUng v. Accidental
B. & C. 724; Attorney -General v. Death {1858), I'W. &, 'P. 116 ; Howard
Murray, [1903] 2 K. B. 64 Harse v. ; v. Refuge (1886), 54 L. T. 644.
Pea/rl Ufe, [1903] 2 K. B. 92.
;
society or to be paid for the funeral expenses of the husband, wife, or child
industrial
insurance
of a member or as respects persons of the Jewish persuasion for
company. the payment of a sum of money during the period of confined
mourning is regarded as among the legitimate objects of a friendly
society, whether registered or unregistered, and such insurances
are in effect authorised by the Act (g). For long many friendly
societies and industrial assurance companies (that is, companies
granting policies on any one life for less than £20) have been in
the habitof making largenumbersof insurancesfor funeral expenses,
not only of children but of parents, grandchildren, and oiher
relatives of members. Many of these were undoubtedly illegal
and might at any time have been repudiated by the insurers

while, on the other hand, the insurers were exposed to a claim for
return of premiums on policies upon which de facto they had
run the risk if it was their practice to pay notwithstanding the
illegality. To remedy this state of matters the Assurance Com-
panies Act, 1909, provides (1) that among the purposes for which
collecting societies and industrial assurance companies may issue
policies of assurance there shall be included insuring money to

be paid for the funeral expenses of a parent, grandparent, grand-
child, brother, or sister ; (2) that policies effected before the passing
of the Act by any such society or company for the bond fide
purpose of defraying the reasonable funeral expenses of any
person shall not be deemed void for want of insurable interest or
because the name of the person forwhose benefit it was effected was
not inserted in the poUcy; (3) that if anyillegal insurance is effected
after the passing of the Act by any such society or company then
there shall be deemed to be a default in complying with the re-
quirements of the Act and the society or company and its officers
shall be liable to penalties (h). It will be observed that the above

provisions of the Assurance Companies Act, 1909, do not apply
to friendly societies which are not also collecting societies. The
law of insurable interest applicable to non-collecting friendly
societies is therefore as before.
Money The fact that a parent or other person in loco parentis has
expended in
maintenance
expended and continue to expend money upon the mainten-
will
and educa- ance and education of a child and that there is a reasonable
tion.
expectation of such expenditure being repaid in the future by
ig) F. S. Act, 1896, see. 8. See (h) Asa. Comp. Act, 1909, sec. 36
Brown v. Freeman (1851), 4 De G. & (1), (2), (3)
Sm. 444.
IN LIVES 161
support and comfort from the child when the parent is old does
not constitute a sufficiently definite pecuniary interest in the
an insurable interest (i). Where a
child's hfe so as to establish
stranger received and maintained a child upon the death-bed
request of mother such stranger was held by a Divisional Court
its
to have an insurable interest

by reason of the expectation that
the child would subsequently reimburse the expenditure by
services rendered (fc) ; but this case can hardly be supported upon
and has been doubted in the Court of Appeal {!).
principle, Main-
tenance of an aged person gives no insurable interest in that
person's life, unless there is a legal obligation to repay the money
spent in his support (m), and even then if the obligation was
created merely for the purpose of showing an insurable interest
without any reasonable probability of the debtor being able to
pay, the Court would probably consider the technical legal
liability a fraud upon the Statute and insufficient to support an
insurance (w).
The fact that a child or other relative was rendering valuable Domestic
domestic service to the assured and that the loss of that service
would entail the employment of hired labour in lieu thereof does
not create an insurable interest (o). Pickford, J., held that it was
the domestic services of a wife which gave an insurable interest
to the husband, but the Court of Appeal declined to support his
decision on that ground, and it appears to be untenable (p).
A may possibly have a legal claim to the earnings of a
parent Child con-
child under 16 years of age (g), and, if so, he may have some in- support^
family,
surable interest on that ground (r), but his insurable interest
cannot exceed the value of the term of service for which the child
was definitely engaged by some employer, because beyond such
term his interest was a mere expectancy. Where the child is
engaged on a weekly or monthly service the insurable interest
must therefore be extremely small.
Halford v. Kymer (1830), 10

(i) Mutual v. Kane (1876), 81 Pa.
B. &C. 724 Worthington v. Curtis
;
154.
(1875), 1 Ch. D. 419, 423 ; Prudential (n) See Seigrist v. Schtnoltz (1886),
Insurance v. Jenkins (1896), 15 Ind. 113 Pa. 326.
App. 297, 57 Am. S. R. 228. (o) Harse v. Pearl Life, [1903]
(fc) Barnes v. London, Edinburgh, 2 K. B. 92.
and Glasgow Life, [1892] 1 Q. B. (p) Griffiths v. Fleming, [1909]
864. 1 K. B. 805.
(I) Griffiths V. Fleming, [1909] 1 (?) Eversley's Domestic Relations,
K. B. 805. 3rd Ed. pp. 552, 577.
(m) Shilling v. Accidental Death (r) Wakeman v. Metropolitan Life
(1858), 1 F. & F. 116; see Reserve (1899), 30 Ont. R. 705.
I.L. 11
;
Halford v. Kymer (1830), 10 B. & C. 724
Halford v. A boy who was approaching majority was entitled under a marriage
Kymer. settlement to a sum of £8000 on attaining the age of twenty-one. His father
effected a policy on two years for £5000 to provide against
his son's life for
the contingency of the son dying under age. The son attained his majority
but died six months afterwards, and one month before the expiration of the
policy. The son by his will left all his property to his father. The father
sued on the policy, but it was held that he could not recover, and that neither
the expectation that the son would reimburse his father the expenses of main-
tenance and education, nor the obligation of the son to maintain his father in
old age created a sufficient insurable interest.
ShiUing v. Accidental Death (1858), 1 P. & P. 116
Shilling v. A son was held to have no insurable interest in the life of his father who was
Accidental a pauper, but who lived with the son and was supported by him under com-
Death.
pulsion from the guardians.
Harse v. Pearl Life, [1903] 2 K. B. 92
Harse v. Pearl A son insured the life of his motherwho lived with and was supported by him,
W^- and performed in his house the domestic duties of a housekeeper. The son
was held to have no insurable interest in his mother's life either in respect of
the loss of her services or the moral duty to incur the cost of funeral expenses
in the event of her death.
Barnes v. London, Edinburgh, and Glasgow Life, [1892] 1 Q. B. 864
Barnes v. -^ woman spent money on the maintenance and education of her step-
London, Edin- sister, a child of ten, having promised the child's mother that she would do so.
The Court held that there was an insurable interest and that on the death of
Glasgow Life.
the child the woman could recover on the insurance policy to the extent of
her disbursements whether made before or after the date on which the policy
was effected. Coleridge, C. J., said, " I agree that the insurable interest must
be a pecuniary interest, and that the interest must be in existence at the time
the policy is effected ; that is perfectly clear upon the authorities. Is there
such a pecuniary insurable interest here ? I think there is. The expenses
to which the plaintiff undertook to put herself for the maintenance of the
child were, as I have said, not expenses which she was bound to incur ; and
in my judgment the plaintiff undoubtedly had an insurable interest on the
child's life so far as to secure the repa3rment of the expenses incurred by her.
I cannot find anjrfching has been said in any case to a contrary effect. Taking
the ordinary course of business as the guide to determine the law, I should have
thought that it was matter of common knowledge that obligations of this
sort were obligations the repayment of which was habitually secured in this
way ;
" and A. L. Smith, J., said, " This decision does not touch on the cases
in which it has been held that a father has no insurable interest in the life
of his son. There is an obligation in law on a father to maintain his son

there is no such obligation here, but an undertaking to incur expense."
IN LIVES 163
There are numerous decisions in America relating to insurable American

interest as among relatives. The settled rule appears to be that
^^law to
if there is a de facto state of dependence the dependent has an insurable in-
insurable interest in the life of the person who supports him even relative™""^^
although he has no legal claim to be supported (s), but where a
person independent he has no insurable interest in the lives of
is
relatives on the ground that he might in the future have a legal

or moral claim to be supported by them (f). Thus, where there is
actual dependence, and a reasonable expectation of the benefit
continuing, a granddaughter is held to have an interest in the life
of her grandfather (m), and an adopted daughter in the life of a
stranger who adopted her {x), and a woman in the life of her
brother (y). But where there is no actual dependence or immediate
pecuniary benefit the American Courts hold that a child has no
interest in the life of a parent {z) or a parent in the life of a child (a),
and d fortiori in the case of remoter relationship (b). Where a
child contributes his earnings to the joint support of the household
some American Courts have held that the parent has an
of the
insurable interest (c). A wife has an insurable interest in the life
of her husband in respect of her maintenance {d), and there are
decisions to the effect that a woman cohabiting with and supported
by a man who is not her husband has an insurable interest in his
life (e), but this must be very doubtful, at any rate if the parties
knew was no legal marriage, because the immorality of the
there
relationship would render the interest illegal. It has been held
that a woman has an insurable interest in the life of her affianced
husband (/), and this seems to be undoubtedly sound, since by
his death she loses the benefit of a contract which the law recognises
as one of pecuniary value. In America a husband is held to have
an insurable interest in the life of his wife on the ground that her
(s) Warnock v. Davies (1881), 104 (6) United Brethren Mutual Aid v.
U. S. 775, 779 ; Insurance Co. v. M'Donald (1888), 122 Pa. 324 ;
Bailey (1871), 13 Wall. 616, 619. Burton v. Connecticut Mutual Life

(t) Life Insurance Clearing Co. v. (1889), 119 Ind. 207
O'Neill (1901), 106 Fed. Rep. 800. (c) Loomis v. Eagle Life and Health
{u)Breesev^. Metropolitan {1899), 31 (1856), 72 Mass. 396; Mitchell v.
Hun. App. 152. Union Life (1858), 45 Me. 104.
Carpenter v. U. S. Life (1894),
(x) (d) Connecticut Mutual Life v.
161 Pa. 9. Schaefer (1876), 94 U. S. 457 Life
;
£or(iv.Z3aZZ(1815), 12Mass. 118.

(2/) Insurance Clearing Co. v. O'Neill
(z) Continental Ufev.Volger {1883), (1901), 106 Fed. Kep. 800; Holmes
89 Ind. 572 ; Ufe Insurance Clearing v. Oilman (1893), 138 N. Y. 369.
Co. V. O'Neill (1901), 106 Fed. Rep. (e) Opitz v. Karel (1903), 118 Wis.
800. 527.
(o) Quardian Ins. v. Hogan (1875), (/) Chisholm v. National Capita
80 111. 35. Life (1873), 52 Mo. 213.
;
death would deprive him of valuable domestic services {g). In

the case of a wife an interest in her husband's life is presumed
without any evidence of actual dependence or support Qi), but in
the case of all other relationships the plaintiff averring interest
must prove that there was in fact a pecuniary benefit (i).
Child Under the Children Act, 1908, a person who undertakes for
farming
insurance on
reward the nursing and maintenance of one or more children
life of child under the age of 7 years apart from their parents or having no
under 7
illegal. parents is required to comply with the provisions of the Act with
regard to notice and other matters, and such person is deemed to
have no interest in the life of the child, and if any such person
directly or indirectly insures or attempts to insure the life of such
child he is guilty of an offence under the Act ; and if any company,
society, or person knowingly issues or procures or attempts to
procure to be issued any policy of insurance upon the life of such

child such company, society, or person is guilty of an offence
under the Act (fc).
Question on The Statute 14 Geo. 3, c. 48, requires that the person on
whose behalf
a policy is
whose behalf the policy is made shall have an interest. It is not
made. sufi&cient to show that the person whose name appears in the
policy as the assured has an interest. If it were so, nothing would

"
be easier than to evade the Act by taking out a " gambling
policy in the name of the assured himself as a policy issued to him.
The policy, however, is not in itself conclusive evidence that the

insurance was made for the use or benefit or on account of the
person named therein as the assured. The policy may appear
on the face of it to be made by the life himself for his own benefit,
and action may be brought in the name of the personal representa-
tives of the life ; but the Court will go behind the policy and if
satisfied that the insurance was made in reality on behalf of one

who has no interest in the life will declare the policy void under
the statute (Q. The person " for whose use or benefit or on whose
(g) Charter Oak Life v. Brant Accidental Death (1857), 2 H. & N.

(1871), 47 Mo. 419 ; Currier v. Con- 42 ; Worthington v. Curtis (1875),
tinental (1885), 57 Vt. 496. 1 Ch. D. 419 ; Harse v. Pearl Life,
(h) Connecticut Mutual Life v. [1903] 2 K. B. 92; M'Farlane v.
Schaefer (1876), 94 U. S. 457. Royal London (1886), 2 T. L. R. 755 ;
(i) Barton v. Connecticut Mutual Holt V. English and Scottish ia«; (1899),
Life (1889), 119 Ind. 207 ; Lema v. The Times Newspaper, Aug. 5 Down- ;
Phoenix (1872), 39 Conn. 100; ing V.Marine and General (1899), The
Guardian Mutual Life v. Hogan Times Newspaper, Aug. 7; Warnock
(1875), 80111. 35. V. Davis (1881), 104 U. S. 775 Brophy ;
(k) 8 Ed. 7, c. 67, sees. 1, 7. V. North America Life (1902), 32 Can.

[l) Wainwright v. Bland (1835), 1 S. C. 261 Hinton v. Mutual Reserve
;
Mood. & Bob. 481 Shilling v.

; (1904), 135 Nor. Car. 314.
IN LIVES 165
account " a life policy is effected is the person who in fact is the
principal in the transaction.
"Wainwright v. Bland (1835), 1 Mood. & Rob. 481 ; (1836), 1 M. & W. 32

A policy was effected in the name of a lady on her own Hfe. The circum- WainiorigU v.
stances were suspicious, and the claim of the plaintiff who sued as the lady's Bland.
personal representative was resisted on the ground that the policy was in fact
the policy of the plaintiff who had no interest in the life. At the trial Lord
Abinger, C.B., in his address to the jury, said, " The question in this case is
who was the party really and truly effecting the insurance ? Was it the poUoy
of Miss Abercromby ? or was it substantially the policy of Wainwright, the
plaintiff, he using her name for purposes of his own ? If you think it was the
policy of Miss Abercromby effected by her for her own benefit her representative
is entitled to put it in force, and it would be no answer to say that she had no
funds of her own to pay premiums. Wainwright might lend her the money
for that purpose and the policy still continue her own. But, on the other hand,
if, looking at all the strange facts which have been proved before you, you
come to the conclusion that the pohoy was in reality effected by Wainwright,
that he merely used her name himself finding the money and meaning (by way
of assignment or by bequest, or in some other way) to have the benefit of it
himself : then I am of opinion that such a transaction would be a fraudulent
evasion of the statute 14 Geo. 3, c. 48, and that your verdict should be for
the defendants." A verdict for the defendants was returned, and on a motion
for a new trial it was argued that where a poUoy was, on the face of it, an insur-
ance by the life for her own benefit, and where the representatives of the life
sued, the defendants could not set up as a defence an intention that a third
person should have the benefit. The. motion was refused on another ground,
and the Court expressed some doubt as to the law.
Shilling V. Accidental Death (1857), 2 H. & N". 42; 1 F. & F. 116;

27 L. J. Ex. 16
This case was first argued on demurrer to the defendant' s plea that the policy Shilling v.
which purported to be a policy by J. S. on his own life " was in truth and in -accidental
tact made and effected by one T. S. in the name and on the pretended behalf
of J. S. but for the use, benefit, and on account and behalf of the said T. S.
;
himself, and not for the use, benefit, or on account of the said J. S. and the ;
said T. S. had not any interest in the lite of the said J. S." In support of
the demurrer it was argued that parol evidence was not admissible to show that
the contract was other than appeared on the poUcy, or that it was in fact for the
benefit of another. It was held, however, that the evidence was admissible
and that the plea was good.
Upon the trial of the case before a jury the evidence established that the
policy was taken in the name of a man seventy-seven years old, who was a
pauper supported by his son, and that the son had been heard to say that he
would insure the old man for £200 as he was a burden to him, and that the
proposal was partly in the son's writing, although signed by the father, and
that the father twelve days after the policy was issued signed a will bequeathing
it to his son. The jury found a verdict for the plaintiff, but in a motion for a
new trial the verdict was set aside as being against the weight of evidence, and
a new trial was ordered.
Payment of Primd facie the person who ultimately bears the cost of the pre-
premiums not mium is the person on whose behalf the policy was effected, but
conclusive.
evidence that another pays the premium is not conclusive to show
that a policy was effected on behalf of the person providing the
premium, even although such person does in fact obtain the benefit
of the poUcy (m).
Mere bene- The words in the Act, " for whose use benefit or on whose
ficiaries need
not show account," are not to be construed too widely. They do not
interest.
include all persons who are ultimately intended to benefit by the
insurance by receiving the whole or part of the insurance monies
although in one sense the policy may be said
to have been made for
their benefit. The principal object of life insurance is to insure that
a man whenever he may die shall have a certain sum to dispose
of at his death, and an insurance effected with this intention is
within the meaning of the statute effected for his own benefit,
and on his own account, and not for the benefit or account of
those to whom he may intend to bequeath the property which
he has thus secured. And if the object of an insurance by or on
behalf of a man on his own life is to secure to himself property which
he may dispose of at his decease he may effect his object either
by taking a policy payable to his representatives and making
bequests by will or by assigning the policy to the person or persons
whom he wishes to benefit by it after his death, or by taking the
policy payable to such person or persons. In none of these cases
is it necessary to show that the ultimate beneficiaries had any
interest in the hfe of the assured (o).
Name of the It is important to remember that not only must a life policy
real assured
must be be made on behalf of some person who has an interest, but that
inserted in person must be named in the policy as the person for whose
the policy.
benefit it is made. Thus, if a policy was effected by a debtor
in his own name but solely for the benefit of the creditor the
policy would be void if the creditor's name was not inserted
therein (p).
(m) Shilling v. Accidental Death 107 Fed. Rep. 402 ; Freeman v.

(1857), 1 F. &
F. 116 ; Wainwright v. National Benefit (1886), 42 Hun. 252 ;
Blared (1835), 1 Mood. & Rob. 481. Ingersoll v. Knights of Golden Bute
(o) Shilling v. Accidental Death (1891), 47 Fed. Rep. 272; Olmsted
(1857), 2 H. & N. 42 ; M'Farlane v. V. Keyes (1881), 85 N. Y. 593 Bawls
;
Boyal London (1886), 2 T. L. R. 755 ; V. American Mutual (1863), 27 N. Y.

Brewster v. National Life (1892), 8 282 Aetna Life Insurance v. France
;
T. L. R. 648 ; North American Life (1876), 94 U. S. 561 ; N. Y. Mutual

V. Craigen (1886), 13 Can. S. C. 278; V. Armstrong (1885), 117 U. S. 591.
Scottv. Roose (1841), 3 Ir. Eq. R. 170 ; (p) Evans v. Bignold (1869), L. R.
Fidelity Mutual v. Jeffords (1901), 4 Q. B. 622 ; Humphry v. Ardbin
IN LIVES 167
Evans v. Bignold. (1839), L. R. 4 Q. B. 622

A's wife was entitled under a will to £200 on attaining majority. The Evans v.
trustees of the will agreed to advance £200 to A on his obtaining a surety Bignold.
for repayment in the event of the wife dying under twenty-one. B promised
to become surety on condition that an insurance was effected. A accordingly
efiected an insurance on the life of his wife for £200 taking the policy in her
name alone. The Court of Queen's Bench held that even although the object
of the poUoy was ultimately to benefit the wife the husband was primarily
interested until the wife attained majority, and itwas in fact made on his behalf,
and as his name was not inserted therein it was void under 14 Geo. 3, o. 48.
And not only must the person on whose behalf the policy is And must bo
made be named in the policy, but he must be named as the person g^^^" ^ ^^
on whose behalf it is made {q).
Hodson V. Observer Life (1857), 8 El. & Bl. 40

The policy recited that A alleging himself to be interested in the life Hodson v.
of B was desirous and had proposed to effect an insurance upon the life Observer Life.
of B, and the insurers covenanted to pay £1500 to A on the death of B. On
the death of B an action on the policy was commenced by A. He did not allege
interest in himself, but stated in his declaration that the policy was in fact
made for the benefit of B. On demurrer the Court of Queen's Bench held that
the declaration was bad because if the insurance was made on behalf of the
life it should have been so stated in the policy, and it was not sufficient that
the name of the person interested and on whose behalf the insurance was made
was named in the policy in another capacity, that is, B ought to have been
named in the policy not only as the life but as the assured.
There is no objection, however, to an insurance being effected
by a trustee on behalf of the person interested if it is so expressed

in the policy.
CoUett V. Morrison (1851), 9 Hare, 162

A proposal was expressed to be made by " A by her trustee B on the life Colletl v.
name B as the assured on the Morrison.

of A." The policy was in fact issued in the of
life of A, but the Court, on the ground of mistake, rectified the policy so as to
correspond with the proposal and acceptance, and held that the policy so
rectified was valid as it was expressed to be made on behalf of the life who was
the person interested.
If the name of the person for whose benefit the insurance is
effected is inserted as such in the application the omission of the
(1836), Lloyd &

G. (Temp. Plunket) than that of the debtor. Downs v.
318, 325. But if the policy was in Green (1844), 12 M. & W. 481 ;
fact the debtor's policy, made on his M'Farlane v. Royal London (1886), 2
own behalf, and merely assigned to T. L. R. 755.
the creditor for the purpose of giving {q) Hodson v. Observer Life (1857),
him security, it is unnecessary to 8 El. & Bl. 40 Dowker v. Canada
;
insert in the policy any other name Life (1865), 24 U. C. Q. B. 591.

name in the policy is not fatal if the application is incorporated

into the policy by reference (r).
Assignment Although the object of the statute is to prevent speculation,
to persons
without it applies only to the contract of insurance between the insurer
interest not and the assured, and it does not apply to contracts whereby the
illegal.
policy may subsequently be assigned or otherwise dealt with
between the assured and third parties. If the poHcy is vahd in
its inception, that is to say if it was in fact obtained on behalf of
the nominal assured having interest, it cannot afterwards be invali-
dated by assignment to a person who has no interest, but who takes
it merely as a speculation (s). In America there has been some
difference of judicial opinion as to the validity of an assignment
to a person without interest (i). It has been held in the Supreme
Court and in some of the States that as it is illegal for a person with-
out interest to insure a life, it is equally illegal for such person to
1 ake an assignment of a life policy by way of purchase, since the same
moral objection applies to both transactions, viz. that a person
without any interest in the life of another acquires by contract a

strong interest in his death (u). Eecent decisions in the Federal
Courts are in conflict upon this point (x), but the latest decision
of the Circuit Court of Appeals follows the earher decisions in
holding that an assignment of a life policy to an assignee without
interest in the life is void (y). In a case decided in the Supreme
Court of Canada an assignment to a purchaser without interest
was held to be valid even although the assignment was made

before the assured had paid a single premium or even received
delivery of his policy (a). He had applied for a policy on his
own life, and his proposal had been accepted, and the policy
forwarded to the company's local agent for delivery against pay-
ment of the first premium. The assured, however, found that he
was unable to pay the premium and asked the agent to get the
policy assigned for him, which he did, and the policy was assigned
(r) Wakeman v. Metropolitan Life National Bank (1904), 132 Fed. Rep.
(1899), 30 Ont. R. 706. 444.
Ashley v. Ashley (1829), 3 Sim.
(«) {x) Gordon v. Ware National Bank
149 ; M'Farlane v. Royal London (1904), 132 Fed. Rep. 444 ; Chamber-
(1886), 2 T. L. R. 755. lain V. Butler (1901), 61 Neb. 730;
(t) Gordon v. Ware National Bank Mechanicks National Bank v. Comins
(1904), 132 Fed. Rep. 444. (1903), 72 N. H. 12.
(m) Warnock v. Davies (1881), 104 (y) Russell v. Grigsby (1909), 168
U. S. 775 Carpenter v. U. 8. Life
; Fed. Rep. 577 ; Mutual Life v. Lane
(1894), 161 Pa. 9; Franklin Fire (1907), 151 Fed. Rep. 276.
V. Hazzard (1872), 41 Ind. 116, and (o) Vezina v. New York Life (1881),
cases cited in Gordon v. Ware 6 Can. S. C. 30.
ILLEGAL INSURANCES 169
to a purchaser who had no interest in the hfe of the assured. The

Court held that as the contract was originally made bond fide by
the assured without any intention to assign it the subsequent
dealing with it and the assignment was not
could not invalidate it,
in itself unlawful. In an American case the assured had allowed

a policy on his own life to lapse, and subsequently by arrangement
with the company it was renewed and assigned to a purchaser (&).
The Court held that the assignee could not recover, and although
the ground of the decision, viz. that no assignment to a specu-
lative purchaser is valid, cannot be approved the decision itself
is probably right, because the renewal of the policy for the benefit
of the assignee was in reahty a fresh contract of insurance between
the insurers and the assignee, and would in England have been
void under 14 Geo. 3, c. 48.
Section V. — Illegal Insurances
If the interest of the insured is tainted with illegality he caimot Illegality,
recover on his pohcy. The law will not admit the validity of an
insurance which assists or encourages the assured in the com-
mission of unlawful acts (bb).
If the subject matter of the insurance is property which is Insurance on
being used by the assured with his knowledge and assent (c), in Sawfi^y
the furtherance of an unlawful object, an insurance upon such employed,
property will be void. Thus, under the old navigation laws a
if bound upon a voyage prohibited
ship could not be vaUdly insured
by law (d). an insurance upon a ship is invalid if with
Similarly
the owner's knowledge she sails in a condition prohibited by the
Merchant Shippiag Act for instance, with a deck cargo of timber
;
(6) Carpenter v. U. S. Life (1894), E. B. & E. 670 ; Wilson v. Rankin

161 Pa. 9. (1865) L. R. Q. B. 162 ; Dudgeon
1
{bb) Amicable Society v. Bolland v. Pembroke (1874), L. R. 9 Q. B.
(1830), 4 Bligh JST.S. 194. The cases 581.
of Jacques V. OoUghtly {VTll), Vifra. 12, (d) Ingham v. Agnew (1812), 15
Bl. 1073 (lottery tickets) ; Roebuck East, 517 ; Toulmin v. Anderson
V. HammeHon (1778), Cowp. 737 (1808), 1 Taunt. 227; Camden v.
(wagering on sex) ; Paterson v. Anderson (1798), 1 272 ;
B. & P.
Powell (1832), 9 Bing. 320 (specula- Johnston v. Sutton (1779), 1 Dougl.
tion on rise or fall of shares) 254 ; Oray v. Lloyd (1811), 4 Taunt,
usually cited as instances of insurance 136; Gibson v. Service (1814), 5
on illegal interest, were really insur- Taunt. 433 Cowie v. Barber (1814),
;
ances without interest. 4 Camp. 100 ; Chalmers v. Bell (1804),

(c) Carstairs v. Allnutt (1813), 3 3B.&P. 604; Lubbock v. Potts [ISOG),
Camp. 497 ; Metcalfe v. Parry (1814), 7 East, 449 ; Parkin v. Dick (1809),
4 Camp. 123 ; Cunard v. Hyde (1858), 11 East, 502.
170 ILLEGAL INSUEANCES
in cases where that is prohibited (e), or with passengers where

that is prohibited (/).
Application of The same principle would undoubtedly apply to insurances
to other risks, on property against fire and other risks on land. An insurance
on a house used with the assured's consent for illegal or immoral
purposes, such as a house of ill fame, a betting place, or an un-
licensed drinking house, would probably be void {g). In Canada
an insurance on furniture in a house of ill fame was held to be
void Qi). In America there are conflicting decisions as to the
legality of an insurance upon stock or furniture in premises used
for an unlawful purpose (fe). An occasional violation of the law
might not avoid the insurance, as where the insurance was upon
a stock of drugs and liquors, and the assured was proved on some
occasions to have made illegal sales (Z), or where the premises
were licensed at the time the policy was issued, but remained for
a short time unlicensed after the licence had expired (m). An
insurance on a building constructed in violation of the building
regulations in the Public Health, Building and Local Government
Acts would probably be void, but there is practically no authority
in this country on the question of illegal fire risks, and the analogy
of the marine insurance cases might not be followed very strictly.
Thus, in Gouldstone v. The Boyal (n), an insolvent insured his house-

hold linen and china which he had fraudulently concealed from
his creditors. Pollock, C.B., directed the jury that he would be
entitled to recover on the poHcy notwithstanding the fraud. The
question of illegality, however, does not appear to have been
pressed, the defendants relying on the claim itself being fraudu-
lent, and the jury so found.
Trading with All trading with the enemy in time of war is illegal by the
the enemy.
common law, being against pubUc poUcy, and any insurance on
(e)Cunard V. Hyde (1859), 2 :E. & (h) Brunean v. Laliberte (1902),
E. 1 Cunard v. Hyde (1868), E. B.
; Rap. Jud. Que. 19 C. S. 425,Deitoh's
& E. 670 Wilson v. Banhin (1865),
; Digest, 1902, p. 11.
L. R. 1 Q. B. 162. (k) Springfield Fire and Marine, y.
(/) Dudgeon v. Pembroke (1874), Fowler (1902), Miss. S. C, Deitch's

L. B. 9 Q. B. 581. Every breach of Digest, 1902, p. 79 ; Erb v. Fidelity
statutory duty on the part of the (1896), 99 Iowa, 727 ;JoAn«on v. Umon
shipowner does not avoid the in- Marine (1879), 127 Mass. 555.
surance. The illegality must go to (I) Insurance Co. of North America
the root of the enterprise and not be v. Evans (1902), Kan. S. C. Deitch's
merely collateral to its prosecution. Digest, 1902, p. 66.
Bedmondv. Smith {lS4:i),TM.a,n. & G. (m) Hinckley v. Germania Fire
457. (1885), 140 Mass. 38.
ig) Ct. Pearce v. Brooks (1866), (n) (1858), 1 F. & F. 276; see Pe«i-
L. R. 1 Exch. 213; UpfiU v. Wright, grew v. Grand Biver (1877), 28
[1911] 1 K. B. 506. U. C.C. P. 70.
the property of a British subject employed in or in pursuance

of such trade without the King's Hcence is void (o). If goods
were imported from an enemy State probably neither the goods
nor the warehouse in which they were stored could be insured (p).
No contrabrand of war, whether belonging to a British subject or
to a subject of a neutral State, could be insured if destined for the
enemy (q), nor could provisions on which an embargo had been
laid (r).
As might be expected, our courts are not so zealous to Breach of the
protect the laws and interests of foreign states (s). It is foreign state,
extremely doubtful whether they will regard an object to be
illegal which is illegal only because it is in breach of a foreign
law. Lord Mansfield has said (i) that " no country ever takes
notice of the revenue laws of another," and this dictum would
probably be apphcable to all breaches of the municipal law of
a foreign state so long as they did not involve acts which were
mala per se and considered wrongful by the laws of all civilised
nations. A similar rule appUes to acts in breach of neutrahty. Breach of

"^'^ ^^ ^'
^Vhen England is neutral it is not illegal either by the law of '
nations or of this country for an individual to send money or

contrabrand of war to support one belligerent power against
the other (w). It is only illegal if it is an act prohibited by the
Foreign Enlistment Act, which is confined to acts in the nature of
actual service or of fitting out expeditions or ships for a belligerent.
The immediate proceeds of illicit trading cannot be insured (x), Proceeds of
'"'* ^'^^ '"^"
but property subsequently purchased with the proceeds of illicit
trading or immorality does not acquire the taint of illegality so

so as to avoid any insurance upon it {y). The law will not end-
lessly pursue inquiries of this kind, but will confine itself to con-
sidering the immediate circumstances {y).
If an insurance in general terms covers risks which are legal Legal and
d'^'''^
and risks which are illegal, it will be vaUd as to the legal risks and |JJg§re
3 Com. Cas. 229 ; Planchi v. Fletcher together.

Potts V. Bell (1800), 8 T. R.
(o)
548; Henty v. Staniforth (1816), 1 (1779), 1 Doug. 251.
Stark. N. P. 254 ; Robinson -v. Morris if) Holman v. Johnston (1775), 1
(1814), 5 Taunt. 720 ; Williams v. Cowp. 341, 343.
Marshall (1817), 7 Taunt. 468 ,-
{u) Ex parte Chavasse (1865), 34
Vandyck v. Whitmore (1801), 1 East, L. J. Bank. 17 ; The Helen (1865),
475. L. R. 1 A. & E. 1 see contra, De
;
{p) Potts V. Bell (1800), 8 T. R. WUtz v. Hendricks (1824), 2 Bing.

548. 314.
(q) Arnould, sees. 760-773. (x) Potts v. Bell (1800), 8 T. R.
(r) Dalmady v. Motteux (1785), 548, 561.
1 T. R. 89n. (y) Bird v. Appleton (1800), 8 T. R.
(«) Fracis v. Sea Insurance (1895), 562.
172 ILLEGAL INSUEANCES
the illegal risks will be deemed to be excepted from the contract (a).
If illegal risks are expressly insured together with legal risks the
insurance on the legal risks will be valid if the contract is severable,
but if they are so mixed up as to be unseverable the whole will
be void.
Insurer's In policies where the risk is illegal it is immaterial whether or
knowledge
of illegality
not the insurer knew of the illegality (a). In the case of an illegal
immaterial. risk Lord Mansfield said (b): " If the defendant did not know that
the goods were unlicensed, the exception is fair as between the
parties. If he did, he would not deserve to be favoured. But,
however that may be, it was illegal and in pari delicto potior est
conditio defendentis," and in another case (c) :

" It appears a mon-
strous thing that persons standing in the situation of these de-
fendants, and having known the objection to exist at the time
when they made the contract should avail themselves of it, but
they are certainly legally entitled to do so if they think fit."
Loss caused A man cannot insure against the consequences of his own un-
by assured's
unlawful act.
lawful acts, and into every policy this exception must be read (d).
If the loss claimed is the reasonable and probable result although

not immediately caused by the assured's unlawful act he cannot
recover. Thus, in life insurance a man who has insured the life
of another cannot recover if he murders the person whose life
he has insured (e). And if he insures his own life his represen-
tatives cannot recover if he commits suicide while sane or if he
commits a capital offence and dies at the hands of justice (d).

Apart from special conditions suicide committed during temporary
insanity is no bar to recovery (/).
Loss caused A man may insure against the illegal acts of his employees or
by unlawful Thus it would be no objection to his recovery on
dependents.
acts of as-
sured's a fire policy to show that his servant or probably even his wife (g)
servants or
dependents. had wilfully burned the premises provided that the assured him-
self was not privy to the act. In America objection was taken
(z) Janson v. Driefontein Consoli- V. MvMal Life (1879), 169 U. S. 139 ;

dated, [1902] A. C. 484, 606. Burt V. Union Central Life (1902),
(a) That is to say, where the insurer 187 U. S. 362; M'Gue v. North
is defending an action for the policy Western Mutual Life (1908), 167 Fed.
money. As to a claim for return of Rep. 435.
premiums, vide infra, p. 793. (e) Prince of Wales Assurance v.
Johnston
(6) v. Sutton (1779), 1 Palmer (1858), 25 Beav. 605.
Dougl. 254. / Horn V. Anglo- Australian Life
( )
(c) Toulmin v. Anderson (1808), 1 (1861), 30 L. J. Ch. 511.

Taunt. 227. (sr) Midland v. Smith (1881), 6
{d) Amicable Society v. Bolland Q. B. D. 561.
(1830), 4 Bligh N. S. 194, 211 ; Bitter
to an employee's fidelity insurance on the ground that it was con-

trary to public policy to permit an employer to insure against the
dishonesty of his servants, as it would tend to make him less careful
in his choice, but the objection was overruled (h).

The assured cannot recover a loss which has been caused Loss caused
directlyby his own wilful act (i). But the assured's own wilful act theâot'of'^tho
not being illegal is no bar to recovery if it was not the immediate assured.
cause of the loss, even although it may have indirectly contributed

to the result. Thus, where the owners of a vessel, having insured
her, wilfully permitted her to go to sea in an unsea worthy condition,
which under the circumstances was not illegal, it was held they
could recover, even although the loss was indirectly attributable
to her unseaworthy condition The case was distinguished
(fc).
from those where through the absence of proper documents a

neutral vessel was captured by belligerents, and it was held that
the assured could not recover because the loss was the direct and
immediate consequence of the assured's deliberate act in not pro-
viding proper papers (Z). So in insurance other than marine, the
wilful act of the assured if directly causing the loss, as, for instance,
if he dehberately set his house on fire, would prevent him from
recovering, even although the policy contained no express condi-
tion to that effect (m) ; but if the assured got drunk and set his
house on fire while intoxicated he could recover because the loss
would not have been the immediate consequence of his wilful act
of getting drunk but would have only been indirectly attributable
to that act {n).
NegHgence of the assured is no defence to the insurers even Loss caused
although the loss is the direct and immediate consequence of the negligence,
neghgence (o).
Where illegality is alleged it lies with the insurers to prove it, Onus on
insurers
and the presumption is always against illegahty (oo). Suicide wilJ
"^prê
to prove
illegality.
(h) Fidelity and Casualty v. Eick- (l) Bellv. Carstairs (ISll), liEast,
hoff (1895), 63 Minn. 170. 374; Horneyer v. Lushington (1812),
(i) Bell V. Carataira (1811), 14 15 East, 46 Oswell v. Vigne (1812),
;
East, 374 ; Britton v. The Royal 15 East, 70.
Î^^^l'
Aubert
*/
v.Gray mJ,\ t°^' f'ê'iJ'T
B. &
(1861), 3 S. 163,
(™) ^"''"^ ^- ^^«
4 f. & p. 905, 908.
^"y^ (l^'"^)'
it was argued but unsuccessfully \ ', '

'
,,„„,> „„ ^ „
that the loss was caused by the
if
'fioî'tf '
^- '^ * ^' ^ ^-
wilful act of the government of the "• ^"^' '^''
country to which the assured belonged (0) Shaw v. Rdbherds (1837), 6
he covild not recover, because the act Ad. & E. 75.
°^n's
g?^<'^"™«°* ^%^^ ^''*M o-o^ (00) Thurtell v. Beaumont (1823), 1
(k) Thompson v. Hopper (I808), -r:„„ ooq
^'"^- "*"'"•
El. B. & E. 1038.
174 ILLEGAL INSURANCES
not be readily inferred, but when the insurers have proved that the
person whose was insured destroyed himself, the burden of
life
proof shifts to the assured, who must prove insanity if alleged (p).
Where an accused person has been convicted in a criminal court
the conviction prima facie evidence of guilt in a civil court (q),

is
and the verdict of a coroner's jury on the cause of death is prima

facie evidence of the facts found (r).
Rights of Although a pohcy is void in the hands of the assured or

assignee in
case of loss his representatives on the ground that the loss has been caused
caused by act by the act of the assured, it may be vaHd in the hands of those who
of assured.
hold as assignees or incumbrancers (s). Thus, apart from all con-
Suicide does ditions, if the assured in a policy on his own life committed suicide
not disentitle
assignee of
his representatives could not recover, but assignees or incum-
life policy. brancers would not be debarred on the ground of illegahty.
Public policy only demands that no claim shall be allowed on
behalf of the assured's estate when he has caused his own death
by suicide or felony. It does not prevent recovery by persons who
claim independently and not through the assured's representa-
Voluntary tives Probably therefore a voluntary assignee could recover
(t).
assignee.
as well as an onerous assignee. But where the claimant is not an
Beneficiary. assignee but merely a payee or beneficiary his claim presents
more difficulty. If he has no vested interest, but merely an ex-
pectancy which can be revoked by the assured either during his
lifetime or by his will, he is in no better position than a legatee, and
therefore he cannot recover if the assured's representatives cannot
recover (u). If, however, there is the relation of debtor and creditor
between the assured and the payee and he is not merely payee but
is entitled to the proceeds of the policy as security for his debt,
or if there is an irrevocable assignment of the policy to the person
who is named as payee, then his claim is independent of the claim of
the assnred's representatives, and he may recover notwithstanding
suicide or felony of the assured. Thus, in Moore v. Woolsey {x), the
policy was effected bya man on his own hfe but with his wife's money
and for her benefit in pursuance of a marriage contract obligation. It
See cases cited infra, p. 862.

{p) Mutual Reserve Fund
(m) Cleaver v.
Crippen, In re, [1911] P. 178.
iq) Life, [1892] 1 Q. B. 147, 152;
Prince of Wales Assurance v.
{r) but see Kerr v. Minnesota Mutual
Palmer (1858), 25 Beav. 605. (1888), 39 Minn. 174, where a bene-
(s) Moore v. Woolsey (1854), 4 El. & ficiary named in a mutual benefit
Bl. 243. society policy was held entitled to
(*) Cleaver v. Mutual Reserve Fnud recover notwithstanding the death of
Life, [1892] 1 Q. B. 147, 159; the member by suicide.
but see Burt v. Union Central (1902), (x) (1854), 4 El. & Bl. 243.
187 U. S. 362.
was not formally assigned but was deposited with trustees for her us e
and it was held that his suicide was no bar to her right to recover.
When the policy is made for the benefit of the assured's wife or
children under the provisions of the Married Women's Property
Act, 1882, sec. 11, there is a vested interest in the wife and children
which cannot be defeated by the acts of the assured, and therefore
they would no doubt be entitled to recover notwithstanding his
suicide or felony. The conditions of the policy may, however, Where there
prevent the assignee from recovering, and if these provide in general ao-ain^^
suicide.
terms that the poHcy shall be void in the event of the assured's
suicide and contain no exception in favour of the assignee they
must be given effect to.
EUinger & Co. y. Mutual Life, Tfew York, [1905] 1 K. B. 31

A policy was effected in the A upon his own life payable to B his
name of EUinger v.
creditor.. The application form signed by A contained this stipulation, " I also Mvtual Life,
"^
warrant and agree that I will not commit suicide whether sane or insane during "
Ahaving committed
the period of one year from the date of the said contract."
suicide within the year an action was brought on the policy by B, and A's
executors were joined as co-plaintiffs. It was held that B could not recover
as there had been a breach of the warranty.
A life policy therefore with a suicide clause but without any Reservation
^'^"'''^^
reservation in favour of assignees or incumbrancers is not a * j°™
proper security for a debt. It is the usual practice in this country favour of
^®''^"®®^'
to insert a reservation in favour of assignees and incumbrancers
duly intimated during the lifetime of the assured, and the
poUcy is thereby rendered effective as a marketable asset, and
there is nothing illegal in the reservation, even although it may
indirectly operate to the benefit of the assured's estate. Thus,
where the insurers held the policy as security for a loan made
by them to the assured, it was held that, as they were incum-
brancers, the policy was valid in their hands to the amount of
the debt, and they were bound to discharge the debt therefrom {z),
and similarly where the policies were mortgaged by deposit to
third parties, creditors of the assured, itwas held that they were
entitled to recover from the insurers, and the insurers had no
claim to the other securities in their hands, nor could they
require the incumbrancers to have recourse to the other securities
first or even fari passu (a), the result being that the assured's
(z) White V. British Empire Mutual v. Lanib (1864), 1 Hem. & M. 716;
Life (1868), L. R. 7 Eq. 394. City Bank v. Sovereign Life (1884),
(o) The Solicitors and General Life 50 L. T, 565.
representativeshad the debt discharged from the policy moneys,

and were entitled to a conveyance of the other securities unin-
cumbered {aa). The assured's trustee in. bankruptcy is in the
same position as his personal representatives, and therefore, if
the assured causes his own death the trustee cannot under any
circumstances recover (&), and the ordinary reservation in favour
of assignees does not include the trustee in bankruptcy (c).
Loss caused If a policy has been assigned absolutely, and the assured's
by act of
assignee. death is caused by the assignee, such assignee cannot recover,
and it is doubtful whether the assured's representatives could
recover. It might be argued that the right to recover in the event
death was imphedly excepted
of the assignee causing the assured's
from the assignment, and that therefore the right still remained
Beneficiary. with the assured and his representatives. If the death is caused
by the act of a beneficiary or payee, such beneficiary cannot re-
cover, but the assured's representatives may (d).
Cleaver v. Mutual Reserve Fund Life, [1892] 1 Q. B. 47

A insured his life the company promising to pay on
death to his wife his
if then alive, and failing her to his personal representatives. A's wife, was
convicted and sentenced to death for the murder of A, the sentence being
afterwards commuted to penal servitude for life. In an action by A's executors
on the policy it was held that although by reason of the Married Women's
Property Act, 1882, s. 11, the executors would ordinarily hold the insurance
money in trust for wife or children named in the policy, the wife here having
forfeited her right as a beneficiary, there was a resulting trust for the benefit
of A's estate and there was no principle of public policy which would disentitle
the executors from recovering the money from the insurance company.
Alien Contracts with alien enemies are void if entered into during
enemies
war (e). If entered into before war, money claims which have
accrued upon an executed consideration are not cancelled, but
the right to sue in respect of them is merely suspended until peace
is concluded (e). Beyond this, commercial contracts which are
still executory are speaking generally dissolved on the outbreak
of war, because performance during the war would be contrary
to public policy as being a trading with the enemy, and as war is
(aa) But the reservation in favour (6) Amicable Society v. Bolland

of assignees may be limited so as to (1830), 4 Bligh. N. S. 194.
(c) Jackson v. Forster (1859),
operate by way of indemnity only and 1
El. & El. 463.
ifso thecompany will, on paying an (d) Cleaver v. Mutual Reserve Life,
indemnity to the assignee, be subro- ri892] 1 Q. B. 147 Standard Ufe
, v.
gated to his claims against the Trudeau (1900), 31 Can. S. C. 376.
assured's estate. (6) Bacon's Abr. Aliens.
ILLEGAL INSUEANCES 177
of uncertain duration, the only satisfactory solution is to hold that

the parties are absolved from further proformance, and free to make
similar contracts elsewhere (/).
Applying these doctrines to the contract of insurance, it is Insurances
clear that no policy can be effected with an alien enemy, or by (juring war
an ahen enemy during the existence of war. But until war is ^^^ ^°^^-
declared all insurances with or by aliens are valid, and if a loss andîoss'"^
occurs before the commencement
war the right of action is
of before war.
merely suspended by the outbreak of war, and after peace is

restored the insurance moneys can be recovered by action (g).
The law recognises no intermediate state between peace and Hostilities
., 1
war, and therefore, however immment war may be, however
J. ,
•
J. 11 imminent.
strained the international relationship, the alien may insure, and

may recover on his loss if it has occurred at any time before a
state of war actually existed (h).
Janson v. Driefontein Consolidated, [1902] A. C. 484
company registered in the Transvaal Republic, was

Gold, the property of a
insured on behalf of the company by British underwriters against loss during
transit from the mines within the Transvaal to England. It was seized by the
Transvaal Government shortly before war broke out, and in contemplation
of war with England. It was held that the company could recover on the
policy after the conclusion of peace. It is unlawful to assist the King's enemies
during war, but that does not extend to assisting persons who thereafter may
become the King's enemies.
It is clear that an alien cannot recover from a British Loss during
insurer in respect of a loss which, during war between this ]]'y'act"T^

country and his country, has been caused at the hands of the King's forces.
King's forces or those of his allies (/c). Thus he could not recover
on a fire policy in respect of damage resulting from the hostile
operations of the British army or navy, or on a life policy if
killed in action against the King's forces.
It is not quite so clear whether it would be illegal for a Loss

British insurer to insure an alien against loss arising during j"^"'^™^
(/) Esposito v. Bowden (1857), 7 (h) Janson v. Driefontein Consoli-

El. & Bl. 779 ; Chitty on Contracts, dated, [1902] A. C. 484, 497 ; Muller
14th Ed. 161. ~ V. Thompson (1811), 2 Camp. 610.
(,g) Harman v. Kingston (1811), 3 ^^.^ Furtado v. Rogers (1802), 3 B.
Cam^. 151 ; Boussmaker Ex p. aSOe), ^ -p .
Gamba v. Le Mesurier (1803),
13 Ves. 71, and a British agent effect- ^ âst, 407 ; Kellner v. Le Mesurier
ing a marine insurance on behalf of (1803) 4 East 396.
an alien was held entitled to sue
during the war in respect of a loss (0 Brandon v. Curhng (1803), 4
sustained before war. Flindt v. East, 410.
Waters (1812), 15 East, 260.
LL. 12
•war, but independently of the hostilities. Some doubt was

expressed upon Ihis point in Janson v. Driefontein Consoli-
dated (m) ; but Lord Lindley said " It appears to be settled
:
that a British subject cannot, even before war, insure a person

against any loss sustained by him after the war began, and whilst
he is an enemy of this country," and this broad proposition is
supported by the earKer authorities. Thus, Lord EUenborough

said, in Brandon v. Curling (n) :
" When the insurance is upon
goods generally a proviso to this effect shall in all cases be con-
sidered as engrafted therein, viz. :
— ' Provided that this in-
surance shall not extend to cover any loss happening during the
existence of hostilities between the respective countries of the
insured and insurer.' Because during the existence of such
hostilities the subjects of one country cannot allowably lend their
assistance to protect by insurance the property and commerce of
the subjects the other." If this is so, insurance with foreign
companies becomes very precarious since no any kind on
loss of
life, fire, accident, or other policies occurring during a state of war
would be enforceable.
British The character of an alien enemy for the purpose under con-
subjects
resident in sideration attaches to all persons who continue to reside in the
enemy's enemy's country, and thus the insurance of a British subject
country.
resident abroad may become void (o), but upon the outbreak
ofwar he will be allowed a reasonable time to withdraw himself
and his effects from the enemy's country before any intention
to remain will be imputed to him.
Nigel Gold Mining Co. v. Hoade, [1901] 2 K. B. 849

Ni^)el Gold Gold was insured by British underwriters on behalf of a British company
Mining Co. registered and having its principal office in Natal, and also incorporated in
V. Hoade.
the Transvaal for the purpose of facilitating business there. The gold was
seized by the Transvaal Government shortly after the outbreak of war, and it
was held that the gold must be treated as the property of a British subject,
and as there was no indication of any intention to continue business in the
Transvaal during the war the company could recover.
Alien enemy And just as a British subject may by continued residence in

licensed to
remain. the enemy's country acquire a hostile character so an alien enemy
may by Hcence from the Crown remain and carry on his business
(to) [1902] A. C. 484. cited in Nigel Gold Mining Co. v.

(n) (1803), 4 East, 410, 417. Hoade, [1901] 2 K. B. 849.
(o) Bacon's Abr. Aliens, and cases
in this country, when he will be treated as a British subject and lose

his hostile character (p). There is no illegality in the insurance
of a British subject against loss which may be sustained by him
at the hands of the British Government during hostilities (r). It
Avas questioned in Janson v. Briefontein Consolidated (s), whether
in the case of a loss otherwise recoverable the parties could by
agreement waive the disability of the alien to sue during the war.
Lord Davey (t) thought they could not and that the Court ought to
take the objection that the plaintiff was an alien enemy. In that
case the action was commenced before the conclusion of peace,
but before the case reached the House of Lords peace had been
signed and the point therefore had become academic.
It is doubtful whether war does not dissolve altogether the How far doea
contract of insurance in respect of future losses (m). If the whole tjfj contract
operation of the contract is suspended so that no loss whatever of insurance,
sustained by the alien enemy during the war can be recovered,

the object of the insurance is to a great extent frustrated, and the
assured is left uncovered during the uncertain duration of hostilities.
He cannot, moreover, lawfully pay, nor can the insurer lawfully
receive, the renewal premiums during the continuance of the war,
and the poUcy, whether it be on life or against fire or other risks,
will necessarily lapse on non-performance of the condition pre-
cedent. This subject, however, has not been judicially considered

in this country. In America it has been decided that a Hfe policy
is not dissolved on the outbreak of war (x).
ip) Usparioha v. Noble (1811), 13 14th Ed. 161 but see Lord Halsbury
;
East, 332. in Janson v. Driefontein Consolidated,

(r) Aubert v. Gray (1861), 3 B. & S. [19021 A. C. 484, 493.
163, 171. (x) Saltusv. United Insurance (1818),
(s) [1902] A. C. 484. 15 Johns, 523 ; Statham v. New York
(t) [1902] A. C. at p. 499. Life (1871), 45 Miss. 581 ; Smith
(u) Eaposito V. Bowden (1857), 7 v. Charter Oak Life (1876), 64 Miss.
EI. & Bl. 763 ; Chitty on Contracts, 330.
CHAPTER III
Formation of the Oonteact
Section I. —Doctrine of Ultra Vires
Corporations The great bulk of insurance business other than marine is trans-
as insurers.
acted by companies which are iacorporated and which can only
make contracts in so far as contractual power has been conferred
upon them (a). For the purpose of considering their contractual
capacity corporations must be primarily divided into (1) common
law corporations created by the Crown, and (2) statutory
corporations created under the direct authority of Parliament.
Common law Common law corporations are created by charter or letters
corporation.
patent from the Sovereign. The broad distinction between such
corporations and those created by statute is that the former,
when created, have unlimited contractual capacity, whereas the
capacity of the latter is limited to the powers conferred on them
by statute. Pull contractual capacity is a necessary incident
of a common law corporation. It may use its common seal for
the purpose of binding itself to anything to which a natural person

could bind himself, and may deal with its property as a natural
person might. Any attempt on the part of the Crown to limit
the contractual capacity even by express negative words in the
charter is ineffective as a limitation of the company's powers.
If there are conditions in the instrument that the corporation
which it creates shall not do certain things any infringement of
the conditions may justify the Crown in repealing the charter or

letters patent (aa), but if the Crown takes no such step neither
(o) Strictly speaking there is noques- only question is as to the authority
tion of ultra vires in the case of com- of the directors to bind the partner-
panies which are not incorporated, ship or individuals as the case may
such as common law partnerships or be, vide infra, p. 1 85.
mutual associations formed under a (aa) Reg. v. Eastern Archipelago Co.
deed of settlement. The capacity, in (1853), 2 El. &Bl. 857 ; Blackburn, J.,
the one case of the partnership, and in Biche v. Ashbury Railway Carriage
in the other of the individual mem- Co. (1874), L. R. 9 Ex. 224, 263.
bers, to contract is absolute, and the
ULTBA VIRES 181
the corporation nor the person who has contracted with it can
allege that any contract made was beyond the capacity of the
corporation (&). No objection therefore can be taken that an
insurance company created by charter or letters patent has
issued a policy which is ultra vires.
Statutory corporations, on the other hand, cannot be bound Statutory
*'°'^P°'^®' '°"^"
by any contract which is beyond the powers conferred upon them.
The company as a legal entity is incapable of making a contract
outside the scope of its statutory powers. If it purports to make
such a contract, the contract has in fact no legal existence, and
even although every single shareholder gives his express consent
the contract does not bind the company (c). Where the contracting
parties are in pari delicto, having equal knowledge of the fact that
the company was acting ultra vires, the company can plead the
want of power as a defence to any action brought against it. It
is said that when the parties are not in pari delicto a company
contracting ultra vires with an innocent party cannot set up its
own an action on the contract {d), and this

illegality as a defence to
undoubtedly is so when the illegahty is such that no inspection

of the memorandum, deed, or act of parUament, would have
disclosed the illegality. Thus where the company has power to
do acts subject to the performance of certain prescribed formalities
as where it has power to borrow upon the authority of a special
resolution, persons dealing with the company are not bound to
inquire whether the formalities have been observed, and if upon
the face of their contract the company appears to be acting intra

vires, they are entitled as against the company to assume that
everything has been done which ought to have been done (e).
But where the illegality would have been disclosed upon a perusal
of the memorandum, deed, or act of parliament, the party con-
tracting with the company cannot plead ignorance, and the com-
pany, on being sued, can take the objection that the contract was
ultra vires (/).
(6) Bowen, L.J., in Baroness Wen- (d) Doolanv. Midland Railway Co.
lockv. River Dee (1887), 36 Ch. D. 674, (1877), 2 A. 0. 792.
685 n. ; Blackburn, J., in Riche v. (e) Royal British Bank v. Turquand
Ashbury Railway Carriage Co. {1814:), (1856), 6 El. & Bl. 327; Agar v.
L. R. 9 Ex. 224, 263 ; Archibald, J., Athenaeum Ufe (1858), 3 C. B. (N. S.)
in the same case, at p. 292 British; 725 ; but see Athenaeum Life v. Pooley
South African Company v. De Beers, (1859), 1 Giff. 102.
[1910] 1 Ch. 354. (/) Ernest v. NichoUa (1857), 6
(c) Ashbury Railway Carriage Co. H. L. 401, 421, 423 ; Balfour v.
V. Riche (1875), L. B. 7 H. L. 653, Ernest (1859), 5 C. B. (N. S.) 601 ;
672. Arthur Average Association, In re
182 FORMATION OF CONTRACT
Since the company cannot be made directly liable upon

a contract ultra vires, it would seem to follow that it cannot
be made liable indirectly on any principle of holding out or
estoppel (g). It has, however, been said that a company which
assumes a power to make contracts ultra vires, and makes repre-
sentations to the public that it has such power may be
estopped from denying the truth of the representations (h), and
that a company which has taken the chance of a contract of
insurance turning out in its favour cannot take advantage of
the defence of ultra vires (i).
Statutory corporations may derive their authority either from

(1) a special act of parliament ; (2) registration under the
Joint Stock Companies Act, 1844; or (3) registration under the
Companies Acts, 1862 to 1908. All, these stand very much
upon the same principles as regards their contractual capacity.
The powers of the first are contained in the special Act, of the
second in the registered deed of settlement, and of the third in
the memorandum of association. If the necessary authority to
contract is not found in whichever of these documents is appro-
priate to the case, then the power does not exist (fc).
The theory that a statutory corporation has full contractual

power except in so far as limited by the instrument of incor-
poration was exploded as regards companies under the Companies
Acts in Ashbury Bailway Carriage Company v. Biche (l). The
memorandum states affirmatively the ambit and extent of vitality
and power which by law are given to the corporation (m). It is
the area beyond which the action of the company cannot go (n).
The principle applied in Ashbury Bailway Carriage Company v.
Biche to companies under the Act of 1862, is equally applicable
to a company incorporated by special act of parhament (o), or
(1876), 34 L. T. 942; Smith v. The (i) Oollett v. Morrison (1851), 9

Hull Glass Co. (1849), 8 C. B. 668; Hare 162.
Chapleo v. The Brunswick Building [k) AthencBumLifev. Pooley [1858),
Society (1881), 6 Q. B. D. 696 Lon-; 3 De & J. 294.
G.
don and County Assurance, In re (1875), L. R. 7 H. L. 653.
(I)
(1861), 30 L. J. Ch. 373. (m) Lord Cairns in Ashbury Rail-
(g) Great NoHh-W est Central Ry. v. way Carriage Co. v. Eiche (1875), L.
Charlebois, [1899] A. C. 114. ; Isling- R. 7 H. L. 653, 670.
ton Vestry v. Homsey Urban Council, (w) Lord Cairns in Ashbury Rail-
[1900] 1 Ch. 695, 706. ; Chapleo v. way Carriage Co. v. Riche (1875), L.
The Brunswick Building Society R. 7 H. L. 653, 671.
(1881), 6 Q. B. D. 696. (o) Lord Watson in A.-G. v. Great
(h) Montreal Assurance Co. v. Eastern Railway Company (1880), 5
MacGillivray (1859), 13 Moore, P. C. A. C. 473, 486 ; Cotton, L.J., in Reg.
87; Balkis Consolidated v. Tomhin- v. iJeeci (1880), 5 0. B.
^ •« /.
483 488o. D ,
son, [1893] A. C. 396.
ULTIiA VIEES 183
registered under the Companies Act of 1844 (p). If the business

of an insurance company is Hmited to a certain class of risks, any
insurance beyond the defined limit would be void and unenforce-
able (5). Where a policy included risks which were ultra vires,
and also risks which were intra
vires, the policy was held valid as
to the latter, although voidand unenforceable as to the former (r).

Power is implied to do all acts which are in the ordinary course
of business incidental to the powers expressly conferred (s), but it
must be shown that they can fairly be regarded as incidental to
or consequential upon these powers it). It is not sufficient to
show that one class of business can be conveniently worked with,

and would be beneficial to, another class of business for which
power has been expressly conferred it must be incidental (m). ;
Power may, however, be given to a company in general terms to

transact insurance business {x). The Court will, if
all classes of
possible, avoid any construction of the words used which would

unduly limit the scope of the company's business. Thus power
to issue policies includes power to make any written contract of
insurance although not in the ordinary form of a policy {y). It
has been doubted whether it would be ultra vires for a life insurance
company to issue a policy at a premium out of all proportion to
the age of the life had been allowed to
insured as where -a policy
drop, and the company, with or without payment of arrears,
issued a fresh policy at the same premium as the original policy {z).
It has been held that it is not ultra vires of the company to make
an ex gratia payment to a policy holder upon a loss not technically
within the policy, and it is conceived that on the same grounds,
that is because the transaction is in the business interests of the
company, it would not be ultra vires to renew a lapsed life policy
at the old premium (a).
(p) Ernestv. Nicholls (1857), 6 County Council v. Attorney-Oeneral,

H. L. C. 401, 421, 423. [1902] A. C. 165, 169.
(2) Phoenix Life, In re (1862), 2 (a;) Norwich Provident Insurance,
John & H. 441. Bath's Case (1878), 8 Ch. D. 334.
(r) G. P. Ey. Co. v. Ottawa Fire (y) Norurich Equitable Fire, In re
(1907), 39 Can. S. C. 405. (1887), 57 L. T. 241.
(s) Lord Selborne in A.-Q. v. (2) WindusY. Lord Tredegar (l^Qd),
Great Eastern Eailway Go. (1880), 5 15 L. T. 108.
A. C. 473, 478 ; Meredith, Ex parte Taunton v. Eoyal Insurance
(a)
(1863), 32 L. J. Ch. 300. H. & M. 135. It is in fact
(1864), 2
(t) Lord Loreburn, L.C., in A.-O. very usual to renew a lapsed policy
V. Mersey Eailway Co., [1907] A. C. at the old premium if arrears are
415. paid and the assured is in good health.
(u) Lord Macnaghten, in London
184 FORMATION OP CONTRACT
Norwich Provident Insurance, Bath's Case (1878), 8 Ch. D. 302

Norwich The company's deed of settlement stated the objects to be insurance against
Provident advanced age
sickness, ill-health, upon lives or survivorship ... to
. . .
Insurance,
BaWs Case.
grant, purchase, and sell endowments by way of annuity, and generally to
make and effect insurance against all and every kind of risk, special or general,
which may be effected according to law and which may at any time hereafter
be determined upon by a general meeting. ... It was held that a resolution
at a general meeting to extend the business to fire and fidelity guarantee risks
was intra vires.
Norwich Equitable Fire, In re (1887), 57 L. T. 241

Norwich The company's deed of settlement stated the objects of the company as
Hquitahle insuring from loss by fire . . . effecting reinsurance . . . giving to or taking
Fire, In re.
from other by way of guarantee for the purpose of dividing the
oflSces policies
risk of insurance. The company's reinsurances or guarantees were done by
way of a request note " The R. Co. request guarantee from N. Co. for £
: ,
part of a policy No " This was accepted by an indorsement "I :
hereby undertake on behalf of the N. Co. to guarantee the R. Co." It was

held that the indorsed request note was a " policy of guarantee " and within
the powers given by the deed of settlement. The company also did what was
called Treaty business that is, they undertook to reinsure one-eighth of every
;
fire riskwhich the agent of another company in Smyrna might effect on behalf
of that other company, and " agreed to follow the fortunes of that other com-
pany in respect of such one-eighth risk as if the two companies formed only
one." This arrangement was also held to be intra vires.
Taunton v. Royal Insurance (1864.), 2 Hem. and M. 135

Taunton v. The company's policies excluded damage by explosion other than gas. An
Royal explosion of gunpowder occurred on board a vessel lying in the Mersey, and a
Insurance,
large number of houses in Liverpool were damaged by the concussion. The
company's directors proposed to make an ex gratia pa3Tnent to their policy
holders in respect of such damage, and it was held that as that was a reasonable
thing to do with a view to future business it was within the company's powers.
Meredith, Ex parte (1863), 32 L. J. Ch. 300

Meredith, Ex The deed of settlement of a fire insurance company provided that the
parte. Uability should by limited to the funds of the company but the deed also
;
gave power to the directors to sign bills for the purpose of discharging claims,
such bills to take effect only on the capital stock of the company. Agents
authorised by the directors issued bills in discharge of fire claims, and it was held
that the company were liable upon the bills to the full amount, and not merely
to the extent of the capital stock. Bills of exchange must be unconditional,
and could not in their nature be limited so as to affect the capital stock only,
and therefore the power to issue bills must be read without any such restriction.
Companies' In the case of companies formed under the Companies Acts,

powers
defined in 1862 to 1908, the powers are defined in the memorandum of asso-
memoran- ciation, which is unalterable except, to a hmited extent, by leave
dum, deed of
settlement of the Court ; and the rules and regulations for the conduct of
AUTHORITY OP DIRECTORS 185
business are contained in the articles of association, which can or act of
be altered by the company in P*"^'*™^"*-

the manner prescribed therein.
Under the Joint Stock Companies Act, 1844, the deed of settle-
ment fulfilled the double duty of defining the powers and regu-
lating the conduct of business, and thus it is sometimes difficult
in construing a deed of settlement to determine whether a par-
ticular provision Umits the scope of the company's capacity or
whether it merely defines the scope of the directors' authority, the
important distinction being that the company as a whole can
ratify an act done by the directors without authority, but cannot
ratify an act which the company itself has no power to do. When
the deed merely prescribes the manner in which an act shall be
done, as for instance the necessary formalities for the execution
of a policy, the presumption is that the provision is not intended
to limit the company's The provision may limit
capacitj^ {b).
the directors' authority by permitting them to contract only in a

particular form (c), or it may be merely in the nature of a direction
for the guidance of the directors without actually limiting their
authority (d). Where the company is incorporated by a special
Act, similar difficulties may arise from the want of a distinct
dividing line between the company's powers and the directors'
powers or other rules for internal management.
Section II. —Authority of Directors
Unless restrained by particular provisions in the articles, deed, Implied

or Act, as the case may be, the directors of a company have implied
authority to do everything necessary for carrying on the business
of the company in a customary and proper manner (e). Even
although the manner of conducting business is not expressly
defined, the directors' authority is limited to what is usual and
right in the particular business (/).
Just as persons deahng with a company have notice of the Authority

company's power, so also they have notice of any limitation upon y^jêd.'^
(6) Prince of Wales Life V. Harding (e) Smith v. The Hull Glass Co.
(1857), El. B. & E. 183. (1849), 8 C. B. 668 ; Charles v. Na-
(c) AthenoBum Life, In re (1858), 4 tional Guardian (1857), 5 W. R. 694 ;
K. & J. 549. Norwich Equitable Fire, In re (1887),
(d) Prince of Wales Life -v. Harding 57L. T. 241.
(1857), El. B. & E. 183; but see (f)Smallv.Smith(im),V)A.C.
Pollock, C.B., in Hamhro v. Hull and 119 ; Security Mutual Life (1858), 6
London Fire Insurance (1858), 3 W.B.. i31 Hambro v. Hull and Lon-
;
H. & N. 789, 796. don Fire (1858), 3 H. & N. 789.

the authority of the directors contained in the articles, deed, or

Act, and if the directors act outside their authority, as therein
defined, they do not bind the company {g) unless the company
has extended the directors' authority, or has subsequently ratified
the unauthorised act. But where persons are acting de facto as
directors,and apparently within the scope of their authority, and
there is nothing on the face of the contract made with them to
show that all proper formalities have not been observed, the
company are bound, and a policy holder is not affected by any
irregularity in the internal management of the company's affairs,
whether it be some informality in the appointment of the
directors Qi) or in the execution by them of their powers (i).
Prince of Wales Life v. Harding (1857), El. B. & E. 183
Prince of The company's deed of settlement provided that the common seal should
Wales Life v. not be affixed except by the order of three directors, signed by them and counter-
Harding.
signed by the manager, and that every policy should be given under the com-
mon seal and the hand of three directors. A policy was issued sealed with the
seal of the company and signed by three directors, one of whom
was the
manager. No order had previously been signed for the affixing of the seal.
The Court were of opinion that this provision in the deed was only for the
guidance of the directors and intended to operate only as between them and
the shareholders, and secondly, that if it did have any effect as between the
company and a pohoy holder, the latter, when he received a policy apparently
in order, was entitled as against the company to assume that the directors who
signed it had done their duty, and that they had obtained the preliminary
order for executing the policy.
County Life Insurance, In re (1870), L. K. 5 Ch. 288
County Life P was the promoter of a company formed under the Companies Act, 1862,
Insurance, In for the purpose of carrying on the business of life insurance. The articles
provided that A, B, C, and D should be directors and that P should be manager.
'''''
The subscriptions not being satisfactory, the directors called a meeting and
passed a resolution that no shares should be allotted or further steps taken.
P took no notice of this resolution, but himself appointed other directors and
a secretary, and proceeded to allot shares and carry on business, and policies
were issued signed by the new directors and under the company's seal. On the
company being wound up it was held that the policy holders were entitled to
prove as creditors of the company. The policies on the face of them were
perfectly valid and binding. People dealing with those who held themselves
(g) Athenceum Life, In re (1858), 4 (h) County Life Insurance, In re

K. & J. 549 Hanibro v. Hull and
; (1870), L. R. 5 Ch. 288; Mahonyv.
London Fire (1858), 3 H. & N. 789 ; East Holyford (1875), L. R. 7 H. L.
Wood, Ex parte (1853), 17 Jur. 813 ;
869.
Lawe's Case (1852), 1 De G. M. & G. (i) Prince of Wales Life v. Harding
421 Featherstonhaugh v. Lee Moor
; (1857), El. B. &E. 183.
Porcelain Co. (1865), L. R. 1 Eq. 318.
AUTHORITY OF DIRECTORS 187
out as acting for a company were taken to have read the general Act and articles
of association, but they were not taken to have knowledge of the internal affairs
of the company.
The authority of the directors may be extended by the com- Extension of
In the case of a company under the Companies Acts the ^^ °"

^"
pany.
company are absolute masters of their own internal regulation,
and by altering the articles of association they may extend the
directors' authority. This may be done by passing a special reso-
lution to that effect (Z). The articles cannot be altered by an
ordinary resolution, and therefore. an ordinary resolution does
not authorise the directors to act beyond the authority conferred
by the articles (m). But when an act within the power of the
company has been done by the directors without authority, it
may be ratified by an ordinary resolution (m).
The whole body of shareholders in any company may by
general consent, and without any formality, either sanction before-
hand, or subsequently ratify, an act of the directors otherwise
ultra vires (n). The shareholders may by acquiescence in a
course of conduct on the part of the directors enlarge their
authority beyond the limits defined in the articles, Act, or
deed of settlement. But the company is not bound by the
informal concurrence of some of the shareholders unless the
acquiescence of each shareholder can be reasonably inferred.
In In re Athenceum Page Wood, V.C., said that if the form
(o),
of a policy were not authorised by the deed of settlement,

it would be very doubtful whether the shareholders could be
said to have acquiesced in its being so executed unless notice

distinct and clear had been brought home to them in the shape
of a report that the policy had been executed on their behalf.
In Ashbury Company v. Biche (p), Lord Cranworth, speaking of
every case of ratification by shareholders
ratification, said that in
of an act ultra vires there ought to be no mere presumption of

consent from notice of the unauthorised act, and absence from a
meeting called to legalise it, but there ought to be proof of the
(l) Comp. Act, 1908, sees. 13, 69. A (m) Orantv.United Kingdom Switch-
special resolution is one passed by bacJsRailway Co. {1888), 40 01.1). 135.
a three-fourths majority at a general (n) Lord Cairns in Ashbury Rail-
meeting of the company held after way Carriage Oo. v. Riche (1875), 7
notice specifying the particular matter H. L. 653, 675.
to be dealt with, and confirmed by a (o) (1858), 4 K. & J. 549.
simple majority at a subsequent (p) (1875), 7 H. L. 653, 680.
general meeting.
actual assent of each shareholder ; but the same judge said in

Houldsworth v. Evans (q), that if with knowledge of the facts
the shareholders remain a long time and take no step what-
ever, still more if they remain so while great alterations are going
on in the company, they must be taken to have retrospectively
sanctioned what has been done; and in Phosphate of Lime Company
V. Green (r), it was held that
was certainly unnecessary to prove
it
conclusively that each shareholder had notice of the facts, and con-
sented. It is sufficient to show that the facts were made known
to the shareholders as a body, and that they ought to have objected

at the time if they did not intend to sanction the acts of the
directors. If there is evidence of consent in this sense it is a
question of fact for a jury to say whether there was consent or not.
Section III. —Authority of Agents
Apparent Much insurance business is transacted through agents, and

au on y.
therefore the question of the agent's authority is one of supreme
importance.
A principal is bound, not only to the extent of the actual
authority which he has given to his agent, but to the extent
of the apparent authority which he has permitted his agent
to assunle in acting with third persons (s).
The authority of a company's agent may be defined in the

company's Act, deed, or articles, and as persons dealing with the
company are supposed to have read these documents, they are
deemed to have notice of any restrictions on the agent's authority
contained therein (i). A policy holder must also be deemed to
have notice any limitations upon the agent's authority expressed
of
in his policy (w), buthe is probably not deemed to have notice of

limitations contained in the company's ordinary form of policy
before a policy has been delivered to him (x).
The general rule is that a person dealing with an agent
must make reasonable inquiry as to his authority and not
merely assume that the agent has authority because he says
(q) R. 3 H. L. 263, 276.

(1868), L. Modern Woodmen v. Tevis (1902),
{r) R. 7 C. P. 43.
(1871), L. 117 Fed. Rep. 369.
(«) Montreal Assurance v. Mac- (m) Conway v. Phoenix Mutual
OilUvray (1859), 13 Moore P. C. 87, (1893), 140 New York, 79.
120. (x) Coleman's Depositories, Ltd. v.
Montreal Assurance v.
(t) Mac- Life and Health Association, [1907]
OilUvray (1859), 13 Moore P. C. 87 ; 2 K. B. 798.
:
AUTHORITY OF AGENTS 189
SO (y). An agent, however, has the full apparent authority

which would in ordinary course attach to the position which the
principal permits him to occupy (z), and private instructions to
the contrary may be disregarded unless the person deaUng with
him has actual or constructive notice of such instructions. Thus
general agents of a company who are entrusted with blank policies,
signed by the and merely requiring the agent's signa-
directors
ture to make the execution complete, have apparent authority
to accept all risks in the ordinary course of business to which
such policies would be appUcable (a). An agent appointed to
receive and forward applications for insurance and to countersign
and deliver completely executed policies issued from the head
office has, in general, no apparent authority to make any binding
contract with applicant (6), but an agent appointed to receive
appUcations on behalf of a fire office is usually entrusted with
forms for interim insurance, and has thereby apparent authority
to bind the company in terms of the printed form. An agent
entrusted with renewal receipts has apparent authority to renew
the risk in ordinary course, but not to grant a renewal so as to
cover a loss which has already occurred (c). An agent entrusted
with a completely executed policy has apparent authority to
deliver it to the assured against payment of premium, and the
company cannot allege secret instructions to the agent not to
deliver in certain events (d).
The extent of the agent's apparent authority depends upon the

general custom of insurance business, and may vary in any parti-
cular county or place in accordance with the local practice. This
principle is thus stated in the Supreme Court of the United States
"It an elementary principle applicable to all kinds of agency
is
that whatever an agent does can only be done in the way usual in
the line of business in which he is acting. There is an implication
to this effect arising employment, and it
from the nature of his
is as effectual ashad been expressed in the most formal terms.

if it
It is present whenever his authority is called into activity and

prescribes the manner as well as the limit of its exercise."
(y) Potter V. Phoenix (1894:), 63 Fed. (h) Linford v. Provincial Horse

Rep. 382. o,nd Cattle Insurance (1865), 34 Beav.
(z) Rainbow v. Hawkins, [1904] 2 291; Insurance Co. v. Mowry {1811),
K. B. 322 Potter v. Phcenix (1894),
; 96 U. S. 544.
63 Fed. Rep. 382. (c) Carpenter v. Canadian Acci-
(a) Ruggles v. American Central derei (1908), 18 Ont. L. R. 388.
(1889), 114 New York, 415 Sanford ; (d) American Employers v. Barr
V. Orient (1899), 174 Mass. 416. (1895), 68 Fed. Rep. 873.
The practice of a particular agent, if recognised by the com-

pany, may be such as to extend the agent's apparent authority
beyond the authority usually held by similar agents in other
companies (e).
When the agent's actual authority is less than his apparent

authority the company must show that the person dealing with
the agent had clear and unambiguous notice of the restriction. It is
sufficient if the appUcant's agent had clear notice of the restricted

authority of the company's agent ; but where one insurance agent,
not being able to place a risk with his own company, handed the
application on to the agent of another company, the first agent was
held not to be the agent of the assured, so as to fix him with his
knowledge of the second agent's restricted authority (f). If the
notice of restriction is ambiguous, and persons acting on it fairly
and honestly construe it in one sense, the company cannot after-

wards be released on the ground that it intended that it should
be construed in another sense (g), and on this principle it was
held that where a company sent to its agent a list of expiring fire
policies, and marked some " renew " and others " drop," and this
was shown to the assured whose policy was marked "drop," he

was justified in reading it not as an instruction to drop
the policy altogether but as an instruction to reduce the
amount Qi).
Eestrictions upon the agent's authority are frequently

printed in the proposal forms supplied to the agents, and when
such form is fill up or sign, it
presented to the applicant to
is his duty to read and not to trust
it, to what the agent tells
him (i) but the restriction must be printed prominently upon
;
the application form, and if printed on the back or in such small

print that an ordinary prudent man could not be expected to
see it the applicant will not necessarily be deemed to have had
notice of it (fc). The restrictions upon the agent's authority con-
tained in the proposal form or policy or elsewhere may be waived
(e) Insurance Co. v. Colt (1874), 20 (i) Henry v. Agricultural MutMal

Wall. 560; Lightbody v. North (1865), Grant, 125; Harris v.
11
American Insurance (1840), 23 Wend. Great Western (1876), 1 Q. B. D. 515.
18 ; Brockelbank v. Sugrue (1831), 6 {k) Cockburn v. British American
Car. & P. 21. (1890), 19 Ont. R. 245 ; Henderson v.
(/) Teutonia Insurance v. Ewing Stevenson (1875), L. R. 2 So. & Div.
Rep. 217.
(1898), 90 Fed. 470 ; Richardson v. Rowntree, [1894]
(g) Ireland v. Livingstone (1872), A. C. 217 ; Watkins v. Rymill (ISSS),
L. R. 5 H. L. 395. 10 Q. B. D. 178 Parker v. South-
;
{h) Winne v. Niagara Fire (1883), Eastern (1877), 2 C. P. D. 416.

91 N. Y. 185.
AUTHORITY OP AGENTS 191
by a persistent disregardof the restriction by the agent and the

company (l).
Where an underwriter at Lloyd's had express authority from
his names to act as their agent for the purpose of underwriting
policies of insurance, and carrying on the ordinary business of
an underwriter at Lloyd's, it was held that he had authority to
underwrite guarantee policies, that being part of the ordinarj^
business of an underwriter at Lloyd's (m).
If an agent has authority, or is held out by his principal as Agent acting
having authority, to make any contract or do any act on behalf Interests or

of his principal, he will bind his principal by making such contract dishonestly.
or performing such act, even although in fact he is acting in his

own interests, and with intent to defraud his principal (m). If
the person dealing with the agent acts in good faith he can, as
against the principal, enforce a contract so made (m). Thus an
agent who fraudulently issues the company's cover notes and
appropriates the premiums to his own use will bind the
company (o).
But where an agent is held out not as having authority to Authority to
contract but only as having authority to perform some ministerial mhiisterial

act, such as the affixing of a seal or the counter-signing of a ^^'^ °^y-
policy otherwise duly executed by the directors, the company

is not estopped from denying that the policy to which he
affixed the seal, or which he countersigned, was not in fact
executed by the directors And if an agent is only held out
(p).
as having authority to communicate the decision of the directors

to a person who has made a proposal for insurance, such agent
does not bind the company if he says the directors have accepted
the proposal, whereas, in fact, they declined it (q).
Primafacie an agent has no power to delegate his functions Agent's
to another. Where an agent, appointed with power to grant delegate

duties,
interim receipts and entrusted with blank receipt forms, employed
a canvasser to solicit insurances and gave him receipt forms and
authority to sign interim receipts, it was held that the company
(l) Oockburn v. British American ( p)

Euben v. Oreat Fingall Consoli-
(1890), 19 Ont. R. 245 ; Postv. Aetna dated, [1906] A. C. 439.
Insurance (1864), 43 Barb. 351. (?) Russo-Ohinese Bank v. Li Yau
(m) Hamhro v. Burnand, [1904] Sam, [1910} A. C. ni; More v. New
2 K. B. 10. York Bowery (1892), 130 N. Y. 537.
(o) Hawke v. Niagara District See contra, Union Central v. Phillips
(1876), 23 Grant, 139; PaUeraon v. (1900), 102 Fed. Bep. 19; Penley v.
The Royal (1867), 14 Grant, 169. Beacon (1859), 7 Grant, 130.
192 POEMATION OF CONTRACT
were not bound by the receipts so signed by the canvasser (r).

Where a policy provided that it should not be valid unless counter-
signed by the agent, the signature of the agent's clerk signing in
the name of the agent " per C.F.M," was held not to be sufficient
to complete the policy (s).
Company's An officer or agent of a company may lawfully insure in his

agent insuring
with the own company, but an agent with a general authority to bind
company. the company cannot accept his own proposal on behalf of the
company (i). In an American case (u) where A was secretary of
X company, and general agent of Y company, and in these
capacities concluded a contract of reinsurance between the two

companies, was held that the policy was voidable in equity
it
at the election of either company, but was valid unless avoided.

It was alleged that A exceeded his authority as agent of the Y
company in reinsuring the X company, but it was held that it
was within the general scope of his apparent authority, and the
fact that he was secretary of the insured company did not affect
it with notice of his want of authority. The rule as to the
knowledge of an agent being the knowledge of the principal is
confined to cases where the knowledge comes to the agent in the
course of the transaction in question.
Ratification If a contract is made by an agent without authority it may
by insurers.
be afterwards ratified by the principal on whose behalf it was, or
was professed to be, made. A contract made in the name of a
principal without his authority may be ratified by the principal,
although in fact the agent making the contract intended to make

it for his own benefit (x) ; but a contract made without authority
must be professedly made on behalf of some principal, either
disclosed or undisclosed, and if the agent makes the contract
without sta,ting that he is acting as an agent, the fact that he
intended to make it on behalf of a particular principal is not
material, and does not entitle the principal to ratify {y).
The right to ratify a contract must be exercised within a
reasonable time, the right of the principal being an election to
(r) Summers v. Commiercial Union (u) New York Central v. National

Insurance (1881), 6 Can. S. C. 19 ; ProtecUon (1854), 20 Barb. 468 14 ;
Canadian Fire v. Robinson (1901), 31 New York, 85.

Can. S. C. 488. (a;) Tiedemann and Lederrriann, In
Wancerville Match Co. v. Scot-
(«) »-e, [189912Q. B. 66.
tish Union(1903), 6 Ont. L. R. 674. (y) Keighley Maxsted S Co. v.

(t) Pratt V. Dwelling House Mutual Durant, [1901] A. C. 240.
(1891), 130 New York, 206.
;
WARRANTY OF AUTHORITY 193
confirm, and not an election to repudiate (z). The principal may

ratify the contract even after the contract has been repudiated by
the person with whom the agent contracted (a), but if the agent
and third person agree to rescind a contract which the agent has
made on behalf of his principal the principal cannot afterwards
ratify (b).
A principal cannot ratify a contract which he could not
in the first instance have made (c), and an agent cannot on behalf
of the principal ratify a contract made by another agent or a sub-
agent unless the agent purporting to ratify has either authority
to make the contract or authority to ratify it (d).
Eatification may be express or it may be implied from know-

ledge of and acquiescence in the contract made by the agent
but ratification can only be with full knowledge of the character
of the act to be adopted or with intention to adopt it under any
circumstances (e). Thus if a contract of insurance has been made
on behalf of a -company, but in a form not authorised, it may
be ratified by the subsequent conduct of the company (J), but the
mere recognition of the contract does not amount to ratification
unless the company has notice of the irregularity, or acts in such
a way as to warrant an inference that it intends to waive any
question as to the regularity of the contract (g).
Section IV. —Warranty of Authority
If directors of a company or other persons purporting to act By directors

'^^^" ^"
as agents exceed their powers they may be personally liable to "'"
third parties for a breach of warranty of authority.

A person purporting to make a contract on behalf of another
warrants that he has the authority of that other to make the
contract, and if he has not authority he is liable to compensate
the party with whom he contracts for any damage which may
result from his want of authority (h).
(z) In re Portuguese Consolidated Co. v. Oreen (1871), L. R. 7 C. P. 43,

Mines (1890), 45 Ch. D. 16. 56.
(a) Bolton Partners v. Lambert (f ) Renter v. Electric Telegraph
( 1888), 41 Ch. D. 295. (1856), 6 El. & Bl. 349.
(6) Walter v. James (1871), L. R. 6 (g) Lewis v. Read (1845), 13 M. &
Ex. 124. W. 834 ; Freeman v. Rasher (1849),
(c) LaBanque Jacques -Cartierv. La 13 Q. B. 780.
Banqued'Epargne (1881), 13 A. cm. (h) Collen v. Wright (1857), 8
Portuguese Consolidated Mines,
(d) El. & Bl. 647 ; Godwin v. Francis
In re (1890), 45 Ch. D. 16. (1870), L. R. 5 C. P. 295 ; Weeks v.
(e) Willes, J., in Phosphate Lime Projser^ (1873), L. R. 8 C. P. 427.
I.I;. 13
194 FOBMATION OP CONTRACT
The fact that the contracting party could have ascertained

the absence of authority by making inquiry does not affect the
agent's liability, and therefore directors of a company entering
into a contract ultra vires of the company or beyond the scope of
their own authority may be hable for breach of warranty of
authority, and this notwithstanding that the want of power or
authority was patent in the company's Act, deed of settlement,
memorandum, or articles (i).
company may become per-

Directors or other agents of a
sonally liableby representing that a sub-agent has greater or
other authority from the company than he has in fact (k), or if
they permit a sub-agent to hold himself out as having such
authority.
Where a party dealing with the directors or other agents
of a company has in fact notice of the limitations upon their
authority, and the parties enter iato a contract under a mutual
mistake in law as to the meaning or effect of the limitation, there
is no implied warranty that the view taken of the law is the
right one (1).
Section V. —Form of the Contract
Contracts of There is apparently no absolute rule of law requiring any

marine
insurance,
contract of insurance other than marine to be made in any par-
ticular form. The law requires every contract for sea insurance
to be expressed in a policy (m), and the policy must be stamped (n),
but since 1876 it may be stamped at any time after execution
on payment of a penalty (o). It has never been definitely settled
whether or not a slip initialed by underwriters at Lloyd's on an
agreement for a marine policy is in itself a " policy " within the
meaning of the Stamp Act. If it is it can be stamped and en-
forced in a court of law as a binding contract, but if not it is
merely evidence of a moral obligation. In Home Marine In-

surance v. Smith (p), Mathew, J., held that a slip was not a
West London Commercial Bank
(i) L. R. 7 H. L. 102 ; Rashdall v. Ford
V. Kitson (1884), 13 Q. B. D. 360 ; (1866), L. R. 2 Eq. 750.
Chapleo v. The Brunswick Building (m) Stamp Act, 1891, 54 & 55 Vict.
Society (1881), 6 Q. B. D. 696 ; Fir- c. 39, sec. 93.
bank's Exors. v. Humphreys (1886), (n) Stamp Act, 1891, 54 & 55 Viot.
18 Q. B. D. 54 ; Richardson v. c. 39, see. 93, Schedule I., Policy of
Williamson (1871), L. R. 6 Q. B. 276. Sea Insurance.
(fc) Cherry v. Colonial Bank of (o) Stamp Act, 1891, 54 & 55 Viot.
Australasia (1869), L. R. 3 P. C. 24. c. 39, sec. 95.
[l) Beattie v. Lord Ebury (1874), (p) [1898] 1 Q. B. 829.
FORM OF CONTRACT 195
policy, and therefore could not be stamped and sued on. The
Court of Appeal in that case held that the particular slip or
cover note in question was not a valid policy since it did not
specify the sum or sums assured as required by section 93 of the
Stamp Act, but they declined to decide whether a slip could be
treated as a policy if it contained all the necessary particulars.
Contracts of insurance other than on marine risks are fortu- The Stamp
^°*"
nately free from any doubt of this kind. The Stamp Act, 1891,
requires all policies of insurance to be stamped, but it does not
expressly avoid contracts of insurance other than marine which
are not expressed in a policy.
A Lloyd's slip in respect of a fire risk on land can be enforced Informal
'
as a binding contract and there is apparently nothing in law "

(g),
to prevent any contract of fire, life, accident, burglary, or any

other kind of insurance on land from being constituted by in-
formal writings by mere oral communications (s).
(r), or even
It has been suggested that an oral contract of insurance oral
contracts.
would be void since it is evasive of the Stamp Act, but the
absence of any provision in the Act to this effect and the contrast
with the express provision as to marine insurance points to the
inference that there was no intention to prohibit any informal
contracts of insurance except in respect of marine risks.
A contract of insurance may come within the 4th section of The Statute
the Statute of Frauds, which provides that no action shall be

brought upon any agreement which is not to be performed
within the space of one year from the making thereof unless
the agreement upon which such action shall be brought or some
memorandum or note thereof shall be in writing. If a contract
may be fully performed within the year the statute does not
apply (i), and therefore contracts for hfe insurance are probably
Contracts for fire and burglary insurance
not within the statute.
and the like are not quite so clearly outside the statute.
On June 20th A promises to insure B's house for a year from
June 25th. A's part cannot be performed within the year because,
even although there is a loss within the year, he is still liable for
further loss up to June 25th, which is more than a year from
(q) Thompson v. Adams (1889), Ont. L. B. 35; Belief Fire v. Shaw

23 Q. B. D. 361. (1876), 94 U. S. 574 ; Mills v. Albion
(r) Eames v. Home Insurance Insurance (1826), 4 S. 575.
4 (1876), 94 U. S. 621. (t) MacGregor v. MacGretjvr (1888),
(«) OouUer v. P!quity Fire (1904), 9 21 Q. B. D. 424.

the date upon which the contract was made, but it has been
held that it is sufficient if one party to the contract can perform
his part within a year, however long a period may have to elapse
before the agreement is performed by the other party (u), and
as the assured may perform his part by paying the premium
within the year it would seem that the contract is not within
the statute. Things which the assured must do as a condition
precedent to recovering upon a loss, such as giving notice and
furnishing proofs, do not extend the assured's obligations beyond
the year, because these are not matters in respect of which the
insurer cannot enforce performance if the assured chooses to forgo
his claim. Contracts of insurance could be conceived which
would fall within the statute. It was held in America (x) that
an oral agreement that until notice to the contrary a fire policy
then current should be renewed from year to year, and the assured
should pay the premiums on demand, was not within the Statute
of Frauds (y), but it is difficult to see how such a contract could
be performed by either party within the year unless the agree-
ment was determined by notice, and the fact that an agreement
may be determined within a year does not take it out of the
Statute {z).
Whether The law some countries requires all contracts of insurance to

in
custom
requires
be made and in an American case it was contended
in writing,
writing. that the custom among business men was such that a like rule
had been incorporated into the law merchant and ought to be
recognised as part of the common law of England. The Supreme
Court of the United States, however, rejected this contention,
and held that where the president of an insurance company was
in the habit of making oral agreements the company were
bound (a).
No for- Restrictions therefore upon the form in which a contract of
malities
required by
insurance other than marine may be made are seldom imposed
latv. by law, but if at all by the rules of insurance companies or the
general practice of insurance business which permits the com-
panies' agents to contract only in a particular form.
(m) North, J., in Miles v. New (y) See the same point raised but
Zealand Alford Estate Co. (1886), 32 not decided in Isaacs v. The Royal
Ch. D. 266, 276 ; Donellan v. Read (1870), L. R. 5 Ex. 296.
(1832), 3 B. & Ad. 899 Cherry v.
; Dohson V. Collis (1856), 1
(2)
Heming (1849), 4 Ex. 631 ; ErsUne H. &
N. 81 Reeve v
;
V. Adeane(lSn), L. R. 8 Ch. 756. [1910] 2 K. B. 522.

(x) Trustees of Baptist Church v. (a) Commercial Mutual Marine v.
Brooklyn Fire (1859), 19 N. Y. 305. Union Mutual (1856), 19 How, 318.
FORM OP CONTRACT 197
The general rule of law is that a corporation is bound only Whether

by a contract under its corporate seal, but the exceptions en- mus "contract
graftedupon this rule are so numerous that the rule has for under seal,
practical business purposes almost entirely disappeared. One

exception is that a trading corporation may without seal make
all such contracts as
are necessary for carrying on the trade
for which
was incorporated (h), and therefore an insurance
it
company may, unless expressly prohibited from doing so, make

valid contracts of insurance without the corporate seal. All
companies formed under the Companies Acts, 1862 to 1908,
have power to make any contract in the same manner as an
individual.
Sometimes the deed of settlement or other incorporating instru- Formalities
ment requires that all contracts of insurance made on behalf of iiistrumentôf
the company shall bemade in a particular manner, as, for instance, incorporation,
that they shall be made in writing, or that they shall be made

under the corporate seal, or that they shall be signed and counter-
signed by certain officers of the company (c). A provision that
every policy shall be executed in a certain form does not, however,
prevent the company from entering into preliminary informal
contracts which will bind the company {d), and the Supreme
Court of Canada has held that although an incorporating statute
provided that no contract of the company should be valid unless
made under seal, yet where the seal has been inadvertently omitted,
and both parties had acted upon the policy as a valid policy,
the company ought to be estopped from setting up the absence
of the seal as a defence (e).
Where any particular form of executing or completing a policy Waiver of
required only by the conditions of the policy such conditions requked

is
W
may be waived by the principal officers of the company issuing term of
the policy without the required formalities having been observed.
Thus, where a policy contained a memorandum, " This policy is
not valid unless countersigned by agent at Countersigned

this day of Agent " ; but the policy was delivered
(6) South of Ireland OolUery Go. v. Commercial Mutual Marine v. Union

Waddle (1868), L. R. 3 C. P. 463 ;
Mutual (1856), 19 How. 318 San- ;
(1869), L. R. 4 C. P. 617. ford v. Orient (1899), 174 Mass. 416 ;
(c) Cope V. The Thames Haven Pratt v. Dwelling House Mutual

Bock Co. (1849), 3 Ex. 841. (1891), 130 New York, 206 Citizens;
{d) Aihenceum, In re (1858), 4 K. Insurance v. Parsons (1881), 7 A. C.

& J. 549 ; Insurance Co. v. Colt 96.
(1874), 20 Wall. 560; Wright v. Sun (e) London Life v. Wright (1880),
Mutual (1880), 5 Ont. A. R. 218; 5 Can. S. C. 466.
in return for premium without the memorandum having been

filled up or signed by the agent, it was held to be a complete and
vahd instrument (/).
Whether oral Oral contracts of insurance are certainly not in the ordinary
contracts are
within the course of business of an insurance company, and as an agent's
agent's apparent authority is limited to an authority to make contracts
apparent
authority. in the usual way, an oral contract would probably not bind an
insurance company unless the agent had express authority, or
was held out by the company as having authority to make such
contracts (g). In America an oral agreement made by a solicitiag
agent for a fire insurance company to insure pending the issuing
of a policy has been held binding upon evidence that it was the
general usage and custom in the district for agents to make such
contracts, and companies to recognise them (h), and there
for the
are numerous American cases where the company has been held
bound by an oral agreement upon evidence of a course of business
followed by the company's agent, and acquiesced in by the com-
pany (i), and there are some cases where it has been held that a
general agent with full contracting power has incidentally power
to make preliminary oral agreements in fire and accident busi-
ness (k). In a Canadian case [l) it was held that an oral agree-
ment made by an agent to give interim protection on a fire risk
did not bind the company. The ordinary course of dealing
was to iasure by interim receipt which gave a temporary in-
surance in carefully guarded terms. There was no evidence of
authority to the agent to depart from the ordinary course.
Contract con- An agent acted for several fire companies, and had full autho-
cluded by
entry in
rity to bind any of them. He received a proposal from an applicant
agent's books. which he accepted, promising to apportion the risk among several
of thecompanies for which he acted, and the applicant left the
apportionment to the agent. The agent subsequently entered
various proportions of the risk in his register against several
(/) Confederation Life V. O'Donnell (1894), 162 Mass. 358 ; Post v. Aetna
(1888), leCan. S. C. 717. Insurance (1864), 43 Barb. 351.
{g) Montreal-v. MacOillivray (1859), (fc) Buggies v. American Central
13 Moore P. C. 90; Davis v. (1889), 114 N. Y. 415; Sanfordv.
National (1889), 10 N. S. W. L. R. Orient (1899), 174 Mass. 416; Ellis
(Law) 90 ; [1891] A. C. 485, 496. V. Albany City Fire (1872), 50 N.
(k) Brown v. Franklin Mutual Y. 402 ; Bhodes v. Bailivay Pas-
(1896), 165 Mass. 565. sengers (1871), 5 Lans. 71 ; Aiuhibon
(i)Convmercial Mutual Marine v. V. Exelsior (1863), 27 N. Y. 216.
Union Mutual (1856), 19 How. 318; (l) Parsons v. Queen Insurance
Insurance Go. v. Colt (1874), 20 (1878), 29 U. C.C. P. 188.
Wall. 560 Baker v. Union Mutual
;
INTERIM RECEIPT 199
companies, and it was held that each company was bound from
the time he made the entry against its name (m).
Section VI. —Interim Beceift
In hfe insurance business interim protection pending the Form o£
acceptance or rejection of the proposal by the directors is hardly jeceip™

known except in the case of foreign branches or agencies which
owing to their distance from the head office are given this limited
power of acceptance (n). On the other hand, in fire, burglary, and
accident insurance, the usual practice is to issue upon application
and payment of the whole or part of the first year's premium an
" interim receipt," or " cover note." The usual form of this
document is similar to that discussed in Mackie v. The European (o),
which was as follows

—
" Memorandum of Deposit.
: A having
this day proposed an insurance of £2700 to the E. Co., on property
described in their fire order of this date, and having made a deposit
of £2 in part payment of premium and duty, it is hereby declared
that the property so described shall be held insured in virtue of
such deposit for one month from this date or until notice be sooner
given that the proposal is declined." Such a receipt, if given
by an authorised officer or agent of the company, creates a Determinable
'°®'
binding insurance for the specified period, but subject to deter- ^°°
mination by notice at any time within that period. In a Canadian
case (p), the receipt was in the following terms :
—"Eeceived the
sum .... being
of £ , the premium for an insurance against fire
upon .... subject to the approval of the board at Kingston,

the said party to be considered insured for twenty-one days from
the above date within which time the determination of the board
will be notified. If approved a policy will be delivered, otherwise
the amount received will be refunded less the premium for the
time so insured." This receipt was in substance the same as

that in Mackie v. The European, and the Court held that there
was an insurance for twenty-one days irrespective of the approval
of the board, but that the board might reject the risk within
that period, and that liability would cease after notice. If the
assured received no notice he would be insured for twenty-one
days, but not longer.
(to) Ellis V. Albany City Fire (o) (1869), 21 L. T. 102.

(1872), 50 2Sr. Y. 402. (p) Ooodfellowv. Times and Beacon
(«) Infra, p. 869. (1859), 17 U. C. Q. B. 411.
—
Interim The principal object of the ordinary interim receipt is to give

insurance not
subject to immediate protection pending the decision of the directors and
approval of the issuing of a poUcy not readily be con-
; and a receipt will
directory.
strued as affording merely conditional protection subject to the
approval of the directors (r). Such a construction would make
the receipt practically useless.
May insure The receipt may be so worded as to insure beyond the specified
beyond
specified days in the event of no notice to determine the risk being given
periodif not by the company. Thus, in a Canadian case (s), the following
determined
by notice. receipt was issued by an agent on payment of the premium :
" Agent's Provisional Eeceipt —Eeceivedof A the sum of $ ... .
being the premium of insurance upon property for twelve months

and for which a policy will be issued by the E. Co. within sixty
days if approved by the manager in Toronto, otherwise this
receipt will be cancelled and the amount of unearned premium

refunded." The agent never informed the manager of the risk,
and had expired a loss occurred. The Court
after sixty days
held that the receipt bound the company until rejection, and
that after the expiration of the sixty days the applicant was
entitled to a twelve months' policy subject to the company's
usual conditions. The applicant was entitled to assume that
the agent did his duty by the company, and the company and
not the applicant must suffer for the fraud of their agent. In
another Canadian case (t) the receipt ran " The applicant :
—
will be considered insured until otherwise notified within one
month from the date hereof, when, if declined, the receipt
shall become void and be surrendered. N.B., should applicant

not receive a policy in conformity with his application within
twenty days from the date hereof, he must communicate with
the secretary direct, as after one month from this date the receipt
becomes void." This was held to create an insurance which

the insurers could terminate by notice within a month, but which
after the expiration of a month without notice became binding
and irrevocable for a year. In another Canadian case (u) the
application was for a four years' fire policy. The receipt issued
on payment of premium was " Eeceived from B $
: being . . . .
a premium for an insurance to the extent of $ .... on the
(r) Wylie v. Times Fire (1860), 22 (t) Hawkev.NiagaraDisirict (1876),

D. 1498. 23 Grant, 139.
(») Patterson v. The Royal (1867), (m) Barnes v. Dominion Orange
14 Grant, 169. Mutual (1895), 22 Ont. A. R. 68.
INTERIM RECEIPT 201
property described in the application .... subject, however,

to the approval of the board of directors, who shall have power
to cancel this contract within fifty days from this date by causing
a notice to that effect to be mailed to the applicant. And it
is hereby mutually agreed that unless this receipt be followed by

a policy within the said fifty days from this date, the contract
of insurance shall wholly cease and determine, and all liability
on the part an end." The Court
of the association shall be at
was equally divided as to whether this was a four years' insurance
determinable upon notice, or only a fifty days' insurance which
would lapse by effluxion of time without notice.
Where the protection of the interim receipt is determinable What is
by must be given to the applicant himself, or notice to
notice, such notice
to some person authorised by him to receive notice on his behalf, determine
A broker instructed to obtain an insurance is not necessarily
the applicant's agent to receive notice of the determination of
the risk. As a rule, the insurers would be safe in giving notice
to a person authorised generally to manage the applicant's in-
surance business, and if the applicant indicates a particular
manner of communicating information the insurers are not bound
to do more than adopt the manner of communication indicated.
Thus, where the assured gave his address to an insurance
company, and the company sent a notice to that address, but the
applicant did not receive it because he had changed his place
of abode without making proper provision for forwarding his
correspondence, it has held that the notice was sufficient (x).
And if the natural method of communication would be through

the post-office the posting of a notice properly addressed would
probably be sufficient to determine the risk at such time as
in ordinary course of post the letter would have been received
by the applicant even if the letter is lost or delayed in the post
through no fault of either party (y).
The mere acknowledgment of the receipt of premium does Receipt and
not in itself amount to an interim insurance {z). Thus, in ment°of^'^^'

Linford v. Provincial Horse and Cattle Co. (a), where upon an premium is
application for insurance on cattle a local agent inspected the an insurance.
(x) Henry v. Agricultural Mutual (z) Armstrong v. State (1883), 61

(1865), 11 Grant, 125. Iowa, 212 ; Lightbody v. North Ameri-
(y) James v. Institute of Char- can (1840), 23 Wend. 18.
tered Accountants (1907), 98 L. T. (a) (1864), 10 Jur. (N. S.) 1066.
225.
cattle, and stated that they would be insured, and accepted a

year's premium and gave the company's printed receipt in the
following form:
—" On account of the P. Co., Eeceived of A the
sum of 35s. for insurance on cows," it was held that the company
was not bound. The receipt was not an insurance, and the agent
had no authority to do more than accept the proposal and premium
and forward them to the company. But, on the other hand, there
need not be an express undertaking to insure if the receipt contains
expressions from which a promise may be inferred, as in the
Canadian case (6) above cited, where was stated that if the risk
it
was not approved by the directors the receipt would be cancelled,

and the unearned premium refunded.
Lloyd's slip When insurances on fire, burglary, and other non-marine risks
constitutes a
binding con- are made at Lloyd's the practice is for the broker to prepare in
tract. the first instance a slip, as in marine insurance, indicating briefly
amount
the nature of the risk, the premium, the duration, and the
insured. The by the various underwriters who
slip is initialled
are willing to underwrite the risk, and afterwards the broker

makes out a policy in accordance with the slip and containing
the ordinary conditions of insurances at Lloyd's, and presents it
to the underwriters for their signature. Until the policy is signed
the slip is a binding contract, and can be sued upon, so that it
operates in this respect as an interim receipt. In Thompson v.

Adams (c), which was a case of fire insurance at Lloyd's, a loss
occurred after theslip was initialled, but before the poHcy had
been put forward by the broker for signature. It was contended

that the slip created no binding obligation, but was merely an
expression of willingness to sign the policy when tendered, or
alternatively, that the preliminary contract contained in the slip
was subject to the policy being presented within a reasonable
time, and if not so presented the insurance must be treated as
abandoned. Both contentions failed, and the underwriters were
held liable.
Whether After loss, therefore, the underwriters cannot escape from
can
liability
the contract contained in the slip but it has been said that
be determined ;
hj notice before a loss has occurred the underwriters may determine the
before loss.
risk, and refuse to same way as an insurance
issue a policy, in the
company can terminate the protection afforded by the cover note.
(6) Patterson v. The Royal (1867), Continental (1888), 47 Hun. 598.

14 Grant, 169 ; and see Welsh v. (c) (1889), 23 Q. B, D. 361.
INTERIM RECEIPT 203
It is doubtful whether the slip can be treated from this point of

view merely as a cover note, and it is submitted that it has the
force of a definite contract to insure from which the insurers
cannot withdraw. In an American case (d) an insurance com-
pany issued to an applicant for fire insurance the following " bind-
ing slip" or "binder":
— "Insure A |1 0,000 for 12 months
on building Binding this 1st day of January at noon
(this memo, to be void on delivery of the policy)." The Court
held that this was not necessarily a complete contract to insure
for twelve months, and they admitted evidence tending to show
"
a custom of the New York fire business to treat these " binders
as interim insurances, binding only until acceptance or rejection
by the company's directors.
An interim protection note is not conclusive evidence of the interim
contract made. Thus where the assured made an oral agreement noT'^press^
with a duly authorised agent to insure him against fire for a year, all the terms
and subsequently a sub-agent, as a matter of routine, issued on tract.
payment of premium an interim protection note purporting to

insure for thirty days only, it was held that, notwithstanding the
terms of the protection note, there was a binding contract for
the year(e). Although an interim receipt may be a "policy"
for revenue purposes it is not a policy of insurance in the ordinary
sense of the word, and it does not purport to contain the complete
and final contract between the parties (/). The extent of the Conditions
protection afforded is not defined in the instrument itself, but may°beîn-
it usually expressed to be on the company's usual terms, or corporated
is
... by reference.
subject to the conditions contamed the company s pohcies. m
Where the conditions are so referred to they are binding on the
assured, whether he has seen them or not, and the insurer does
not have to prove that they were brought to the notice of the
assured, or even that he had an opportunity of making himself
acquainted with them (g). The assured is bound to take notice
of the conditions contained in the form of the company's policy
then in use and applicable to the case (k).
Certain conditions contained in the company's policy may Where policy
not be applicable to insurance under an interim receipt. If a are
Underwood v. The Greenwich

{d) McQueen v. Phoenix Mutual ^^
[g)
(1900), 161 N. Y. 413. (1879), 29 U. C. C. P. 511.
(e) Coulter v. Equity Fire (1904),
9 Ont. L. R. 35. (h) Wilson, C.J., 29 U. C. C. P. 511,
(/ ) Citizens' Insurance v. Parsons 522.
(1881), 7 A. C. 96.
condition is wholly inapplicable, such as a condition with reference

to renewal of the insurance at the end of the year, it may be
entirely ignored. Others may be discarded as inapplicable on
the ground that they impose obligations upon the assured to do
certain things which it would be unreasonable to expect him to
do, unless he had actual notice of the condition (i). Thus in In
re Coleman's Depositories (k), a cover note was issued on December
28, 1904, in respect of a proposal for insurance against employers'

liability. The company's policies contained the condition that
the assured should give immediate notice of any accident ; but
the Court (l) held that the condition was not applicable until the
contents of the policy had been communicated to the assured.
Until then, it was impossible to comply with the condition, and
it was not reasonable to suppose that the parties mtended the

assured to be bound by such a condition while ignorant of its
existence. Some conditions which are not in terms applicable

to insurance under an interim receipt may be applied in sub-
stance mutatis mutandis. Thus, where there is a condition that
certain circumstances will vitiate the contract unless allowed
by indorsement on the policy. In one Canadian case (m) this
condition was held to be applicable, and the indorsement was
required on the interim receipt, whereas in another case (n) it
was held sufficient if notice of the circumstances was given to
the agent authorised to grant an interim receipt, and his consent
obtained.
How far the Even although there is no express stipulation in the receipt that
tions are in- i* i^ issued Subject to the conditions in the insurers' policies, such a
corporated by stipulation is probably implied (o), or, at any rate, the insurance
must be held to be subject to the ordinary conditions contained
In an American case ( p),
in poHcies in that particular class of risk.
where the only evidence of the contract of insurance was an entry
in the insurers' books containing particulars such as would be
given in a was held that the insurance was subject to the
slip it
conditions contained in the insurers' policies, and this

was approved
in a Canadian case (r), where Proudfoot, V.C., said, " It would
(i) Union Central Life v. Phillips (n) Parsons v. Queen Insurance

(1900), 102 Fed. Kep. 19. (1878), 43 U. C. Q. B. 271, 279.
(k) [1907] 2 K. B. 798. (o) Coleman's Depositories, In re,
(I) Vaughan Williams and Far- [1907] 2 K. B. 798.
well, L.JJ., Fletcher Moulton, L.J., (p) Eureka Insurance v. Robinson
dissenting. (1867), 56 Pa. 256, 264.
(m) Hawke v. Niagara District (r) Hawke v. Niagara District
U876), 23 Grant, 139, 148. (1876), 23 Grant, 139.
;
INTERIM RECEIPT 205
be unreasonable to hold that by giving an interim receipt the

company meant to insure a larger liability than they were subject
to on a policy ; they must be understood as contracting for an
insurance of the ordinary kind. The plaintiff asks for the com-
pletion of the contractby the issuing of a policy, and he does not
pretend that he is entitled to any other than the ordinary policy ;
he caimot, therefore, be in any better condition than if he had

the policy in his possession." It may, however, be questioned
whether, if a company's policies contained some altogether unusual
condition, the assured would be bound by such condition in the
absence of an express stipulation in the receipt, that it was issued
subject to the conditions in the company's policies.
If an agent issues an interim receipt and makes an oral agree-
ment which is not inconsistent with the terms of the receipt, then
the assured will not be bound by the terms of the company's
policy so far as they are inconsistent with the oral agreement (s)
but, on the other hand, the question will arise whether the agent
had authority to make any contract otherwise than in terms of
the company's policies.
An agent has apparent authority to grant interim receipts Agent's
in accordance with the forms provided by the company but if ; iggue interim
receipts.
the company does not provide the agent with anything except
forms of receipt for premium which do not purport to give
interim protection, the mere fact of agency does not give the
agent any apparent authority to bind the company in any way (t).
On the other hand, if the company's receipts are so framed as

to give the applicant protection until the directors have approved
or rejected the risk, the company are bound by such receipt, not-
withstanding that the agent never communicates the matter to

the company, and appropriates the premiums to his own use (w).
If the protection given by the interim receipt is for a specified

number of days only, the agent has no apparent authority to
grant an interim receipt for a longer period, nor to grant a per-
manent insurance without submitting the proposal to the directors.
In one Canadian case the agent granted a succession of interim
receipts each as the previous one expired, but it was held that
{») Canadian Casualty v. Haw- [u) Hawke v. Niagara District

thorn (1907), 39 Can. S. C. 558. (1876), 23 Grant, 139 ; Patterson v.
(t) Linford v. Provincial Horse T/ie iJoi/oZ (1867), 14 Grant, 169. See
and Cattle Co. (1864), 10 Jur. (N. S.) supra, p. 200.
1066,
he could not in this indirect manner grant an insurance for a
longer period than thirty days without submitting a proposal to

the company {x).
Section VII. —Proposal and Acceptance
How far When a proposal for insurance is made, the usual course is
aooeptanoe
creates a
for it to be submitted to the directors of the company for their
binding con- consideration. The decision of the directors to take the risk does
tract.
not ipso facto create a bindiag contract (y). Their acceptance
must communicated to the assured or his agent, and
at least be
even communication to the assured of the fact that the directors
are willing to take the risk does not necessarily conclude a binding
contract between the parties.
Presumption With regard to this point, life insurance must probably be
in life
insurance
differentiated from other classes of insurance. In life insurance
that no there is a strong presumption that all communications before the
binding con-
tract is con- execution of the policy are preliminary only.The parties negotiate
templated
upon the footing that there shall be no binding contract until the
until the
policy is first premium is paid, and the policy issued (z). This may be
issued.
definitely expressed on the company's forms of proposal (a), or
in the secretary's letter of acceptance intimating the directors'
approval of the risk (aa), but if not expressed it will be implied
in the absence of anything pointing to a contrary conclusion.
On the other hand, if appropriate words are used showing the
clear intention of the parties, a binding contract may be made
before the issuing of the policy (6).
(a;) Hawke v. Niagara District (aa) Most companies have a printed

(1876), 23 Grant, 139. form so that the secretary may
{y) Armstrong v. Provident Savings intimate the approval of the risk in
Life (1901), 2 Ont. L. R. 771. carefully guarded terms. The latter
[z) Canning v. Farquhar (1886), 16 informs the applicant that his proposal
Q. B. D. 727 ; Wolfe v. Equitable Life has been "approved" and that "the
(1906), The Times Newspaper, Jan. assurance may be completed " by
26; Equitable Life v. M'Elray (1897), payment of the first premium on or
83 Fed. Rep. 638 ; Iowa Life v. Lewis before a named date. It also states
(1902), 187 U. S. 335 New York Life
; that until the premium is paid " and
V. M'Master (1898), 87 Fed. Rep. 63. accepted " the company will be under
(o) Paine v. Pacific Mutual (1892), no liability, and that the directors
51 Fed. Rep. 689 Kohen v. Mutual
; "reserve the power of withdrawing
Reserve (1886), 28 Fed. Rep. 705 ; their approval of the proposal in the
Misselhom v. Mutual (1887), 30 Fed. meantime."
Rep. 545 ; Marks v. Hope Mutual (6) Armstrong v. Provident Savings
(1875), 117 Mass. 528 ; M'Master v. Life (1901), 2 Ont. L. R. 771 ; Hebert
New York Life (1900), 99 Fed. Rep. v. Mutual Life (1882), 12 Fed. Rep.
856. 807.
.
PROPOSAL AND ACCEPTANCE 207
It is doubtful how far the presumption applicable to life Whether this
insurance ought to be extended to other classes of risk. In eSendb'to'"

other classes
the Scottish case of Sickness and Accident v. General Accident (c),
or risk.
Lord Adam seemed to think that the principle might be
equally applicable to insurance against liability for accident,
but there is no doubt that in risks such as fire and burglary
an informal contract by letters or notification of acceptance
will be much more readily construed as binding than in life
insurance, and it is submitted that the ordinary business pre-
sumption is that a definite contract has been made from which
the insurers cannot withdraw (d). The condition that there shall
be no insurance until the first premium is paid does not in itself
operate to prevent there being a binding agreement before the

payment of the premium (e). When, however, the agreement
is made subject to that condition the contract is one to issue a
policy on tender of premium, and even although the agreement
is to insure from a specified date, it only binds the company to issue
a poHcy if, when the premium is tendered, the risk remains the
same. Consequently if a loss occurs before the premium is
tendered the company is not Hable, nor is the company bound
to accept the premium and issue a policy if there has been any
material alteration in the risk since the date of the preliminary
agreement. means any change
Alteration of risk for this purpose -^
of circumstanceswhich makes any of the statements in the pro-

posal cease to be true or which the assured would have been
bound to under the doctrine of
disclose in the first instance
uberrima Thus any declination or extra rating by another
fides.
office, even although there was no alteration in the actual risk,
would entitle the company to withdraw (ee)
Canning v. Farquhar (1886), 16 Q. B. D. 727
C applied for life insurance upon one of the insurance company's printed
forms with the usual questions and declaration. The risk was considered and
approved by the directors, and the actuary wrote to C's agent " The proposal :
to insure £2000 with profits on the C has been accepted

at the annual
life of
premium £47 18s. 4d. No insurance can take place until the first premium
of
is paid." Before the premium was paid or the policy issued, fell over a cliff
and was seriously injured. The premium was then tendered but refused, and
(c) (1892), 19 R. 779. Newcastle Fire v. Macmorran

(e)
Thompson v. Adams (1889), 23
(d) (1815), 3 Dow. 255 ; General Accident
Q. B. D. 361 Fames v. Home Insur-
; v. Oronk (1901), 17 T. L. R. 233.
anc6(1876), 94U. S. 621. (ee) Vide infra, ip. 308.
208 FORMATION OF CONTEACT
shortly afterwards C died. On an by C's representatives it was held

action
that the company was not liable. The Court of Appeal gave the following
reasons for their decision :
— (1) The application and notification of acceptance
was never intended by the parties to constitute a binding contract, but were
merely in the nature of prehminary expressions of mutual willingness to enter
into a contract of insurance (2) there could have been no binding contract,
;
since the so-called acceptance contained a new term, viz. the amount of the
premium which had been previously mentioned, and therefore the acceptance
so called was in reality a counter ofier which could not be considered as con-
tinuing after the risk had changed ; (3) that if there was an agreement to insure
it was on the implied condition that the risk was the same when the policy was
called for.
Sickness and Accident v. General Accident (1892), 19 R. 977

Sickness and A policywas issued to a tramway company against liability for accidents
Accident v.
for a year from November 17, 1888, to November 17, 1889. The policy con-
General
Accident. tained the clause, " No insurance shall be held to be effected until the premium
due thereon shall have been paid." The secretary of the assured company
thereupon, on November 19, wrote to the insurers' agent " I am duly in
:
receipt of this policy, and will send you a cheque for the premium in the
course of a few days. There are one or two points upon which I must confer
with my directors. The date from which I desire to be covered is from the
24th inst. inclusive, and not the 17th inst., as stated therein." The agent
replied on the 20th "I shall be pleased to make the alteration in policy
:
required by your directors.'' On November 24, before the premium had

been paid or a new policy issued, an accident occurred for which the assured
company were liable. On November 26 the secretary of the assured company
wrote to the insurers' agent enclosing cheque for premium, and the agent re-
plied : ". I am much obliged for your favour enclosing cheque for the third
party risk from the 24th inst. Please return policy for alterations."
. . .
The Court of Session held that the insurers were not liable. The Lord Ordi-
nary decided on the ground that there could be no risk until the premium was
paid, and the acceptance of the premium, although it made the insurance
effective for the future, did not act retrospectively so as to make it effective
for the past. The Inner House decided on the ground that the agreement to
insure being one for cash against the issue of a poUcy was subject to an implied
condition that the circumstances were not changed before the company were
called on to issue a poMoy, and the acceptance of the premium created a new
agreement to insure from, but not including, the 24th. Lord Adam doubted
whether, even if there had been no change of risk, the insurers would have been
bound on tender of the premium to issue a policy.
Thompson v. Adams (1889), 23 Q. B. D. 361
Thompson v. The plaintiff's merchants in New Zealand instructed an insurance broker,

Adams. who was entitled to effect insurances at Lloyd's, to effect insurances upon goods
in their premises. The broker, in accordance with the usual course of business,
prepared a slip containing the particulars of the proposed insurance and show-
ing the risk in the same way as if it were a marine risk. The defendant.
amongst other under^vriters at Lloyd's, initialled the slip for a line of £300.
The slip was initialled in October, 1886, and in accordance with the ordinary
course of business it was the duty of the broker to put forward a policy for the
signature of the underwriters. The broker, however, omitted to put forward
a policy, and no premium was paid, when on February 27 some of the plaintiff's
goods were burned. On March 1 the premium was tendered, but the under-
writers refused to accept it or to sign a policy. The plaintiff sued upon the
contract contained in the slip. The defendant argued ( 1 ) there was no contract
of insurance, but merely an honorary undertaking (2) if there was a binding
;
contract it was subject to the condition that a policy should be put forward
wthin a reasonable time after the slip had been initialled (3) by not putting ;
forward a policy the plaintiff had elected to abandon the insurance. It was
held that there was an unconditional contract to insure, and that it had not
been abandoned and that the defendant was accordingly liable for the loss.
The first essential to a binding contract is that the parties must Essential
be agreed upon every material term (j). Probably the most essential ^ bhubng"
terms are the nature of the risk, the duration of the risk, the contract.
premium, and the amount of insurance. As to all these there
must be a consensus ad idem, that is to say, there must either be
an express agreement or the circumstances must be such as to
admit of a reasonable inference that the parties were tacitly
agreed.
If there is doubt as what property
to is insured there Must define
where the proposal was "my "^1"'^° °

is no contract, as to insure th!
house," and the agent accepted the risk believing that the applicant
referred to his previous residence (g). But where the property
was defined, and the insurers agreed " to insure it," it was a
reasonable inference that the intention was to insure it against
fire, and there was, therefore, a binding contract Qi).
The commencement and duration of the risk must be agreed, the duration
Where, however, an application for life insurance did not specify

the date when the risk was to commence, the issue of a policy
ante-dated to the date of the application was held to be a good

acceptance (i). If the terminus a quo is agreed upon, it will not as
a rule be necessary to expressly agree the terminus ad quern.
The universal practice in fire, burglary, and accident risks is to
(/) Travis v.Nederland Life (1900), Life {1901), 2 Ont.. L. R. 771. This
104 Fed. Rep. 486 ; M'Nicoll v. New was held to be so notwithstanding
York Life (1907), 149 Fed. Rep. 141. that the proposal was made and the
(g) Mead v. Westchester (1875), 3 policy insured on the express terms
Hun. 608. that the insurance should not be
(h) Baile v. Joseph (1880), 73 Me. binding or the policy go into effect
371. until payment of the first premium.
{i) Armstrong v. Provident Savings
I.L. 14
insure for a year, and, in the absence of anything to indicate the

contrary, that may be taken as an implied term in the con-
tract (k). The duration of the risk may also be inferred from
previous insurances between the same parties (Z).
the rate of The rate of premium must be defined (m), but it may be
premium,
inferred to be the company's ordinary rate if they have a
fixed rate, and there is no doubt as to how the risk should be
classed (n), or it may be inferred to be the same as the rate
previously insured (o). In insurance at Lloyd's it is a common
practice for underwriters to take certain risks at a rate to be
agreed. The parties thereby agree to leave the rate open for
future settlement, and if a loss occurs before settlement the loss

becomes payable subject to deduction of a reasonable premium (p).
In defaidt of agreement between the parties, the amount of the

premium will be settled by the Court or arbitrator. This is not
a common form of insurance in fire, life, and accident risks, but
it is not unknown.
and Another matter which must necessarily be defined is the
amount of
insurance. amount of the insurance. And if the amount of insurance re-
quires to be apportioned upon different portions of property to
is not complete untU this has been done.
be insured the contract
Thus there was no contract where the parties contemplated
apportionment between the real and personal property, and this
had not been done when a loss occurred (g). And so, where
insurers offered to insure at a certain rate upon certain build-
ings, if in " specific form," that is to say, if the various buildings
and contents were specified with a separate amount on each,
and the applicants accepted the rate, and sent details of the amount
which they hoped would be sufficiently specific, it was held that
there was no binding contract until the insurers had signified
their approval of the apportionment (r).
Preliminary Just as the interim receipt is issued subject to the usual con-
contract is
made subject ditions contained in the company's policies, so every proposal
to the usual Ewmes Home Insurance
{k) v. (o) Winne v. Niagara Fire (1883),
conditions. U.S.
(1876), 94 621. 91 N. Y. 185 ; Autkibon v. Exelaior
(I) Winne v. Niagara Fire (1883), (1863). 27 2Sr. Y. 216.
91 N. Y. 185.
(m) Canning V. Farquhar (1886), 16
(p) Hyderabad' Company v. Wil-
loughby, [1899] 2 Q. B. 530.
Q. B. D. 727 ; Christie v. North
British (1825), 3 S. 519 ; Eose v. (q) Kimball v. Lion (1883), 17 Fed.
Medical Invalid (1848), 11 D. 151. Rep. 625-
(w) Train v. Holland (1875), 62 (r) Phoenix v. Schultz (1897), 80
N Y. 598 Boice v. Thames (1885),
; Fed. Rep. 337.
38 Hun. 246.
and acceptance is made with reference to these conditions (s),

and when the contract is concluded the only obligation of the
company is pohcy with such conditions as are usually
to issue a
attached to the company's policies, and are not inconsistent with
terms of the preliminary contract (i). Where, however, a mutual
company tendered to an applicant for fire insurance a policy
which recited that he had agreed to become a member of the com-
pany, it was held that he was not bound to accept such a policy
as his proposal was for insurance only, and not also for membership
in the company (u).
Silence does not give consent, and, therefore, there is no what is

°
binding contract until the person to whom the offer is made says ^^^^'^^^
or does something to signify his acceptance (x). Mere delay in
giving an answer cannot be construed as an acceptance (y).
Prima facie must be communicated to the

acceptance Newspaper
''°"P°"''-
offeror (yy), but communication is not necessarily essential if the
acceptance is made in the manner indicated by the particular
terms of the offer (z), or by the general course of business (a).
For example, an offer to insure holders of newspaper coupons
might be made in such a manner as to conclude a contract
between the company and purchasers of the newspaper who signed
the coupon (6), or were regular subscribers to the paper (c).
Whether an offer to insure all purchasers of the paper could be
accepted by a person purchasing a newspaper in ignorance of
the offer is doubtful (d). Where a coupon contained in Letts'
diaries was in the form of apromise by the company to pay
£1000 to the representatives of any person kilkd in a railway
accident provided he was the owner of the diary, and had caused
(s) General Accident V. Cronk {1901), (z) Carlillv. Carbolic SmoJceball Co.,
17 T. L. R. 233 ; Eames v. Home [1893] 1 Q. B. Williams v.
261 ;
Insurance (1876), 94 U. S. 621 ; Carwardine (1833), 2 B. & Ad. 621 ;

Coulter V. Equity Fire (1904), 9 Ont. Adams v. Lindsell (1815), 1 B. & Aid.
L. R. 35. 681.
(t) Palmer v. Commercial (1889), (a) Household Fire Insurance v.
53 Hun. 601. Grant (1879), 4 Ex. D. 216 Henthorn ;
{u) Star Fire and Burglary v. v. Fraser, [1892] 2 Ch. 27 ; Dunlop v.

Davidson, [1903] 5 F. 83. Higgins (1848), 1 H. L. C. 381.
{x) Felthouse v. Bindley (1862), 11 (6) Law v. George Names, Ltd.
C. B. (N..S.) 869. (1894), 21 R. 1027 ; Carlill v. Car-
{y) Equitable Life-v.M'Flroy {1897), bolic Smokeball Co., [1893] 1 Q. B.
83 Fed. Rep. 631 ; More v. New York 261.
Bowery (1892), 130 N. Y. 537 ; Harp (c) Shanks v. Sun Lije (1896), 4
V. Granger's Mutual Fire (1878), 49 S. L. T. 66.
Md. 307; Paine v. Pacific Mutual {d) Gibbons v. Proctor (1891), 04
(1892), 51 Fed. Rep. 689. L. T. 594 ; Fitch v. Snedaker (1868),
{yy) Powell v. Lee (1908), 99 L. 38 N. Y. 248.
T. 284.
his name to be registered at the head office of the company, and

the claim was made within twelve months of registration, it was
held that there was a binding contract, and that the risk attached
at latest when the letter applying for registration was received by
the company's servants, and possibly at the date when the letter
was posted (e).

Acceptance As the post-office is now the customary medium of communi-
letter*'"^ cation between persons at a distance, an invitation to communi-
cate by post will readily be inferred, and, if the post is thus
impliedly indicated as the manner of accepting an offer, a letter
delivered to the post-office concludes the contract as at the time
of posting the letter (/ ) and the subsequent delay or loss of the
letter in course of transit is immaterial (g).
Contract con- If an agent has merely authority to forward a proposal to the

^ directors, some external act of acceptance is necessary but the
agOTt ;
subject to the agent may have authority to conclude a contract with the applicant
approval. on the terms that it shall not be effective until approved by the
directors, and when the negotiation with the agent takes this
form, no notification of acceptance by the directors is necessary,
and the contract becomes operative when, in fact, the directors
approve the risk, although their approval has not been indicated
by any outward act. Thus, -in an American case the general
agent of an English company upon receiving a proposal gave the
following receipt :
—
" Eeceived the sum of £ premium on
a proposal of assurance for £ on the life of A, which is
to be forwarded immediately to the head office at Liverpool,
England, for acceptance. If it be accepted, a policy will be

issued in accordance therewith ; if declined, the above-mentioned
premium will be returned. But in case the said A die before
the decision of the head office shall have been received the sum
insured Avill be paid." The proposal was transmitted and accepted
and a policy issued and forwarded to the agent, who, in accordance
with instructions, declined to deliver it on the ground that the
applicant's health was failing. was held in New York that as
It
the risk had in fact been accepted by the head office, there was a
binding contract to issue a policy (h). And in a fire case in
America the agent gave a receipt for application and premium
(e) General Accident v. Robertson, Grant (1879), 4 Ex. D. 216 ; Hen-
*
[1909] A. C. 404. thorn v. Fraaer, [1892] 2 Oh. 27.
(f) Taylor v. Merchants' Fire {h) Fried v. Boyal Insurance (1872),
(1850), 9 How. 390. 50 N. Y. 243.
(gr) Household Fire Insurance v.
PROPOSAL AND AOCErTAKOB 213
on one year's insurance " subject to the approval of the company,"

and it was held that the contract became absolutely binding on
the company from the date when the directors in fact considered
and approved the risk although no intimation of their decision
was made to the applicant (i). And in another American case (k)
where the agent accepted a fire risk " subject to acceptance by
the directors of the premium agreed," and a loss occurred before the
agent had communicated with the head office, it was held that the
company were bound if the rate was a reasonable one.
An acceptance must necessarily be unconditionally in the Acceptance
terms of the offer, for otherwise it is not an acceptance but a "p^^jg â
counter offer (Z) ; but a mere verbal variation from the offer (m) ,
o*^®""-
or the expression of a term which if not expressed would have

been implied, does not constitute a departure from the terms
of the offer, and therefore the delivery of a policy containing
all sorts of conditions not previously referred to between the
parties may constitute a complete acceptance of the offer, if
the policy contains nothing but the company's ordinary terms

with reference to which the proposal must be deemed to have
been made (n). If the policy as delivered is not in accordance
with the proposal in this sense then the mere delivery of the policy
cannot constitute an acceptance, and there is no complete con-
tract (o). Where a proposal for fire insurance was made to a
mutual company it was held that the issue of a policy wherein
it was narrated that the assured became a member of the company,
did not complete any binding contract, the assured never having
proposed or agreed to become a member of the company (p). If
the policy is under seal the company may be bound by their deed,
but the delivery of an unsealed policy cannot bind either party
unless it is in accordance with the terms of the proposal, or until
the applicant by word or act signifies his assent to what is in fact
a counter proposal (q). If the applicant refuses to accept a policy
(i) Welsh V. Continental (1888), 47 (n) Cominonwealth Mutual v. Knabe

Hun. 598. (1898), 171 Mass. 265.
(k) Perkins v. Washington (1825), (o) InsuranceCo. v. Young (1874),
4 Cow. 645. 23 Wall. 85 ; Mowat v. Provident
(I) Canning v. Farquhar (1886), (SomnsrsLi/6(1900),27 Ont. A. R. 675.
16 Q. B. D. 727; Jordan v. Norton {p) Star Fire and Burglary v.
(1838), 4 M. & W. 155 Honeyman ; Davidson (1903), 5 F. 83.
V. Marryat (1857), 6 H. L. C. 112 ; (g') Laing v. Provincial Homes In-
Aetna Indemnity V. Crowe (1901), 15i vestment, [1909] S. C. 812; National

Fed. Rep. 545. Benefit Trust v. CouUer, [1011] 1 S.
(m) Colonial Insurance v. Adelaide L. T. 190 M'Master v. New
; York
(1886), 12 A. C. 128. (1899), 99 Fed, Rep. 856; German
214 FOBMATION OF CONTRACT
tendered to him, and insists upon alterations being made, he

cannot sue upon the rejected policy, and until the parties are
agreed upon the alterations he remains uninsured (r).
Withdrawal An offer, when made, remains open for acceptance for the
of offer.
time specified, if any, or for a reasonable time (s) ; but the offeror
may withdraw any time before acceptance (i). A
his offer at
withdrawal, however, does not operate until actually communi-
cated, and therefore a withdrawal posted before acceptance is of no
effect, unless it is communicated to the offeree before a letter of
acceptance has been posted. A proposal for insurance may, there-

fore, be withdrawn by an appHcant if notice of withdrawal is
communicated to the company at any time before the company

has posted an acceptance (m) and thus, where an applicant, having
;
made a proposal, afterwards made another proposal relating to

the same risk, but in different terms, was held that the second
it
proposal was a withdrawal of the first, and the subsequent accept-

ance of the first proposal by the company created no binding
contract (x). Where upon proposal for life insurance the first
premium was paid and an interim receipt given providing that
the insurance should be binding from the date of the approval of
the medical officer, it was held that the proposer could withdraw
his proposal and recover the premium at any time before the
medical officer signified his approval (a).
Section VIII. —Increase of Bisk before Policy Issued
Change of It may happen that between the time a proposal is made and
risk between
proposal and the time it is accepted a material change has taken place in the
acceptance. nature of the risk. The general rule is that acceptance is made
in reliance upon the continued truth of the representations made
in the proposal, and in the behef that there has been no material
change in the risk offered (b). If, therefore, anything has occurred
Insurance v. Dovmman (1902), 115 653 ; Dickinson v. Dodds (1876), 2

Fed. Rep. 481 ; Kerr v. Milwaukee Ch. D. 463.
Mechanics (1902), 117 Fed. Rep. 442. (u) Wolfe w. EquitcAle Life {1Q06),
(r) Eguitahle JAfev. M'EVroy (1897), The Times Newspaper, Jan. 26 ; Globe
83 Fed. Rep. 631 Smith v. Provident
; Mutual V. Snell (1880), 19 Hun. 560.
Savings (1896), 65 Fed. Rep. 765 ; (a;) Travis v. Nederland (1900), 104
Piedmont v. Eunng (1875), 92 U. S. Fed. Rep. 486.
377. (a) Henderson V. State Life (1905),
Ramsgate v. Montefiore (1866),
(a) 9 Ont. L. R. 540.
L. R. 1 Ex. 109 Dunlop v. Higgins
; (5) Equitable Lifev. M'Elroy (1891),
(1848), 1 H. L. C. 381. 83 Fed. Rep. 631, 636.
{t) Cook V. Oxley (1790), 3 T. R.
INCREASE OF RISK 215
to increase the risk between offer and acceptance prima facie

the insurers are not bound (c).
however competent to the insurers to agree that they Agreement

It is
shall be bound as from some prior date notwithstanding any ^j „ot lost."
loss or changes of risk which may have occurred at the time
they accept the proposal. This in effect is an agreement to

insure " lost or not lost," to use the familiar clause in marine
policies. It has long been decided that this is a perfectly valid
form of insurance, and that the insurers are bound by their
agreement if both parties were equally cognisant or equally
ignorant of the fact that a loss had occurred when the contract
was made {d). Marine policies almost invariably contain tho
" lost or not lost" clause, but it seems clear, and it has been so
decided in America, that these words are not essential even in
marine policies, and that any form of words which expresses an
intention to cover past losses is sufficient (e). Where, therefore,
insurers agree to insur^from the date of a proposal or from
some other prior date they undertake to bear losses which have,
in fact, occurred at the time the contract is made, and (}
fortiori they undertake to bear the consequence of any increase

in the risk.
An applicant for a retrospective insurance could not recover if ^^'y *° <1'^-
,
close mforma-
he was aware at the time he made the proposal that a had loss tion received
occurred. A more doubtful class of case is that where knowledge po*âlmade'

comes to the applicant after he has
of a loss or increase of risk
made his proposal. In an American case (/) a proposal for fire
insurance requested insurance from a specified date. The pro-
posal was accepted after that date, and in ignorance of a loss
which had occurred meanwhile. It was held that the loss was
covered, and that there was no obligation upon the insured to
disclose the fact that there had been a loss. It is difficult to
reconcile this case with the principle of uberrima fides (g). It
is submitted that an applicant, who has made a proposal of this

kind and subsequently becomes aware of a loss or an increase of
risk, is bound to disclose the fact. If, however, he sends notice
(c) Oanning V. Fa/rquhar {1886), 16 (/) Whitaker v. Farmers' Union
Q. B. D. 727. (1859), 29 Barb. 312.
(d) Mead v. Davidson (1835), 3
Ad. &
E. 303; Bradford v. Symond- (g) êeF^tzherheHv. Mather (1185),
son (1881), 7 Q. B. D. 456 ; Stone v. 1T. R. 12 ; Proudfoot v. Montefiore
Marine (1876), 1 Ex. D. 81. (1867), 2 Q. B. 511.
(e) Insurance v. Folsom (1873),
18 Wall. 237.
to the insurers in the most expeditious manner available, he pro-

bably does all that is required of him, and if the insurers accept
the proposal before they receive the intimation of loss they are
bound by the retrospective term in their contract. In a Canadian
case(h) company A had agreed to renew X's fire policy from
October 2 to October 2. On October 15, desiring to be off the

risk,company A went to company B and asked them to insure
X company B agreed to take the risk, and on October 17
;
issued a policy to X insuring him from October 2 to October 2.

Meanwhile, on October 13, a loss had occurred of which X was
aware, but of which the companies were both ignorant. It was
held that X could recover from company B on their policy not-
withstanding that it was effected after his knowledge of the loss.
This, however, was not a case where uberrima fides was required
on the part of the assured since the agreement was essentially
one between the companies to the effect that company B should
take over from company A their whole liability, whatever it
might prove to be.

An intention to make an insurance contract retrospective
must be clearly expressed, and frimd facie an acceptance does
not relate back to the date of the proposal {i).
Change of After the proposal has been accepted change of risk may still
acceptance
avoid the Contract. Where acceptance is merely an intimation
and before that the insurers are willing to issue a policy they are obviously
policy. free to decline to carry the matter further, since there never was
any binding contract. But even where acceptance creates a
binding contract to insure, it may nevertheless be subject to the
express or implied condition that the risk shall be the same when
the applicant tenders the first premiums and calls for the policy.
In Canning v. Farquhar (k) the proposal for a life policy had been
accepted subject to the condition that " no insurance shall take
place until the first premium is paid." Lord Esher held that even
if was a binding contract to insure it was only a contract to
this
insure if the risk was the same when the premium was tendered
and the policy called for, and therefore where, after acceptance and
before tender of premium, the applicant fell over a cliff and became
seriously injured, the insurers were entitled to decline to issue
(h) Qiffard v. Queen Insurance (1897), 103 Iowa, 337.

(1869), 1 Hannay (N. B.) 432. (h) Canning v. Farquhar (1886), 16
(i) Rogers v. Equitable Mutual Q. B. D. 727.
INCREASE OP RISK 217
a policy. Speaking of the truth of the representations, Lord

Esher said that the material time was the moment when the
insurance was made, meaning thereby, not the making of the pre-
liminary contract, but the payment of the premium and the com-
mencement of the risk. In this case as in practically all cases
of life insurance the agreement was that the risk should com-
mence on payment of the first premium. The material time
before which change of risk will relieve the insurers from any
obligation to carry out the preliminary contract is probably in
all cases the time when it is agreed that the risk shall attach. If
the insurers agree unconditionally to insure from a specified date

or from the date of the agreement, a change of risk occurring after
such date does not entitle the insurers to refuse to issue a policy.
The insurers are liable for losses happening after the agreed date (l),
and a fortiori they must bear the consequence of increased risk.
When the agreement is to insure from a specified date, but subject
to the condition that the insurance shall not be effective until
the premium is paid, a change in the risk after the specified date,
but before payment of the premium or execution of the policy,
entitles the insurers to decline to issue a policy (m). The date
when the premium is paid is really the commencement of the
risk, and must be considered the material time notwithstanding

the fact that the insurers are to receive their premium from the
date specified as the terminus a quo of the insurance. Thus, in
Sickness and Accident v. General Accident (n), where the agreement
was from a specified date,
to insure against liability for accidents
but subject to the condition that " no assurance shall be held
to be effected until the premium due thereon shall have been
paid," an accident for which the assured were liable occurred
after the specified date, but before the premium had been tendered
or the policy issued. The Court of Session held, on the authority
of Canning Y.Farquhar (o), that as the circumstances had changed
before the company were called on to issue a policy they were
relieved from their contract.
As the rule in Canning v. Farquhar applies to preliminary Change ot
contracts only, it would seem that after a policy of insurance has policy issued.
been executed and delivered, no subsequent alteration of the
(Z) Thompson v. Adams (1889), 23 (m) Sickness and Accident v. Gene-

Q. B. D. 361 Insurance Co. v. Colt
; ral Accident (1892), 19 R. 977.
(1874) 20 Wall. 560; Roberts v. (m) (1892), 19 R. 977.
Security Co., [1897] 1 Q. B. 111. (o) (1886), 16 Q. B. D. 727.
circumstances, whether before or after the commencement of
the risk, entitles the insurers to withdraw from their obligations.

Thus, if the poUcy in the case of Canning v. Farquhar had been
executed and delivered with a condition that the insurance
should not be in force until payment of the premium by the
assured, the fact that the premium was unpaid when the assured
fell over the cUff would not have entitled the insurers to refuse
a subsequent tender of the premium, and they would have been
liable if the assured had died at any time after such tender. So
in the case of fire insurance, if a policy is issued, say, on the
1st of June, insuring premises for a year from June 24, and sub-
ject to the condition that the insurers shall not be liable in respect
of any loss occurring before payment of the premium, the insurers
could not refuse to accept the premium on the ground, say, that
an extensive fire had broken out in adjoining premises on June 23,
and was still burning when the premium was tendered. Of course
the above principle does not apply to alterations in premises,
varying them from the description in the policy, or to altera-
tions prohibited by the conditions of the policy. Such alterations
are an entirely different matter, and avoid the policy in whole or
in part, whether they are made before or after the execution of
the policy or before or after the commencement of the risk.
Section IX. —Execution and Delivery of Policy
When does From what has been said it will be seen that it may be of the
the policy
become an
utmost importance to determine the time when the policy becomes
operative effective as a binding insurance, as distinguished from a contract
instrument.
to insure.
Distinction When the policy is not under seal it is a simple contract, and
between
is probably not operative as a completed policy until it has been
policies under
seal and actually delivered to the assured or his agent, and even then, if
policies not
under seal. it varies from the terms of the proposal, it is not operative until
the assured accepts it by word or deed as the contract by which

he agrees to be bound (p). When the policy is under seal it is a
contract by deed, and becomes operative from the time when it
is formally " signed, sealed, and delivered," although there may
have been, in fact, no actual delivery to the assured or his agent.
{p) Coffin y. New York Life (1904:), Insurance Oompanyv. Young's Adrs.
127 Fed. Rep. 555 ; M'Nicoll v. New (1874), 23 Wall. 85.
York Life (1907), 149 Fed. Rep. 141 j
EXECUTION AND DELIVERY OP POLICY 219
A deed is executed by being " sealed " by the grantor, and Signing and
no signature is necessary (q). It is of no importance what the ^®*™S'

seal is made of; whether of wax, wafer, or impressed in relief
upon the paper, it is equally vaUd (r). It may be affixed before
the time of execution if at the time of execution it is sufficiently
recognised as the seal of the party executing the deed. In one
case where the document bore nothing but the ribbon by which
it was customaryto attach the wax seal to the parchment it was
held that the ribbon might well have served for a seal, and when
the document was acknowledged by the grantor as his deed and
attested as such, the Court held that there was a fully executed
"
deed. Lindley, L.J., however, thought this was a " good-natured
decision, and doubted whether it ought to be followed (s), and
where there was nothing of any kind that could stand for a seal
the Court held that the intention to give effect to the document
as a deed could not have that effect (t).
A deed, although signed and sealed, does not take effect until Deed
it is delivered (u), but if it has passed out of the possession of the fj^m j^te
of delivery,
grantor it is presumed to have been delivered (a;). If a deed
is dated it is presumed to have been completely executed, that is,
signed, sealed, and delivered on the day of the date (y), but the
parties are not estopped from alleging that it was signed, sealed,
or deUvered on a date subsequent to that stated in the deed (a).
Prima facie a deed speaks from the date of delivery, but the and prima
deed may be expressed so as to operate retrospectively (6). Where from that
'^**®-
a deed is dated and time is computed from the date of the
deed the party executing the deed agrees that the date men-
tioned in the deed shall be the date for the purposes of computa-
tion (c).
A deed may be delivered, although the grantor does not What is
^'^^''y
part with possession (d). Any word or act of the grantor at the
time of execution which shows the grantor's intention that the
deed shall be a complete effective iastrument is sufficient to
(q) Norton on Deeds, p. 6. {y) Steele v. Mart (1825), 4 B. & C.

National Provincial Bank v,
(r) 272.
Jackson (1886), 33 Ch. D. 1, 11. (a) Hall v. Cazenove (1804), East,
(«) National Provincial Bank v. 477.
Jackson (1886), 33 Ch. D. 1, 14. (&) Jayne v. Hughes (1854), 10 Ex.
(f) National Provincial Bank v. 430.
Jackson (1886), 33 Ch. D. 1. (c) Styles v. Wardle (1825), 4 B. &
(m) Doe v. Day (1809), 10 East, 427. C. 908.
(x) Hall V. Bainhridge (1848), 12 (d) Doe v. Knight (1826), 5 B. & C.
Q. B. 699, 710. 671 ; Exton v. Scott (1833), 6 Sim. 31.
constitute delivery (e). An insurance policy signed and sealed in

the prescribed manner may therefore become effective as a com-
pleted policy immediately the last signature has been written.
Xenos V. In Xenos v. Wickham (J) a marine policy had been executed
Wickham.
by an insurance company, and purported, on the face of it, to be
" signed, sealed, and delivered " by two directors of the company.
There was no other evidence of delivery, and the policy, on being

executed, was kept by the company until it might be sent for by
the assured or his broker. A loss occurred while the policy was
still in the company's possession. The House of Lords held that
the policy was complete and operative from the time when it was
executed. The statement on the face of the poHcy that all acts
were done to render the execution complete was in the absence of
any other evidence as to what took place at the time of execution
conclusive against the company that it was not only signed and
sealed but also delivered. Although the policy was retained
by the officers of the company when formal execution of it had
taken place, they held it for the assured, whose property it became
from that moment.
Roberts v. In Boberts v. Security (g) a burglary policy was signed and
Security.
sealed in the prescribed manner by two directors and the
secretary. The policy recited that the first premium had been
paid, and it contained the condition that no insurance should be
held to be effective until the premium due thereon should have
been paid. After being signed and sealed the policy remained
at the company'soffice, and the premium had not in fact been
paid, but there was no other evidence tending to show that the
execution of the policy was conditional. The Court of Appeal
held that the policy was fully executed when it was signed, and
that no further delivery or act was necessary to make it a com-
plete operative deed, and that the company were estopped from
denying the truth of the recital that the first premium was paid.
Delivery is £
Whether or not a policy is delivered so as to complete the
question of
intention. execution appears, therefore, to be a question of intention
on the part of the company's officials who sign and seal the
deed. This intention may be inferred from all the facts and
circumstances of the case, and no direct evidence of any word or
act indicating a formal delivery appears to be necessary. In
(e) Doe V. Knight (182C), 5 B. & C. (/) (1867), L. R. 2 H. L. 296.

671. (g) [1897] 1 Q. B. 111.
EXECUTION AND DELIVERY OF TOLICY 221
Boberts v. Security (h) there appears to have been no evidence

at all beyond the was sealed and signed,
fact that the policy
and the policy itself did not, as in the case of Xenos v. Wickhavi (i),
purport on the face of it to have been " delivered." The principle
adopted seems to have been that, in the absence of evidence to the
contrary, it may be assumed that a policy which has been signed
and sealed in the prescribed form, and is on the face of it complete,
has also been " delivered," as a completed deed. No doubt where
a deed is in the possession of the grantee and is signed and sealed
by the grantor, the fact of delivery may be inferred (k), but the
case of Boberts v. Security (l) appears to be the first decision that
the essential fact of " dehvery " may be inferred without any
further proof from the other two essential facts of signing and
sealing. If the directors of an insurance company desire to execute
a policy which shall not be immediately effective as a completed
deed they must in some manner or other clearly indicate that it
is not " delivered " or that it is " delivered " as an escrow, and
not as a completed deed (11).
So long as a deed remains in the possession of the grantor, ConditioDal
or of some third party for custody on behalf of the aVeTd^s

safe
grantor, there is not necessarily any delivery (m), but if the an escrow.
grantor parts with possession to some person not being his
agent there is delivery, and unless delivered as an escrow the
deed is completely executed. An escrow is a deed delivered
subject to a suspensive condition that it is not to take effect as
a completed deed until the happening of some future event. In

Boberts v. Security (n), was retained
Lord Esher said that if a policy
in the hands of the company itself it could not be delivered as an
escrow. This does not appear to coincide with the view of Lord
Cranworth in Xenos v. Wickham (o), where he clearly contemplates
such a possibility ; and on principle there appears to be no reason
why, if the grantor may completely deliver the deed while in his
(h) Q. B. 111.
[1897] 1 that signed and sealed in advance
if
(i) B. 2 H. L. 296.
(1867), Ii. of paymentof premium they should
(k) Hall V. Bainbridge (1848), 12 not be treated as delivered and are
Q. B. 699, 710. not intended to operate as completed
(l) [1897] 1 Q. B. 111. deeds until in each case the premium
This might be done by means
{II) has actually been paid and the policy
of a general standing resolution of sent to the assured or his agent.
the board of directors or better still (m) Doe v. Knight (1826), 5 B. & C.
by introducing into each resolution 671.
which authorises the signing and (n) [1897] 1 Q. B. 111.
sealing of policies words to the effect (o) (1867), L. R. 2 H. L. 296.
own hands, he should not be able to deliver it conditionally as
an escrow, and if he can keep it in his own hands as an escrow a

fortiori he can deliver it to his agent as an escrow. The common
case of an escrow no doubt by conditional delivery to a stranger
is
on behalf and probably delivery to the grantee

of the grantee,
himself cannot be conditional, but must be deemed to be an un-
conditional delivery of a completed deed. There are cases, how-
ever, where an escrow has been delivered to one of several grantees (p)
or to the grantee's solicitor (g). If a policy is not under seal it
may be delivered to the assured or his agent conditionally, and

so as not to be operative until the condition is fulfilled (r),
but if under seal it will probably take immediate effect, notwith-

standing any alleged suspensive condition (s).
Delivery aa Whether or not a deed is delivered as a complete instrument or

an escrow
may be in- as an escrow is seldom a question of express words, but usually an
ferred with- and from the circum-
inference from the nature of the deed, all
out express
•nords. stances attending the execution (<). If a policy remains in the
hands of the company or its agents after execution, and it is so held
merely for the convenience of the assured until he should demand
it, authority both here and in America is clear to the effect that
such policy is completely operative (m) ; but if the object of hold-
ing the policy is to obtain payment of the premium or to make
inquiries before finally committing themselves to the risk, it is a
natural inference that the directors did not intend complete execu-
tion of the policy, and in America there are numerous decisions
Avhere it has been held that the execution and delivery of a policy
to the company's agent for delivery against premium to theassured
does not complete a binding insurance, either because there is no
delivery at all or because the delivery is conditional upon the
performance of the condition that the premium shall first be
paid {x). At first sight these decisions appear inconsistent with
( p)
London Freehold v. Suffield, Freehold SuffieU, [1897] 2 Ch.
[1897] 2 Ch. 608 ; Johnson v. Baker 608.
(1821), 4 B. & Aid. 440. (u) Xenos v. Wickham (1867),
(q) Watkins v. Nash (1895), L. R. I-.R. 2 H. L. 296 ; Insurance Co. v.
20 Eq. 262 MilUrship v. Brookes
; Colt (1874), 20 Wall. 560 ; Yonge v.
(1860), 5 H.
N. 797. & Equitable (1887), 30 Fed. 902 Shut- ;
(r) Hartford Fire v. Wilson (1902), luck V. Mutual Ufe (1878), 4 Cliff.
187 U. S. 467. .T98 Bragdon v. Appleton Mutual
;
(«) Harnickell v. New York (1886), (1856), 42 Me. 259; Union Century
40 Hun. Hodge v. Security
558 ; V. Phillips (1900), 102 Fed. 19.
(1884), 33 Hun. 583. (x) Wainer v. Milford (1891), 153
{t) Bowker v. BurdaUn (1843), 11 Mass. 335 ; Markey v. Mutual
M. & W. 128 ; Gudgen v. Besset Benefit (1879), 126 Mass. 158 ; Marks
(1856), 6 El. & Bl. 986; London V. Hope Mutual (1875), 117 Mass.
EXECUTION AND DELIVERY OF POLICY 223
the decision in Boherts v. Security (y), but as in each case it is a

question of fact as to what the intention of the directors was, a
very slight difference in the circumstances may justify a different
inference as to that intention. As a matter of fact, the decision
in Boherts v. Security {y) by the
was not very cordially received
Privy Council in the case of Equitable Fire and Life v.. The Ching
Wo Hong {yy), and it is possible that if the former case had gone
to the House of Lords the decision would have been reversed.
When a deed is produced from the possession of the grantee Effect of the
1 •
, ,. ., . 1 • ^ i- •
J. 1 1
performance
or nis representatives, presumed prima jacie to nave been
it is ^f ^he con-
dition subject
delivered unconditionally and if shown to have been delivered
{z),
conditionally it is presumed prima facie that the conditions have policy has
been fulfilled, and that the deed has become completely opera- liêredâs an
tive (a). The consequence of the performance of a condition escrow.
precedent to the effective operation of the deed is to make it
effective, as if it had been delivered unconditionally at the date
when was delivered as an escrow (h). If, therefore, the delivery

it
of a policy by the directors of a company to its own officials or

agents is a delivery of the deed, as an escrow, for instance
if it is delivered conditionally and with the intention that it
shall not be completely executed until the premium is paid,

payment of the premium or the performance of any other
suspensive condition would render the policy as effective for all
purposes as if it had been delivered unconditionally at the time

when it was delivered conditionally to the officials or agents of
the company (c). If a loss had happened in the interval the
company might, upon principles already discussed (d), be entitled
to refuse to accept the premium, or they might not be liable if
liability for loss before payment of premium was expressly ex-
cepted by the conditions (e), but if they accepted the premium,

or were bound to accept the premium after loss, the policy would
be effective as a completed poUcy from the original date of con-
ditional dehvery, and the question of whether or not the company
were liable for the loss would be one of construction of the terms
of the policy.
528; Oreen v. Lycoming (1879), 91 (a) Hare v. Horton (1833), 5

Pen. 387. B. & Ad. 715.
, , rionm 1 rs T, ,-,. (b) Graham v. Graham (1791), 1
{y) [1897] 1 Q. B. 111. Ves. 272, 275.
-So&ej-is v. Security Co., [1897]
(yy\ ri9071 A C q6 ''"'>
(z) Mutual Life v. ffiyraere (1902), 32 {d) Supra, p. 216.

Can. S. C. 348. (e) Infra, p. 228.
Policy cannot Although a poHcy may be dehvered as an escrow not to take

be delivered
subject to effect until a certain condition has been fulfilled, it cannot be
defeasance it shall take effect imme-
dehvered subject to the condition that
upon a con-
dition not become void on the happening of some future event.
diately but
contained in
the policy. Any such condition subsequent must be inserted in the policy,
for once the policy has been delivered as a fully completed deed
no condition can be effective which is not part of the written
agreement. Thus, where an apparently complete policy was
delivered subject to the alleged oral condition that it should be
surrendered and cease if and when cancelled by the company's
head was held that such condition could have no effect,

office, it
as to give effect to it would be to introduce a term into the contract

inconsistent with the written agreement (/).
No accept- The peculiarity of an instrument under seal is that it requires

ance of a
policy under
no acceptance on the part of the grantee to give it binding effect.
seal is neces- Even in the case of a bilateral deed or indenture where the
sary.
covenants of the one party are expressed to be in consideration
of the covenants of the other, the execution of the deed by one
party binds him, even although the other party never executes
his part (gf). As, in general, grants are for the benefit of the
grantee he may, so long as he has not rejected the deed, come in
at any time and say, " I claim by the deed ;
" but he has the
full power, so long as he has not assented, to say that he declines,

and have nothing to do with the deed (h). The grantee,
will
therefore, so long as he has neither assented nor dissented,

is free to elect whether he shall take the deed or not, and
although he can sue he is not liable to be sued upon it (i). If,

however, he has assented to the deed by taking any benefit under
it or otherwise he is bound to perform his part of the deed although
he has not, in fact, executed it (k). Upon these principles it
follows that a poHcy under seal may be relied on by the assured,

although it varies from his proposal, and although he has never
acquiesced in it, and even although he has never seen it or has no
knowledge that it has been executed. If he has seen it and
repudiated it he can no longer rely upon it, but until it has been
repudiated he has the right to elect.
(/) Hodge v. Security (1884), 33 ,

(h) Siggera v. Evans (1855), 5
Hun. 583. El. & Bl. 367, 381.
{g) Morgan v. Pike (1854), 14 (i) Petrie v.Bury{1824),3 B.& C. 353.
C. B. 473 ; Rose v. Poulton (1831), (k) Webb V. Spicer (1849), 13
2 B. & Ad. 822. Q. B. 886, 893.
.
CHAPTER IV
DUEATION OF THE ElSK
Section I. —Co^njputation of the Period of Bisk
Where the risk is not specified as running from a particular date, Risk runs
the presumption is that it runs from the date of the policy (a), from date of
contract,
or,where no policy has been issued, from the time when a binding
contract to insure was made. Unless so specified, an acceptance
does not relate back to the date of the proposal or offer (b). It
is not uncommon, however, to antedate the policy to the date of

the proposal, and if the assured accepts the policy in this form
the period of risk will be computed as from the nominal date
of the policy (c).
Where the risk is specified as running from or to a particular Risk specified
day or from the date of the policy the question may arise whether iffrom°''°or
the specified day is included or excluded. In an early life in- "to "a par-
, _.
T J
. , . tioular day.
surance case, Holt, (J.J ., drew a distmction between the expression
" from the day of the date thereof," and " from the date hereof,"
holding that the former was exclusive of the day of the date, but
the latter inclusive. Lord Mansfield, however, disapproved of
any such rigid distinction, and said that the construction must
vary according to the subject matter, and that " from " a par-
ticular date may mean inclusive or exclusive according to the
context (d).
In the absence of anything in the context to indicate the

intention of the parties, the word " from "is to be used in what
the Courts have said is its primary meaning, that is, exclusive of
the specified day.
(o) McMaater v. New York Life nell v. Provident

Savings Life (1899),
(1901), 183 U. S. 25. 92 Fed. Rep. 769.
(6) North American Life v. Elson (d) Pugh v. Duhe of Leeds (1777),
(1903), 33 Can. S. C. 383. 2 Cowp. 714 Lord Low, in Sickness
;
(c) Johnson v. Mutual Benefit and Accident v. General Accident

(1906), 143 Fed. Rep. 950; McCon- (1892), 19 R. 977.
I.L. 15
226 DURATION OP THE RISK
Isaacs V. The Boyal (1870), L. E. 5 Ex. Cli. 296
Isaacs V. The A fire insurance was issued by the company whereby they declared
policy
Royal.
« tjja^^ j^^j^ ^^^ ^^ February, 1868, until the 14th day of August, 1868,
^^^^ ^^^
and for so long after as the said assured shall pay the sum of 225 dollars at
the time above mentioned and the directors, by their authorised agent, shall
accept the same, the funds and property of the said company shall be liable to
pay and make good to the assured all such loss or damage by fire as shall happen
to the property above mentioned." The property was destroyed by fire
between 11 and 12 p.m. on August 14, 1868, and the half-year's premium due
on that day had not been paid. The Court held that the original term included
the 14th of August, and that the insurers were therefore liable. It was proved
that both parties intended to renew the policy, and the Court thought they
were entitled to place some reliance upon this fact, in order to interpret words
which, taken by themselves, were somewhat equivocal. If August 14 was not
included the assured would be unprotected for at least part of the day upon
which the renewal premium was payable. In giving judgment the Court did
not give any opinion as to whether the poUcy covered February 14 ; but
Martin, B., during the argument, said " I do not think both days were pro-
:
tected by this poUcy. Otherwise a period of more than six months would be
covered by the policy."
South Staffordshire Tramways v. Sickness and Accident,

[1891] 1 Q. B. 402
South A pohcy was issued on December 2, 1887, to indemnify the assured against
Staffordshire
liability for accidents. The had paid the sum
policy recited that the assured
Tramways
V. Sickness of£200 " as premium for such indemnity for twelve calendar months from
and Accident. November 24, 1887," and witnessed that the company did thereby agree to
pay the assured certain sums " in respect of claims for personal injury and
damage to property for which the assured shall be liable." It was stipulated
that the policy was renewable and that the premium was due on November 24.
It was not renewed, and on November 24, 1888, an accident occurred for which
the assured was hable. The Court held that the assured was entitled to recover,
and Day, J., said " The insurance being for twelve calendar months from
:
'
November 24, 1887,' obviously either November 24, 1887, or November 24,
1888, must be excluded, for otherwise the period covered would exceed twelve
calendar months by one day. I decide without hesitation that the former date
is excluded and the latter included. ... I cannot but think that as regards
time from is akin to after,' and excludes the date fixed for the commence-
' ' '
ment of the computation.''
Sickness and Accident v. General Accident (1892), 19 E. 977
Sickness The had agreed by letter to insure the assured against liability for
insurers
and Accident accidents for twelvemonths from November 24 inclusive, subject to the condi-
V. General tion that there should be no insurance until the premium was paid.
Accident.
The pre-
mium was not paid, and the policy was not issued, when on November 24 an
accident for which the assured was liable, occurred. According to the view
taken by the Court of Session the happening of the accident before the issue
of the policy entirely relieved the insurers from their contract. The insurers
COMPUTATION OP THE PERIOD OP RISK 227
denied liability, and on November 26 the assured sent a cheque for the first
year's premium, and the insurers accepted it in the following terms " I am :
obliged by your favour enclosing cheque value £240 for the third party risk of
the So. StafEo., etc., Tram Co. from the 24th inst.'' The Court held that this
created a new contract to insure from November 24, but not inclusive, and
Lord President Robertson said, " I consider the primary meaning of from '
the 24th to be from the expiry of the 24th. It was strenuously maintained,
'
indeed, that the previous correspondence showed that the defenders had used
those very words from the 24th as including the 24th, and this is the case.
'
'
But then, this cannot be taken to stereotype a secondary meaning as applying

to a common expression when used by a particular person, irrespective of all
changes of circumstances and intervening meetings. In reading the receipt
as excluding the 24th, I do not go upon the extreme improbability of the insur-
ance company meaning to include it, but upon the primary meaning of the
words, and I decline to adopt a secondary meaning upon the sole medium of
the previous letters."
Many accident insurances are now completed by the signing, Coupon

"*™™"°^^-
posting, and registering coupons issued with periodicals or
of
diaries. According to the terms of the particular coupon the

insurance becomes effective from the date of signing, or from the
date of posting with a remittance, or from the date of registration
by the company. Usually the risk will run for twelve months
only from the date on which it attaches, but in the following case,
owing to the peculiar wording of the coupon, it was held that the
risk, although commencing at latest upon the date when the
coupon and remittance were received by the office, ran until

the expiration of a year from the date when the coupon was
" registered," and it was held to be " registered " when it was
filed in alphabetical order along with other similar coupons.
General Accident v. Robertson, [1909] A. C. 404
The company issued insurance coupons which were attached to Letts' General
diaries. On December 25, 1905, H purchased a diary for 1906. It Accident v.
or before
Robertson.
contained the company's coupon whereby they promised to pay £1000 to the
heirs, executors, or administrators of any person killed in a railway accident
provided that the person so killed was the owner of the diary and had caused
his or her name to be registered at the head office and had paid the fee for
registration and that notice of claim was sent to the head office within fourteen
days after the accident and within twelve months after the registration. On
December 25, 1905, H sent in the coupon slip for registration, together with a
remittance for 6d., the prescribed fee. The company's office was closed on
December 26. On December 27 H's letter was opened, and the coupon slip
was stamped as received on that day. The ordinary course of business was to
date-stamp all coupon shps on the day when the letters were opened and to
228 DURATION OF THE RISK
divide them into classes and to enter in a book the total number of coupons in
each class received that day. Subsequently, but not necessarily on the day
of receipt, a printed form of acknowledgment was filled up for each coupon
slip and dispatched to the assured, and the coupon slips were then made up
according to classes in separate bundles of not more than 100 slips in alpha-
betical order. Each bundle might contain slips of more than one date of
stamping. The form of acknowledgment sent to H was dated December 29,
but was not dispatched until January 3, 1906. On December 28, 1906, H
it
was killed in a railway accident, and a claim was made by his widow on January
2, 1907. The House of Lords held that the contract of insurance was complete,
and that the risk attached if not when H's letter was posted on December 25,
then at all events on December 26, when it was delivered, or on December 27,
when it was opened. If the coupon was not registered on that day the com-
pany alone was to blame, and it could not take advantage of its own default.
The question was how long the insurance was to continue. On this the docu-
ments were silent, except that the claim had to be made within twelve months
of registration. If there was no registration the liability would be protracted
without limit, and if registration was delayed the liability would be deferred
accordingly. Then, when was the coupon registered ? The date-stamp was
not registration, and neither was the entry in the books of the total number
of coupons received. The only registration was the filing of the coupons in
bundles in alphabetical order. There was no direct evidence as to when that
was done, but as the bundle in which the sUp in question was contained also
contained slips dated January 1, 1906, it could not have been done before that
date, and very likely it was done later. The claim was made on January 2,
1907, and the onus was on the company to prove that there had been registra-
tion before January 2, 1906. They had not proved it, and the fact that they
did not send their letter of acknowledgment until January 3 was evidence to
the contrary. The House held, therefore, that the claim had been made within
the time stipulated.
Section II. —No Insurance until First Premium is Paid
Effect of Where there is a binding contract to insure, or a policy has
thepolioy*'^'^*
been issued, in either case subject to the condition that there
shall not be gjiall be no insurance until the first premium is paid, this con-
erst premium dition saves the company from the unsatisfactory position of
P*''^' being on a risk for which they may never be paid. The condi-
tion operates to suspend the risk where but for the condition it
would have attached at the time the contract was made or at

some specified date. Further than this, the proviso does not
affect the period of risk. It does not affect the dates upon which
the renewal premiums are payable or the expiration of the risk
upon non-payment (/).
(/) Armstrong v. Provident Sewings Can. S. C. 383 ; M'Connell v. Provi-

Life (1901), 2 Ont. L. R. 771 North ; dent Savings Life {1899), 92 Fed. Rep.
American Life v. Elson (1903), 33 769.
;
NO INSURANCE UNTIL FIRST PREMIUM IS PAID 229
The expression that there shall be no insurance, or that When it also
the insurance shall not be in force, until the premium is paid hJûrTfrom a
specified date,
is not altogether free from ambiguity. If it is coupled with
an agreement to insure from a specified date it is open to
argument that the condition has the effect ofmaking the insur-
ance subject to a suspensive condition, and that when the
condition is satisfied by payment of the premium, the insurers
are bound to indemnify the assured in respect of losses happening
between the specified date and the payment of the premium (//).
Where no policy has been executed the insurers may escape
liability by refusing to accept the premium on the ground that
there has been a change of risk before the policy was called
for (g). But if a policy has been executed the insurers are
probably liable (h).
Even where the insurance is not from a specified date, but is Where it
expressly or impliedly to run from the date of the policy or from theTdateaf™
the delivery of the policy, the condition that it shall not be in the policy.
force until the premium is paid is probably in itself not sufficient
to exclude all liability for loss happening after the execution of
the poUcy and before payment of the premium. If insurers desire
to avoid all risk of having to pay upon such a loss they must
either" delay execution of the policy until the premium has been
paid or else insert the less ambiguous proviso that they shall not
be liable in respect of any
happening before the premium is
loss
paid, and same time take care that they do not by declara-
at the
tion in the policy or otherwise admit payment of the premium
before it has in fact been received. In life policies upon the life
of the assured a proviso that " the policy shall not be in force
until the premium is paid," might perhaps be sufficient, as payment
means payment by the assured, and he cannot pay after his death ;
but a safer form of proviso, available also for insurances upon the
lives of third parties, is that " the policy shall not be binding
until the premium has been received during the lifetime of the
party assured."
{ff This argument is strengthened

) (g) Sickness and Accident v. General
where the practice of the office
it is Accident (1892), 19 R. 977.
to accept the full premium for the (h) Rigby, L.J., in Roberts v.
specified period even although not Security, [1897] 1 Q. B. Ill, 116
paid until part of that period has Whittaker v. Farmers^ Union (1859),
elapsed. Many offices charge the 29 Barb. 312 ; contra, Lord Low
premium only from the date of pay- (OTd^na,Ty)in Sickness and Accident v.
ment and acceptance thereof, and this General Accident (1892), 19 R. 977.
is a much safer course.
;
230 DUEATION OF THE RISK
Condition When there is no express provision in a pohcy that it should

requiring pre-
payment of not attach until payment of the premium, such a condition will
premium will not be implied (i).
not be
implied. The condition in the policy for prepayment of premium may
Acknowledg- be rendered inoperative if, in a policy under seal, the company
ment in policy
of receipt of formally acknowledge receipt of premium. This is said to follow
premium
effect upon
from the doctrine of estoppel by deed. The company having in
prepayment a completely executed deed declared that it has received the
condition.
first premium said to be estopped from thereafter denying
is
such receipt. The Court of Appeal have carried this doctrine

so far that they have held that even where the policy has not
been handed to the assured or his agent, but is still in the custody
of the company and its agents, yet if it is a completely executed
deed, " sealed and deUvered," the company are estopped from
denying the receipt of premium therein acknowledged (k). This
decision was doubted in a later case in the Privy Council, where
it was held that the receipt clause in the particular policy then
under consideration ought to be read as merely matter of common
form, andwhen taken in conjunction with the condition that
the company should not be liable in respect of loss until the
premium " is actually paid," could not reasonably be read as
conclusive evidence of actual payment (Z). In Canada it has
been held that where a policy is executed acknowledging receipt
ofpremium and containing the condition for prepayment of premium

and is delivered to an agent of the company to exchange against
the premium in cash, the company is not estopped from alleging
the non-payment of premium (m). In the United States it has
been held that even where the policy has been delivered to the
assured the acknowledgment of receipt of premium is not con-
clusive when it is coupled with the condition that there shall be
no insurance until the actual payment of the premium (w).
Roberts v. Security, [1897] 1 Q. B. HI

Roberts v. A proposal for burglary insurance dated December
14 was presented by the
Security. plaintiff, and on December 18 the company's agent sent a protection note
(i) Kelly v. London and Stafford- tion as to the possibility of avoiding

shire (1883), Cab. &B. 47; Thompson this resultby means of a resolution of
V. Adams (1889), 23 Q. B. D. 361. the board of directors.
(&) Boberts v. Security, [1897] 1 (m) Western Assurance v. Pro-
Q. B. 111. vincial Assurance (1880), 5 Ont. A. R.
(I) Equitable Fire and Life v. 190.
T/ie Ghing WoHong, [1907] A. C. 96. (n) Sheldon v. Atlantic Fire (1863),
(II) Vide suj,ra, p. 221, for sugges- 26 N. Y. 460.
NO INSURANCE UNTIL FIRST PREMIUM IS PAID 231
purporting to protect the plaintiff against burglary risk (subject to the conditions
contained in and indorsed on the form of policy used by the company) for seven
days from the date thereof or until the proposal should be in the meantime
rejected. The protection note contained an intimation that in the event of
the proposal being declined the deposit would be refunded, less the proportion
of the premium for the period covered. The note was inclosed in a letter
from the agent stating that a policy would be sent in due course. No sum of
money was ever paid by way of premium, and nothing further was done until
December 26, when a burglary was committed and loss sustained. On
December 27 the directors of the company, who were then ignorant of the fact
that a loss had ooeurred, executed a policy in conformity with the proposal.
The policy recited that the plaintiff had paid to the company the sum in the
margin thereof, being the first premium for the assurance of the property from
noon of December 14, 1896, to noon of January 1, 1897, and purported to
insure the property described accordingly. It was provided by the policy that
no insurance by way of renewal or otherwise should be held to be effected until
the premium due thereon should have been paid. The policy was never
delivered to the plaintiff, but remained in the company's office. The Court
held that the policy was completely executed and that the company were not
entitled to plead in contradiction of the terms of their own deed that the
premium had not been paid. They had treated the premium as paid, and if
it had not been paid they thereby waived the previous payment as a condition
of the existence of an insurance.
Equitable Fire and Life v. The Ching Wo Hong, [1907] A. C. 98
A policywas issued by the Western Assurance company covering certain Equitable

property against fire risks, and the policy recited " that the insured having -^^''^ ""'^ ^'/^
paid the sum of (blank) for insuring against loss or damage by fire the property
(described) in the sum of (mentioned) the company agreed, etc.
^
Hona'^^
.
."
. The
policy contained the condition, "This insurance will not be in force until, nor
will the company be liable in respect of any loss or damage happening before,
the premium or a deposit on account thereof is actually paid." No premium
was ever paid, and the policy was treated by both parties thereto as having been
abandoned; but other insurers of the same risk attempted to set up this in-
surance as a subsisting insurance, and therefore a breach of the terms of their
own policy which prohibited double insurance. The Board held that the
policy of the Western Assurance Company was not enforceable as the premium
had not been paid, and that the Western were not estopped from denying pay-
ment by reason of the recital in the policy. Lord Davey said " The instru-
:
ment must be read as a whole for the purpose of ascertaining the intention of
the parties, and effect so far as possible must be given to every part of it. Their
Lordships are of opinion that the condition quaUfies and restricts the engage-
ment of the company and converts what would otherwise be an absolute en-
gagement into a conditional one, and that the words '
having paid to the '
company are common form words or words of style for expressing the considera-
tion for the company's engagement which would become accurate when that
engagement became effective. The Judicature Act provides that where the
rules of law and of equity differ the rules of equity shall prevail. It is familiar
law that in equity a vendor was never held to be estopped by a statement in
the conveyance that the purchase money had been paid or even by an endorsed
receipt for the money by him so as to exclude the enforcement of the
signed
vendor's hen. Their Lordships think that in any case the parties should not be
held in equity to be estopped as between themselves from showing that the
consideration had not in fact been paid. But in the present case they think
that the condition read with the operative part of the instrument negatives
any such estoppel ; for the only meaning which can be given to the words is
that the consideration must be not only expressed to be paid, but actually
paid. Their Lordships cannot treat the fact of the executed policy having
been handed to the respondents as a waiver of the condition or attach any
importance to the circumstances. What was handed to the respondents was
the instrument with this clause in it, and that was notice to them, and made
it part of the contract that there would be no liability until the premium was
paid. It is not a question of conditional execution, but of the construction of
what was executed. The learned counsel for the appellant company cited
and relied on a decision of the Court of Appeal in England in Roberts v.
Security Co., Ltd. It is enough for their Lordships to say that the words of
the instrument in that case were different from those which their Lordships
have to construe, and they are relieved from saying whether they would
otherwise have been prepared to follow it."
Presumption The well-known principle in marine insurance that the acknow-
insuranoethat ledgment of the receipt of premium cannot be disputed by the

premium has underwriter has been cited in support of the application of a
been paid ]a . .
not applicable Similar doctrine to other classes of insurance. It has long been
toother risks,
jjgj^ ^^ marine insurance, where the contract is concluded through
a broker, that the underwriter must look to the broker for
payment of his premium, and as between underwriter and assured
the premium is deemed to be paid, and it is no defence for
the underwriter who is sued by the assured on the policy or for
a return of premium to say that he in fact never received it (o).
It is sometimes said that the acknowledgment contained in the
policy is conclusive as between underwriter and assured (p), but
as a Lloyd's policy is not under seal this cannot be so on the doctrine
of estoppel, and the rule has arisen merely from the universal
practice among business men to treat the premium as paid as
between underwriter and assured. This is shown by the
clearly
decision of the Court of Appeal in Universo Insurance v. Merchants'
Marine where they held that, even where the policy contained
(r),
an express promise by the assured to pay the premium, the

underwriter could not sue the assured, since by the custom of
(o) Dalzell v. Mair (1808), 1 Pigou (1812), 4 Taun. 246.

Camp. 532 ; Power v. Butcher {p) Anderson v. Thornton (1853), 8
(1829), 10 B. & C. 329 ; Foy v. Bell Exch. 425.
(1811), 3 Taun. 493; De Gaminde v. {r) [1897] 2 Q. B. 93.
NO INSURANCE UNTIL FIRST PREMIUINI IS I'AID 233
insurance the premium was as against the assured deemed to be

paid, and the underwriter's remedy was against the broker only.
It will thus be seen that the doctrine in marine insurance that
the premium is deemed to be paid has really no application to
other branches of insurance where the custom or practice which
is the basis of the doctrine does not exist.
Although acknowledgment premium contained
of the receipt of Estoppel as
in the policy may not be conclusive evidence of payment as against assi>nice of
the assured, the insurers may be estopped as against third poli'^y-
parties into whose hands the policy may afterwards come as

purchasers, from denying, as against them, the payment of the
premium so acknowledged in the policy to have been paid (s).
Besides estoppel by deed, the insurers may be estopped by Waivor of
their conduct from relying upon the conditions for prepayment

^^^'cuy^™*'
of the premium, or in other words they may expressly or impliedly
waive this condition precedent to liability. Generally any act
leading the assured to believe that the contract will be effective
without payment of premium amounts to a waiver of the con-
dition (<), but unless the insurers do or omit some act whereby
the insured has just ground to believe and does believe that the
contract will be made, continued, or restored without payment of
premium there is no estoppel, and can be no waiver (u).
The actual delivery of the policy to the assured without de- Delivery of
manding payment of premium may constitute a waiver, not- demanding-""*

withstanding that the condition is contained in the policy as payment,
delivered Where the usual practice is to insist upon payment
(x).
of the premium against the delivery of the policy, a departure

from the usual practice by delivering without demanding pay-
ment may justify the assured in believing that the prepayment
condition is not to be insisted on. The question is, was the
delivery made on such terms as implied a giving of credit with-
out prejudice to the immediate validity of the policy {y). This
is a question for the jury. Probably the bare fact that a policy
(«) Conveyancing Act, 1881 (44 & Tool Co. v. Hibernia Fire (1876), 7
45 Vict. c. 41), sees. 54, 55. Hun. 74 Aff. 66 N. Y. 613 ; Boehenv.
:
{t] Sheldon v. Atlantic Fire (1863), Williamsburgh Insurance (1866), 35

26 N. Y. 460 O'Brien v. Union
; N. Y. 131 ; Bodine v. Exchange Fire
(1884), 22 Fed. Rep. 586 ; Bragdonv. (1872), 51 N. Y. 117; Trustees of
Appleton Mutual (1856), 42 Me. 259. Baptist Church v. Brooklyn Fire
{u) Equitable Assurance v.M'Flroy (1859), 19 N. Y. 305; Hodge v.
(1897), 83 Fed. Rep. 631. Security (1884), 33 Hun. 583.
{x) MutvM Reserve Life v. Heidel (y) Famum v. Phcenix (1890), 83
(1908), 161 Fed. Rep. 535 ; Washoe Cal. 246.
234 DUEATION OF THE BISK
was actually delivered to the assured would not be evidence upon

which a jury could find that a condition in that policy requiring
prepayment of the premium was waived {z), but very little more
would be sufficient as, for instance, the fact that the insurers
;
usually did insist upon payment before delivery (a).

Delivery of a A condition in a preliminary contract requiring prepayment
policy con-
taining no would undoubtedly be waived by delivery of a policy without
prepayment
such condition, and in an American case (b) where the company's
condition.
policies contained the condition and there was an oral contract
to insure, the Court held that the fact that the company had
previously issued policies to the same assured without demanding
prepayment, was evidence of the condition having been waived.
Section III. —What Constitutes Payment of Premium
Premium Prima facie premiums are payable in cash to the insurers at the
payable at
principal place of business, that is to say, in the case of companies
head office,
at the head office of the company (c).
Conditions The assured is presumed to have notice of any condition in

specifymg^the
^^^ policy relating to the place of payment, and will be bound
ment. '
thereby (d). But the conditions of the policy may be waivedi
and payment to an agent Avill be sufficient if such agent was
expressly or impliedly authorised by the company to receive
payment, or held out by the company as a person having such

authority (e). If the terms of the pohcy require payment to
be made to one particular agent, some other agent

payment to
is not good payment, and the assured must use reasonable

diligence to find the particular agent to whom payment must be
made, and the fact that he has called once or twice and found the
agent out is no excuse for non-payment of premium (/). But,
even where payment is directed to be made to a particular agent,
the officials at the head office may probably be assumed, in the
absence of express stipulation to the contrary, to have a con-

current authority to accept the premium.
(z) Wood Poicghheepaie (1865),

V. {d) Mulrey v. Shawmut Mutual
32 N. Y. 619 Equitable Fire and Life
; (1862), 86 Mass. 116.
V. The Ghing Wo Hong, [1907] A. C. 96. (e) State Life v. Murray (1908),
(a) Miller v. lAfe Insurance Co. 159 Fed. Rep. 408 ; Talbottv. Metro-
(1870), 12 Wall. 285. politan Life (1906), 142 Fed. Bep.
(6) Church v. La Fayette (1876), 66 694.
N. Y. 222. (/) Cronkhite v. Accident (1888),
(c) Palmer v. Phoenix (1881), 84 35 Fed. Rep. 26.
N. Y. 63.
WHAT CONSTITUTES PAYMENT OP PREMIUM 235
Payment to the company's examining physician, who under- insurers
took to transmit the money to the company, was held to be in- persons as
absence of evidence of authority
sufficient in the ' or holding
°
out agents to
collect pro- .
of authority by the company (g). An agent to whom a policy is miums.

transmitted for delivery to the assured has probably implied
authority to collect the premium, and in one American case {h)
a provision in the policy that payment should be made to the

secretary or agent appointed in writing was held to be waived by
the company transmitting the policy to an agent under such
circumstances that authority to collect the premium would be
implied. Where the assured has been in the habit of paying the
premium to a certain local agent, payment to that agent is suffi-
cient payment until the agent's authority has been revoked (i),
and the assured has clear notice of the fact (fc). An agent with
authority to deliver policies and collect premiums has prima facie
authority to collect premium notes (I).
An agent is not entitled to delegate his authority without the Agent to
express or implied consent of his principal, and therefore, where miums may
an insurance company appoints a particular person to receive the ^?* delegate
premiums, that person cannot appoint any one else to receive them
on his behalf, unless authorised by the company to do so. But
an agent has implied authority to do his business in the ordinary
way through a staff of clerks or other servants in his employment,
and therefore payment to such persons would be deemed payment
to the company. In one American case (m) the secretary's wife
was in the habit of receiving premiums on behalf of the secretary.
This practice was acquiesced in by the company, and payment
to the wife was accordingly held to be sufficient payment. In
another American case (w) an agent authorised his daughter to
receive payment of premiums during his absence. The Court

held that the agent had acted within the scope of his authority in
temporarily delegating that authority to his daughter, and that
therefore payment to the daughter was sufficient payment to
the company.
A not uncommon condition is that no payment of premium Condition
requiring
(jr) Teeter v. United Law (1899), (1) Mutual Life v. Logan (1898),
159 N. Y. 411. 87 Fed. Rep. 637.
{h] Arthurholt v. Susquehanna(1893),
159 Pa. 1. (m) Anderson v. Supreme Council
(i) McNeilly v. Continental Life (1892), 135 N. Y. 106.
(1876), 66 N. Y. 23.
(Jfc) Insurance Co. v. McCain (n) McNeilly v. Continental Life
(1877), 96 U. S. 84. (1876), 66 N. Y. 23.
—
printed can be recognised unless the company's printed receipt signed

receipt.
by the president and secretary was received at the time. This
condition may be waived. Thus where the company terminated
an agency, and did not send the agent the usual forms, but
authorised him to remit to the head office the premiums then
falling due, it was held that payment to the agent was sufficient,
although no printed receipt had been given (o). In an Australian
case (p) the renewal receipt granted by the agent was subject to
the following terms " This temporary receipt has the full force
:
of the company's policy (and is subject to its conditions) for

fourteen days only from the date of issue, but on the expiry of
that time none other than the head office receipt will be acknow-
ledged by the company." A fire occurred after the fourteen
days, and before the agent had transmitted the premium to the
head office, and it was held that the renewal was good for the year,
even although no receipt had been issued from the head office.
The Court thought that the condition referred rather to the duty
of the agent than to any obligation imposed on the assured.
Broker's Prima facie a broker employed by the assured to effect an
authority
to collect insurance has no authority to collect the premium for the company,
premiums.
and therefore payment to him is not necessarily payment to the
company (g). But the broker may be held out by the company
as having authority to collect the premium.
Kelly V. London and StaflFordshire Tire (1883), Cab. & E. 47

Kelly V. P, an insurance broker, was employed by K in America to effect a fire in-
London and
Staffordshire
surance. P did so with the London and Staffordshire through C, the com-
Fire. pany's agent in Washington, U.S.A. P was in the habit of effecting insurances
with the London and Staffordshire, and the course of business was for him to
deduct 20 per cent, from the premiums as commission. The policy was
delivered by C to P on June 9 and immediately handed over to K, who paid
the premium to P. The policy contained the clause, " It is part of this con-
tract that any person other than the assured who may have procured this
insurance to be taken by this company shall be deemed to be the agent of the
assured, and not of this company under any circumstances whatsoever, or in
any transaction relating to this insurance." It was held that the money was
received by P on behalf of and with the authority of the company, and as
between the company and K must be deemed to have been paid. The object
of the condition was to prevent the company being bound by the representa-
tions of the broker, and did not prevent his being held out by the company as
agent to receive the premium.
(o) McNeilly v. Continental Life (q) Wilber v. Williamsburgh {1890),

-
(1876), 66 N. Y. 23. 122 N. Y. 439 ; Becker v. Exchange

ip) Moore v. Halfey (1883), 9 ilfMiwo? (1908), 165 Fed. Rep. 816.
Vict. L. R. 400.
WHAT CONSTITUTES PAYMENT OF PREMIUM 237
The insurers may accept a cheque, promissory note, or bill of Negotiable

exchange as whole or part payment of the premium, and the ^"cepted'as^
question then arises whether they have accepted it as absolute payment of
premiums:
payment payment conditional on the document being
or only as
honoured Whether a negotiable instrument is
at maturity.
accepted by a creditor as absolute or conditional payment is a
question of fact for a jury (r). If a creditor were for his own
convenience to take a bill drawn by a third party
or accepted
instead of payment in cash, the presumption would be that he
accepted it as an absolute payment in satisfaction of his debt (s).
The authorities differ [t) as to whether a negotiable instrument
accepted by way of premium is equivalent to payment of the
premium so as to waive all conditions in the contract as to
suspension or forfeiture in the event of non-payment, or whether
it only enlarges the time for payment, so that if the cheque is dis-
honoured, or the note or bill is not met at maturity, the conditions

relating to non-payment become effective. Just as in other cases
of creditors accepting payment in this way it is a question of fact
whether the payment was taken in satisfaction or not.
The tendency of the authorities is to hold that if the insurers may be
take a bill drawn or accepted by a third party it is taken in satis- satisfaction
faction (x). When a negotiable instrument is accepted in satis-
faction, the dishonour of the instrument at maturity does not

affect the assured's right to sue upon the policy, unless there is a
special condition in the policy that the policy shall be forfeited
in that event (y).
When the assured gives his cheque or a bill or promissory note or merely as
upon which he alone is liable, the presumption is that it is not payment,

accepted in satisfaction of the claim for premium, but as con-
ditional payment only (z).
Conditional payment of a debt by bill or note suspends the Acceptance
debt until the bill or note has matured and become payable, and instrument as
hands of a third conditional
if at that time the instrument has passed
^
into the
payment ot
debt.
{r) Goldshede v. Cottrell (1836), 2 S.869 ; Shaw v. Republic Life (\9,m),
M. & W. 20. 69 N. Y. 286.
(s) Anderson v. " 12
Hillies (1852), ^,^y) ^t'^;[; ^'fy^^'^^t'
v. New^^l?'']''^l
England
^
p ^-p ,
QQ N. Y. 286 McAllister
;
,.' ^r" r „ „„-, MutuallAfe (1869), 101 Mass. 558.

(t) Thompson v. Insurance (1881),
>
u) nÛI v. Union Mutual Life
104 U. S. 252; McOugan v. Manu- (iggl), 7 Ont. A. B. 171; McGugan
facturers (1879), 29 U. C. C. P. 494 29 U. C. C. P.
;
^ Manufacturers {l%.1^),
McAllister v. New England Mutual 494. MacMahonv. V. S. Life {1904:),
Life (1869), 101 Mass. 558. 128 Fed. Rep. 389 Brady v. Aid;
(x) Barker V. North British {1831), 9 Association (1899), 190 Pa. 595.
;
party, that is to say if the creditor has negotiated it, the debt
remains suspended until the instrument gets back into the creditor's
possession (a). When the bill has matured and is in the creditor's
own hands the debt revives. If the debtor himself is primarily
liable on the bill or note there is no obligation on the creditor to
give notice of the fact that it is overdue and unpaid, and it is for
the debtor if charged with the debt to show that the bill or note
is still current or has been met (b). On the other hand, if a creditor
accepts a bill drawn by the debtor on a third party he must present
the bill to the drawee and give notice of dishonour to the debtor
before the original debt can be revived (c). When the bill or note
ismet conditional payment becomes actual payment, and relates
back to the time when the bill or -note was first given (d).
Acceptance Applying the above general principles to the case of bills or notes
of negotiable
instrument as accepted conditionally for payment of premium, it would seem
conditional that the effect of such acceptance is not to waive all conditions
payment of
the premium. relating to the punctual payment of premium, but merely to
suspend their operation. If the bill or note is ultimately met,

then the premium is deemed to have been paid on the date when
the bill or note was first accepted (e) ; but if the bill or note is not
met, then the parties are in the same position as if no payment
of any kind had ever been made. The result is practically the
same as if there had been a condition for forfeiture on non-payment
of the bill or note at maturity.
Whether Where there is a clause working forfeiture in the event of non-
insurers must
give notice of payment of a note or bill at maturity, and the assured is primarily
overdue bill Uable on the note or bill, it is not necessary to give him notice when
before claim-
ing a for- it is due (/), nor to signify any election on the part of the insurers
feiture.
to avoid the policy Where a third party is primarily liable
{g).
on a bill, it must be presented to him for payment on the due date

but, this having been done, the Supreme Court of the United States
held that it was not necessary to give notice of dishonour to the
assured in order to work a forfeiture under the express condition
that " the policy shall become void if this draft is not paid at
(o) A Debtor, In re [1908] 1 K. B. Champion (1900), 103 Fed. Rep.

344. 609.
(6) Price v. Price (1847), 16 M. & W. (/) Thompson v. Insurance (1881),
232. 104 U. S. 252 ; Roehner v. Knicker-
(c) Soward v. Palmer (1818), 8 bocker (1875), 63 N. Y. 160.
Taun. 277. {g) McOeachie v. North America
(d) Felix Hadley v. Hadley, [1898] Life (1893), 23 Can. S. C. 148;
2 Ch. 680. Frank v. Sun Life (1893), 20 Ont.
(e) American Credit Indemnity v. A. R. 564.
maturity " (h). And where there is an express condition of this

kind would seem that non-payment of the note or bill at maturity
it
will work an immediate forfeiture even although the instrument
has been negotiated by the insurers and is in the hands of third

persons (i).
Even although the payment of the pre-

policy acknowledges Ci^ndition for
mium, it is competent to the insurers to show that it was paid non-payment

of a bill at
not in cash, but by note, and that the policy has become void by
maturity.
reason of the dishonour of the note (k). And where the policy
contained no condition for forfeiture in the event of non-payment
of a note, but the notes themselves given for the premium con-
tained the proviso that the policy should be void if not paid on
the day named, a Canadian Court held that the assured could
not rely upon the note as payment of the premium without being
bound by the proviso (1).
Primarily the company is not bound to accept a cheque in Payment of

. .
-n n K T ,
premium by
payment or premrams. rostmg a cheque is thereiore not payment cheque,
of premium, either conditionally or unconditionally, unless the
company have authorised payment by cheque, either by express
invitation or by a previous course of dealing (m). Where payment
by cheque has been sanctioned it is sufficient if the assured posts
the cheque in time to reach the company in ordinary course of

post before the expiration of the time limited for payment, even
although, owing to some accident, the letter is delayed or even lost
in the post (n). If a cheque is dishonoured on presentation at
the bank there is no payment of premium, even although the
company continue to hold the cheque, and there are subsequently
sufficient funds of the assured in the bank to meet it (o).
Although an agent may not be authorised to give credit on Payment of
behalf of the company, or otherwise waive the conditions ^

for agent oT
punctual payment of the premium, he may himself pay the premium l"?^"^,?^
.""
on behalf of the assured, and give the assured credit in respect assured.
(h) Knickerbocker Life v. Pendleton (m) Taylor v. Merchants' Fire

(1884), 112 U. S. 696. (1850), 9 How. 390; Kenyan v.
(i) London and
Lancashire v. Knights Templar (1890), 122 N. Y.
J'Zemijig', [1897] A. C. 499 ; Hutchings 247; Palmer v. Phoenix (1881), 84
V. National Life (1905), 37 Can. S. C. N. Y. 63 ; McNeilly v. Continental
124. Ufe (1876), 66 N. Y. 23.
[k) Baker v. Union Mutual (1871), (n) Mutual Life v. Tuchfield (1908),
43 N. Y. 283 ; Pitt v. Berkshire Life 159 Fed. Rep. 833 Krebs v. Security
;
(1868), 100 Mass. 500. Trust Life (1907), 156 Fed. Rep.
(l) Frank v. Sun Life (1893), 20 294.
Ont. A. R. 564 ; Town Life v. Lewis (o) Neill v. Union Mutual Life
(1902), 157 U. S. 335. (1881), 7 Ont. A. R. 171.
of the personal debt then due by the assured to him (p). But
probably there must be an actual payment in cash made by the
agent to the company within the time limited, and the agent caimot
by agreement with the assured to give him personal credit give
the assured the benefit of his periodical account with the company,
and, by merely debiting himself with the premium, claim that it
was paid on behalf of the assured when he made the entry in his
book (g). A fortiori, in the absence of any agreement between the
agent and the assured, the assured cannot avail himself of any
arrangement between the company and the agent, whereby the
agent is made personally liable for the premium if he does not
immediately notify the company of the failure of the assured to

pay the premium within the days of grace (r).
Aeey v. Ternie (1840), 7 M. & W. 151
Acep V. A company gave the following instructions to its agents —

" The premium
:
Fernie on every lifemust be renewed within fifteen days at the latest from the
policy
time of its becoming due, and if not paid within that time you are to give im-
mediate notice to the office of such fact, and in the event of your omitting to
do so your account will be debited for the amount after the fifteen days are
expired, and you will be held responsible to the directors for the same." The
renewal premium on a hfe policy was not paid to the agent within the fifteen
days, but the agent accepted it some days afterwards. He gave no notice to
the company that the premium was overdue, and the premium was accordingly
debited against the agent in the company's books in ordinary course. It was
held that the assured could not take advantage of the arrangement between the
company and its agent, whereby it penalised the agent for neglect of his duty.
There was no evidence that the agent had undertaken to pay the premium on
behalf of the assured, and therefore the premium was not paid within the
fifteen days.
Busteed v. West of England Tire and Life (1857), 5 Ir. Ch. R. 553
Busteed i A company gave the following instructions to its agents :

— " Every policy
West of of life insurance must be renewed within fifteen days after the same becomes
England Fire will be void. If any person shall omit to renew his life in-
due or the policy
and Life
surance within the fifteen days before mentioned the agent shall immediately
give notice thereof to the secretary, and such policy shall not thereafter be
renewed without the fine and subject to the restrictions stated in the general
printed proposals and conditions of the company. All receipts for the renewal
of life insurances not paid within a month from the date of the expiration of
( p) Newcastle Fire v. Macmorran and Life (1857), 5 Ir. Ch. R. 553;

(1815), 3 Dow. 255 ; Yonge v. JEJquit- London and Lancashire Life v.
able Ufe (1887), 30 Fed. Rep. 902 ; Fleming, [1897] A. C. 499.
Train v. Holland (1875), 62 N. Y. 598. (;•) Aceyv. Fernie (1840), 7 M. & W.
(q) Busteed V. West of
England Fire 151.
the policies are to be returned to the

office at the end of that period." A policy
was taken out by S on the life of K. B, the agent of the company through
whom the policy was effected, agreed to accommodate S by taking his pro-
missory notes and bills tor the amount of the premiums, and to debit himself
with the amount in his account with the company. This was done for several
years, and the company had no knowledge of the facts and beUeved the
premium to have been paid in ordinary course. The agent did not, in fact'
make any entry in his books within the fifteen days, but he did make the entry
when he subsequently rendered his account to the company. The Court held
that the premiums had not been paid within the fifteen days, and that even if
the agent had debited the amount in his books within that time it could not,
considering his instructions, have been deemed payment of the premium by
the assured to the company.
London and Lancashire Life v. Fleming, [1897] A. C. 499
A life policy provided that "if a noteor other obligation betaken for the first London and
or renewal premium any part thereof and such note be not paid when due, Lancashire
or
the policy or assurance becomes null and void at and from default." W, the
nemina
district manager of an English company at Toronto, took notes from the assured
in respect of premiums on a life policy, but they were not in accordance with
the forms furnished by the company. W
himself discounted the notes and
applied the proceeds to his own use. He gave his own note to the company
for this and other premiums. The notes given by the assured to were not W
paid when due. It was contended for the assured that the notes were not paid
to W as premium, but in order that W, as agent of the assured, might raise
money to pay the premiums, and that the company had accepted W's note as
satisfaction of the premium due. It was held that the poUcy was void under
the condition. There was no evidence to show that the nature of the transac-
tion was as contended for, but, on the contrary, as the notes were the exact
amount of premium, the presumption was that they were paid as premium, and
being dishonoured the policy became void. The Court would not assume that
the company accepted W's note in satisfaction of the premium when they were
ignorant of all the facts.
Where there are frequent transactions between the same parties Payment by
actual payment of a cash premium upon each occasion might be accounts,
extremely inconvenient, and therefore it is not unusual to have
periodical settlements. Where this is the recognised course of
business thepremium may, for the purpose of the conditions in the
poUcy, be deemed to be paid when an entry is made in the business
books, or the transaction is in some other way recorded (s). But
prima facie agents of different companies have no authority to
give one another credit, and unless the course of business is re-
cognised by the companies themselves, their agents do not by
(s) Prince of Wales v. Harding (1858), El. B. & E. 183.

I.L. 16
242 DUEATION OF THE RISK
debiting one another against periodical settlements effect pay-

ment of the premiums (t).
Prince of Wales v. Harding (1858), El. B. & E. 183

Prince oj Two insurance companies were in the habit of taking part of one another's
Wales V. risks by way of reinsurance. The course of business between them was for
Harding.
the company granting the reinsurance policy to give the other company a
receipt for the premium as it became due. No money passed at the time, but
periodically the balance was struck and paid according as it fell to the one or
the other. In the case of a policy granted by A company the usual receipt
for premium was given to B company. A company was then indebted to
B company, and at the next settlement a balance was struck in favour of B
company and paid by A company to B company. The condition in the policy
was that no " policy shall be considered in force beyond thirty days after the
expiration of the period within mentioned for pajrment of the same unless the
premium then due shall have been paid at the office of the company or to some
one of the agents of the company." The Court held that the premium must
be deemed to have been paid when the receipt was given, and Lord Camp-
said " The amount of premiums went in reduction of the debt of A
bell, C. J., :
company, and was taken as pa3mient of so much on account, and in effect was
payment of the premiums at the time the entries of these payments were made
to the credit of A company in account with B company."
Broker's In America it has been held that where an insurance company

periodical
accounts. deals with a broker on the terms of a monthly settlement, the
broker being responsible to the company for the premiums, the
premiums must be deemed as between company and assured to
have been paid when the contract was concluded, and the fact
that the assured has not paid the broker is immaterial (m). This
is in accordance with the law and practice in marine insurance
in this country, and it would seem that, even in the case of other
risks, if the insurers accept the credit of the broker and look to
him alone for payment of the premium the agreement with the
broker for a monthly account must be a waiver of all conditions
in the policy requiring punctual payment by the assured.
Appropriation The insurers may, under certain circumstances, be bound to
of assured's
money in appropriate moneys in their hands, but belonging to the assured,
hands of
to the payment of premiums falling due.
insurers
towards
payment of Kirkpatrick v. South Australian Insurance (1886), 11 A. C. 177
premiums.
K. & Co.,a firm of merchants, acted as agents for an insurance company.
Kirlcpatrich
V. South They had effected with the company fire insurances upon their own stock and
Australian premises. Those insurances were allowed to lapse, and the company sent
Insurance.
(<) Western Assurance v. Pro- (m) White V. Connecticut (1876),
vincial Assurance, (1880), 5 Ont. A. R. 120 Mass. 330; Potter v. Phoenix
190. (1894), 63 Fed. 382.
WHAT CONSTITUTES PAYMENT OF PREMIUM 243
several letters and telegrams urging renewal. K. & Co. finally sent a telegram,
" The whole of the premiums will be wired to you on Monday first." That was
not done, but some time afterwards K. & Co. telegraphed, " One hundred
pounds your credit of Bank of South Africa for premiums." The company
received the money from the bank and signed a receipt for a hundred pounds
" on account of premiums." At that time K. & Co. owed the company in re-
spect of other poUcies, partly agency and partly their own, £41 lis. dd. The
premiums on the policies in question were £28 2s. 6d. These figures were
known to the company. It was held that although there was no specific
appropriation either by K. & Co. or the company of the £100 or any part of
it, the remittance and acceptance must be taken on reference to the previous
correspondence to have been partly in respect of these policies and to have

effected their renewal.
There is a considerable difference of opinion in America as to Appropriation

^
whether insurance companies are bound to appropriate dividends to^yards™
due to the assured towards payment of premiums so as to save payment of
the pohoy from forfeiture. On the one hand, it has been held
that a dividend in the hands of the company is not payment
of premium unless so stipulated, or subsequently allocated
as such (ic). On the other hand, it has been held that the
company ought to apply dividends in hand towards payment of
premium or premium notes becoming due, and especially if the
assured has been in the habit of applying his dividends in this
way {a). If the course of dealing has been such as would lead the
assured to expect the company to apply the dividends to premiums
without special instructions, the company would probably be
bound to do so {h). Profits earned but not declared cannot be
treated as funds in the hands of the company applicable to pay-
ment of premium (c) . Thus, where the directors declared a dividend
as at a prior date out of profits earned up to that date it was held
that such dividend could not be set off as payment of a premium
which fell due after the date specified, but before the declaration
of dividend (d).
If the assured has a good claim against the insurers he can, Appropriation
while it is still unliquidated, set it off against premiums due under towarcS^
the same or other policies (e). Thus, where the assured had a payment of
premiums.
claim against a mutual company and tendered the balance of
(a;) Wheeler v. Connecticut Mutual (c) Mutual v. Girard Life (1882),

(1880), 82 N. Y. 543, 553 ; Mutual 100 Pa. 172.
Mre v. MiUer (1882), 58 Md. 463. (d) Mutual v. Oirard Life (1882),
(a) Girard Life v. Mutual (1881), 100 Pa. 172.
97 Pa. 15. (e) Roberts v. Security, [1897] 1
(6) Matlack v. Mutual (1897), 180 Q. B. HI, 117.

Pa. 360.
;
calls setting off the amount of his claim, it was held that there was
a sufficient tender in respect of the calls if the claim was well
founded (/). The insurers are not bound to appropriate moneys

due for claims towards payment of premiums unless directed to
do so{g), although in an American case where a member of a mutual
society was in receipt of sick benefits it was held that they could
not cancel the policy for non-payment of dues when they could
have deducted the amount of dues from the weekly allowances Qi).
Section IV. — The Renewal Premium

Uight of A policy may be issued to cover a certain risk for a definite
period at a definite premium without any provision for renewal
but more usually the policy is expressed to cover first a definite
period, say a year, for which the premium is acknowledged to have
been received, and second, an indefinite period thereafter, so long
as an annual or other periodical payment shall be paid in accordance
with the conditions on the policy. In the case of risks other than
life the assured is not given an absolute right of renewal, the con-
tinuance of the policy being conditional not only upon the payment
of the premium by the assured, but also upon the acceptance of it
by the insurers. The insurers may therefore terminate the risk

at each renewal period. by refusing to accept the premium ten-
dered, and sometimes the further right is expressly reserved of
terminating the risk at any time upon giving notice, and returning
the unearned premium {%).
Sun Fire Office v. Hart (1889), 14 A. C. 98
Sun Fire The conditions in a fire policy provided that if there was any alteration
Oê V. increasing the risk the policy should cease to attach in respect of the property
affected thereby, and then provided that, "if by reason of such change or
from any other cause whatever the society or its agents should desire to termi-
nate the insurance," they might cancel the policy on repayment of a rateable
proportion of the premium. During the currency of the policy the assured
received an anonjonous letter containing threats of incendiarism. This
letter was shown to the society's agent, who immediately gave notice to termi-
nate the poKcy and tendered repajrment of the rateable proportion of the
premium for the unexpired period of the term. Subsequently a loss occurred.
The assured contended that the insurers could only terminate the policy
(/) Williams v. British Mutual (h) Conley v. Washington Casualty

Marine (1886), 57 L. T. 27. (1900), 93 Me. 461.
(i) Sun
Fire Office v. Hart (1889),
(g) Simpson v. Accidental Death 14 A. C. 98 ; International Life v.
(18.57), 2 C. B. (N. S.) 257. Franklin Fire (1876), 66 N. Y. 119.
THE RENEWAL PKEMIUM 245
on the ground of increased risk or something ejusdem, generis. The Judicial

Committee of the Privy Council held that the ordinary course of construction
which requires that general words at the end of the specific enumeration should
be limited to matters ejusdem generis did not apply, since there was in this case
no specific enumeration but rather the enumeration of a genus, and they held
that the clause gave the insurers complete discretion to terminate the risk
without any further reason for doing so than their own desire, however capricious
that might be.
Notice to determine the risk must be given to the assured, or Notice to
to some agent whose duty it is to receive and communicate the risk,
information to the assured. Notice therefore given to the assured's

agent who procured the pohcy would not necessarily be sufficient,
as his duty as agent might have terminated when he delivered
the policy to his principal (/c). Under a condition similar to that
in Sun Fire Office v. Hart the insurers must, in addition to giving
notice, have tendered a return of the unearned premium before
the policy can be deemed to be cancelled (l).
The contract of Ufe insurance is essentially different from other I^,^ lif°
pohcy an
classes of insurance. The assured must in life insurance have annual risk?
the absolute right of renewal subject to reasonable conditions.

There has, however, been considerable difference of judicial
opinion as to whether the contract of life insurance made in
consideration of an annual premium is an insurance for a year
with an irrevocable offer to renew upon payment of the renewal
premium, or whether it is an insurance for the entire life subject
to defeasance or forfeiture upon non-payment of the renewal
premium at the times stated. In Pritchard v. The Merchants'

Life, Willes, J. (m), takes the view that the contract is an annual
contract with the privilege of renewal, and in Stuart v. Freeman (n),
Collins, M.R., judgment of

cites the Willes, J., in the former case
with apparent approval, and refers to a life policy as being " a
contract for a year with a provision for renewal which would

entitle the insured to insure in a future year at the same premium,
and not at a higher one, provided he approaches the insurers
within a certain time." The other judges in Stuart v. Freeman
appear to doubt the dictum of Willes, J., and in America, where
the subject has been more carefully considered, it has been held
(k) Hodge v. Security (1884), 33 and see Lord Chelmsford in Phcenix

Hun. 583. Life v. Sheridan (1860), 8 H. L. C.
il) White V. Connecticut (1876), 120 745, 750.
Mass. 330. (n) [1903] 1 K. B. 47.
(to) (1858), 3 C. B. (N. S.) 622, 643,
246 DURATION OF THE EISK
that a life policy is not an insurance for a single year with a privilege
of renewal from year to year by paying the annual premium, but
is an entire contract of insurance for life, subject to discontinuance
or forfeiture for non-payment of any of the stipulated pre-
miums Bradley, J., in the Supreme Court of the United

(o).
States said, " Such is the form of the contract, and such its cha-
racter. It has been contended that the payment of each premium
is the consideration for insurance during the next following year
as in fire policies. But the position is untenable. . . . The value
of insurance for one year of a man's life when he is young, strong,
and healthy, is manifestly not the same as when he is old and
decrepit. There is no proper relation between the annual pre-
mium and the risk of insurance for the year in which it is made " (p).
In a Canadian case (g) the four judges of the Court of Appeal in
Ontario were equally divided upon the question whether a life
policywas an insurance continuing for life until forfeiture or an

annual insurance from year to year. The distinction is one of
considerable importance, particularly with relation to the legal
effect of the days of grace, and the insurer's liability for losses
occurring during the days of grace, but before payment of the

renewal premium (r).
Punctual In all classes of insurance the punctual payment of the renewal

payment of
renewal premium according to the terms of the policy is a condition pre-
premium is of cedent to the continuance of the risk (s).
the essence of
the contract.
Frank v. Sun Life (1893), 20 Ont. A. R. 564
Frank v. A premium on a life policy was payable by quarterly instalments on specified
Sun Life.
days. was held that default in the payment of any one quarterly instal-
It
ment even for a day would release the company from further liability, notwith-
standing the absence of any express forfeiture clause. Burton, J., said (t) :
" Promptness in payment is of the very essence of the business of life insurance,
and it, therefore, any one of the quarterly instalments remains unpaid the
forfeiture is absolute, unless there is something in the contract itself to dis-
pense with it. When no such stipulation exists it is the well-established
understanding that time is material, or, as it is sometimes expressed, is of the
essence of the contract."
Premiums A premium expressed to be an annual premium is sometimes,

payable by
instalments.
for the convenience of the assured, made payable in quarterly or
(o) New York v. Statham (1876), {r) See infra, p. 246.
93 U. S. 24. is) Frank
v. Sun Life (1893), 20
(p) 93 U. S. 24, 30. Ont. A. R. 564 ; Nederland Life v.
(q) Manufacturers' Life v. Oordon Meinert (1905), 199 U. S. 171.
(1893), 20 Ont. A. R. 309. {t) At p. 567.
THE RENEWAL PREMIUM 247
other periodical instalments ; but in order that the insurers may

not lose thereby it is provided that if the assured die in any one
year before the whole instalments for that year have been paid,
the balance may be deducted from the sum insured. Such a
proviso does not render the punctual payment of the instalments
any less a condition precedent to the continuance of the risk (u).
Phoenix v. Sheridan (1860), 8 H. L. C. 745

A life August 2, 1856, was headed, " Sum assured, £1000 Phmnix v.
policy dated ;
annual premium, £33, whole term ; payable quarterly instalments £8 5«. each." Sheridan.
The insurers acknowledged receipt of £8 5s. premium to November 2, 1856,
and undertook to pay the sum assured " if B shall die before the termination
of twelve calendar months from the date hereof, or shall live beyond such period,
and the assured shall on or before that period or on or before the expiration of
every succeeding twelve calendar months, provided B be still living, pay the
annual amount of premium," and then it was provided " that if B shall happen
to die before the whole of the said quarterly pajmients shall have become
payable under these presents for the year in which he shall so die it shall be
lawful for the directors to deduct and detain from the said sum of £1000 so
much as will be sufficient to pay and satisfy the whole of the said premiums
of that year, reckoning the said year to commence from the 2nd day of August."
The life dropped within twelve months from the date of the policy and the
third quarterly instalment was overdue. It was held that the assured could
not recover as the insurance was conditional on the punctual payment of each
quarterly instalment so long as the life was in being, and Lord Chelmsford
said {x) " I do not agree with those who think that it is a policy from quarter
:
to quarter {y). I think it is an annual policy, of which the premium is payable

by quarterly instalments. Then the nature of the contract, as I gather from
the operative words of the policy, is that, if B shall die before the termination
'
of twelve calendar months and if he shall on or before that period pay or

' '
cause to be paid the annual amount of premium,' then the policy shall be paid.
Now, what is the meaning of these words the annual amount of premium ?
' '
Why, the annual amount of premium according to the stipulations of the policy,
'
that is, '

the annual amount of premium '
payable by quarterly instalments.
Therefore as the quarterly instalments become due he must pay the quarterly
instalment which is due."
Where the insurers wrongfully refuse to accept a renewal Remedy for
premium on a life policy the assured may treat the refusal as refusal to
(u) Phoenix v. Sheridan (1860), 8 ments is earned whenever the year

H. L. C. 745 ; McConnell v. Provi- begins to run. In the ease of a true
dent Savings Life {1899), Q2'E'ed.'Rep. quarterly premium each quarterly
769. Note that these are not cases premium is earned whenever the
where the premium was a true quarter in respect of which it is pay-
quarterly premium as to which there able begin to run.
could have been no question as to the (x) At p. 750.
efieet of unpunctuality in payment. So held by the Queen's Bench
{y)
In the case of an annual premium per Lord Campbell, El. B. & E. 156,
payable by quarterly instalments the 159.
whole premium, that is all four instal-
248 DURATION OF THE BISK
receive a a final breach of the contract and sue for the value of the
renewal
premium. pohcy at that time ; or tender the exact amount of each pre-
mium in cash until the policy money becomes payable [z). The
assured is not entitled, on account of the insurer's refusal to re-
ceive the premium, to a declaration of the Court that his policy
is valid {zz). If the insurers repudiate the contract and declare it
void, the assured need tender no further premiums (a), but if he

takes that course he treats the repudiation as a final breach,
and would therefore be bound to commence proceedings within
the period allowed by the Statutes of Limitations, that is, twenty
years if the policy is under seal, and otherwise six years from
the date when the insurers declared the policy void.
Section V. — Tlie Days of Grace
Object and If the continuance of the risk under a policy were conditional
meaning of
the days of on thepayment of a premium on a certain specified date in each year
grace.
or quarter, and no provisions were made for the payment of over-
due premiums, the policy would immediately lapse if a premium
was even one day in arrear, and in consequence the assured
would be placed in the position of having to apply for a new
contract of insurance which, in the case of life insurance, he could
not obtain on the same terms, and the insurers, if they accepted
the application, would have to prepare a new duly stamped policy
in order to avoid the penalties of the Stamp Act (h). To obviate
this expense and inconvenience to the insurers and hardship to
the assured, the practice has long been resorted to in all classes
of insurance of making the future risk conditional on the payment

of the renewal premium on a certain day, or within so many days
thereafter, or else of declaring that the policy should not be con-
sidered void if the renewal premium was paid within so many
days after it fell due. These days are called the days of grace,
and the position of the assured during the days of grace, but before
the renewal premium has been paid, depends upon the nature of
the insurance, and the particular conditions as to renewal which
are inserted in the policy.
(z) Day V. Connecticut Qen. lAfe 181 Pa. 443 ; Byram v.

(1878), 45 Conn. 480. Oomp. (1899), 108 Iowa, 430.
(zz) Honour v. Equitable Life, (6) Doe V. Shewin (1811), 3 Camp.
U.S.A., [1900] 1 Ch. 852. 134.
(a) Mutual v. Home Benefit (1897),
THE DAYS OP GRACE 249
In fire, burglary, and other risks where the insurers reserve Loss happen-
the right to refuse renewal the days of grace do not primarily dOTôfgrace^
afford protection while the renewal premium is unpaid, that is,
before it is tendered and accepted (c). If the insurers expressly
covenant that the assured shall be protected during the days of
grace, notwithstanding the non-payment of the premium, then
the assured is covered during these days for so long as the question
of renewal is in abeyance (d) ; but if the insurers decline to renew
before the days of grace have begun to run, or perhaps even at an,y
time before a loss has occurred they thereby relieve themselves
from liabihty during the days of grace (e), and it seems to follow
that if in like manner the assured has either by word or act
declared his intention of not renewing the policy, he cannot after-
wards claim indemnity for a loss occurring during the days of
grace. In life insurance the insurers cannot decline to renew
the policy ; but is the assured protected without renewal
during the days of grace, or if not, can the policy still be
renewed after the life has dropped ? This appears to depend
upon the fundamental nature of the provisions for renewal.
If the risk expires on the day when the premium is due and the
days of grace are given merely as an opportunity for renewal,

then death before payment of premium is not covered, because
there is an implied condition that the subject matter of the in-
surance is still in existence when renewal is claimed (J). On the

other hand, if there is a continuing risk carrying the insurance
beyond the day on which the premium is payable, and subject only
to defeasance upon non-payment of the premium upon that day or
within the days of grace, then death before payment of premium
is covered, because until the days of grace have expired there can be
no forfeiture (g). Whether the insurance is of the one nature or
the other is a matter of construction, although the better opinion

probably is that primarily at least a life policy creates a continuing
risk subject to defeasance, and not merely an annual risk with
a right of renewal (h). Where the insurance is upon the life of
Tarleton v. Staniforth (1794), 5

(c) Merchants' Life (1858), 3 C. B. (N. S.)
T. R. 695 ; Simpson v. Accidental 622, 643 ; Collins, M.E.., in Stuart v.
Death (1857), 2 C. B. (N. S.) 257. Freeman, [1903] 1 K. B. 47.
(d) Salvin^/. James [1805), &V,a.st, (g) Freeman, [1903] 1
Stuart v.
571 ; M'Donnell v. Garr (1833), K. B. 47 ; New
York v. Statham
Hayes & J. 256. (1876), 93 U. S. 24; Manufacturers'
(e) Salvin v. James (1805), 6 East, Life v. Gordon (1893), 20 Ont. A. R.
571. 309.
(/) Willes, J., in Pritchard v. The [h] Supra, p. 245.
the assured, and is expressed to be conditional upon the payment

of the premiums by him, the inference may be that payment by
his executors after his death does not satisfy the condition (i).
This, however, would not appear to affect the case if the risk be
construed as a continuing risk subject to forfeiture, because the
insurers are liable until forfeiture, and no subsequent tender or
payment premium is necessary, as it would be if it was a question
of
of renewal. The rights of the parties become fixed at death,
and the insurers are liable for the insurance moneys less the premium
which has become due (k). If a life policy provides expressly
that the insurers will be liable in the event of death during the
days of grace, but before payment of the premium, the matter is
placed beyond doubt (kk). The insurers have no right as in other

risks to refuse to continue the insurance, and so escape liability
during the days of grace. But if the assured intimates that he
does not intend to pay the premium on a life policy, this would
probably relieve the insurers if the insurance was construed as
an annual insurance with an option to renew, but it would not
do so if it were construed as a continuing insurance subject to
forfeiture, as the assured might have changed his mind before
forfeiture was actually incurred (l).
Tarleton v. Staniforth (1794), 5 T. E. 695

Tarleton v. A
policy insured against loss or damage by fire " so long as the assured
Stamfortn. should duly pay the premium " on certain fixed days " and the company
should accept the same " and the conditions on the proposal provided that
" policy holders shall as long as the company agree to accept the same make
pa3?nient of the premium within days " of the specified days, or forfeit
fifteen
the policy. A loss occurred during the days of grace, but before tender of the
renewal premium. The Court held that each premium only covered the period
up to the day when the next premium was due, and that the risk for the next
period did not attach unless (1) the renewal premium was tendered within
fifteen days,and (2) the company accepted it. Only the first of these con-
ditions had been fulfilled, and the company were quite entitled to decline to
accept the premium, even although a loss had occurred.
Salvin v. James (1805), 6 East, 571

Salvin v. After the decision in Tarleton v. Staniforth the Sun Fire Office, while con-
JamRS. tinuing to issue policies in the same form and subject to the same conditions as
(i) Want V. Blunt (1810), 12 East, (kh) This form of policy is now
183 ; Simpson v. Accidental Death very common.
(1857), 2 C. B. (N. S.) 257. (I) Master v. New York (1898), 90
{k) Provident Savings Life v. Taylor Fed. Rep. 40 ; Provident Savings Life
(1906), 142 Fed. Rep. 709. V. Taylor (1906), 142 Fed. Bep. 709.
THE DAYS OF GRACR 251
before, advertised that all policy holders in their office " were and always have
been considered as insured for fifteen days beyond the time of the expiration
of their policies." Before the expiration of the original term on one of such
policies the company intimated to the assured that they would require an
increased premium as a condition of renewal. The assured expressly declined
to pay any increase of premium. During the days of grace and before any
premium had been paid or tendered a loss occurred and the assured then
tendered the full amount of the increased premium demanded. The Court
held that there was no liability on the company. Reading the policy and
advertisement together, they held that the effect of the contract was that after
the days of grace had begun to run and a loss had occurred the company could
not refuse to accept a renewal premium. They could, however, terminate the
policy at the expiration of the original term by electing to do so before that
date, and in effect that was done in this case, because the company declined to
continue the existing insurance and offered instead an insurance at a higher
rate.
Want V. Blunt (1810), 12 East, 183

The policy of a mutual benefit society promised to pay an annuity to the Want V.
widow of a member if he should pay the quarterly premiums on the quarter Blunt.
days during his life or within such time after those days respectively " as is or
shall be allowed for that purpose by the rules of the said society." The rules
of the society provided that if any member neglected to pay the quarterly
premiums days after they were due the policy should be void unless
for fifteen
the member (continuing in as good health as when the policy expired) paid up
arrears within six months and 5s. per month extra. A quarterly payment due
on December 20 was not paid on December 25, when the assured died. The
premium was tendered by the executors on December 27, but refused. The
Court held that there was only an insurance up to the end of the quarter, and
that the condition of renewal was payment by the assured within fifteen days
and payment by the executors was not equivalent, and Lord Ellenborough
said that it was observable that throughout the policy the words " executors
and administrators " were only used once, namely, in the covenant of the
defendants, where they covenanted with the said Want, his executors and
administrators, to pay the annuity to his widow after his death. In every
other act to be done it was expressed as being to be done by Want without any
other words indicating an intention that it should be any other than the
personal act or neglect of the assured.
M'Donnell v. Carr (1833), Hayes & J. 256

A policy of fire insurance, after reciting a proposal to effect a policy for a M'Donnell v.
period commencing March 25, 1830, and ending March 25, 1831, and renewable Can.
from time to time if the committee should think proper to renew the same,
provided that if during the continuance of the policy the property should be
burnt the company would indemnify the assured subject to the conditions
of the policy. One condition provided that " no policy will be considered
valid for more than fifteen days after the expiration of the period limited
premium and duty for the renewal of such policy shall have
therein, unless the
been paid within that time and the printed office receipt given. On assurance
for a less period than a year the premium will be as moderate as possible, and
only a proportionable part of the duty charged, but in those cases the insurances
will terminate at six o'clock in the evening of the day specified in the policy
without the allowance of fifteen days."A fire occurred on March 31, 1831, and
the renewal premium was unpaid. The Court of Exchequer in Ireland held
that the assured was entitled to recover, and in giving judgment they said ;
" The agreement is that if during the continuance of the policy the loss
'
'
occurred the insurers would pay. The question, then, is when did the policy
expire ? There is nothing whicli could originally have limited the insurers to
one year, and they have not limited themselves by the contract. We think
that, looking at the policy and indorsement, the insurance has been actually
effected for one year and fifteen days.The words in this policy are materially
different from those in Tarleton v. Staniforth."
Simpson v. Accidental Death (1857), 2 C. B. N. S. 257

Simpson V. An accident policy after acknowledging receipt premium
for one year
of the
Accidental " It is hereby witnessed and declared
ending January 22, 1852, proceeded :
that if the said assured shall receive or suffer bodily injury from any accident
or violence on or before January 22, 1852,
and subsequently thereto during the
continuance of the said policy, provided he, the said assured, on or before or
within twenty-one days after the 22nd day of January, which would be in the
year 1862, and on or before or within twenty-one days after the 22nd day of
January in every succeeding year, so long as the acting directors for the time
company should accept the same, pay or cause to be paid to
being of the said
the company the annual premium of £12, then " the company shall pay an
indemnity " subject to the several regulations and conditions printed on the
back hereof." The following conditions were printed on the back " (1) The :
premium on this policy is to be paid within twenty-one days from the day on
which the same shall first accrue or become due and provided the same be
;
from time to time paid within such space of twenty-one days tliis policy shall
not be void, notwithstanding the happening before the expiration of such space
of twenty-one days of the event or events upon the happening whereof the
amount secured by this policy shall according to the terms thereof be payable."
(2)
" If the premium on this policy be unpaid for the space of twenty-one days
next after it shall first accrue or become due, then this policy shall become and
be absolutely void, and the person or persons entitled to the benefit of such
policy shall forfeit all his, her, or their claim on the company under the same.
(3)In every case where a new premium shall become payable the directors
shallbe at liberty to terminate the risk by refusing to accept such premium.''
The assured met with a fatal accident on January 27, 1856, and death followed
on February 1, the renewal premium being then unpaid. On February 4
noticewas given to the company by the persons named as the assured's execu-
tors. On February 5 the secretary acknowledged the notice, and sent down
the company's surgeon with a blank certificate. On February 8 the secretary
heard for the first time that the agent had not received the renewal premium
due on January 22. He did not immediately disclose this to the claimants,
but waited until February 13, when he wrote intimating that the company
were not liable, but assigning no reason. It was argued for the claimants (1)
there was an express contract for one year and fifteen days, whether or
not the renewal premium was paid (2) if not, payment within fifteen days
;
THE DAYS OF GRACE 253
would renew (3) the company must exercise their option to refuse renewal
;
before the end of the year (4) the company were estopped by their conduct
;
and silence from denying that there was payment within fifteen days (5) the ;
premium should be taken as paid since it was merely a matter of adjustment

and setting off against the claim (6) as the death of the assured and the non-
;
appointment of executors within fifteen days made it impossible to pay the

premium within that time relief should be granted. The Court decided against
the claimants on all these points. The condition was for payment of premium
by the assured, and this would not have been satisfied by payment by his
executors, but there was in fact no payment of premium within twenty-one
days, and the conduct of the insurers in keeping silence was not a wilful mis-
leading of the claimants and raised no estoppel against the insurers, and even
if the premium had been tendered within twenty-one days by the assured the
insurers would have been entitled to refuse renewal.
Stuart V. Treeman, [1903] 1 K. B. 47

A
life policy on the hfe of the assured was dated November 18, 1899, and Stuarl v.
the premium was expressed to be as follows " If paid annually, £404 11«. Sd.
:
IFreevmn.
on every 18th day of November. ... If paid quarterly, £105 on every 18th
day of November, 18th day of February, 18th day of May, and 18th day of
August. The policy witnessed that " in consideration of the assured having
paid to the company the sum of £105 on account of the premium for one year
until November 18, 1900 . the funds of the company shall be liable
. . . . .
in case the assured shall die before or upon that day or shall survive that day
and there shall be paid to the company a like premium before, upon, or within
thirty days after the day above mentioned," and contained the following
condition " provided also that this policy shall ... be null and void and of
:
no effect if at the time of the death of the person upon whose life this policy is
granted any of the above-mentioned premiums, as well quarterly as annual,
shall be more than thirty days in arrear. The assured had assigned the pohcy
and the premium was paid by the assignee on the last day of grace, but a few
hours after the death of the assured. Both the assignee and the company were
alike ignorant of the fact that the assured was dead when the premium was
tendered and accepted. The Court held that the assignee was entitled to
recover on the poUoy. Collins, M.R., distinguished between this case and that
of non-payment of an annual premium. Here, he said, the payment of the
premium was not a question of renewal. The insurance had been effected for a
year, and was liable to forfeiture if the quarterly premium was not paid within
the days of grace, but the policy continued in full force during the days of grace,
and would cease only upon the expiration of the days of grace while the pre-
mium was still unpaid. Romer, L. J., pointed out that this case was distinguish-
able from those where the policy depended on payment " by the assured " or
" by the assujed during his lifetime,'' and Mathew, L.J., was of opinion that
the correct view as to the days of grace stipulated for in this policy was that if
payment was made within the time mentioned it was to be deemed to have
been made on the day appointed for payment, and it was to have the same effect
as if made on that day. Both Romer and Mathew, L.JJ., appear to have
thought that if this had been an annual renewal premium their decision would
have been the same and that there was no necessary implication that the policy
should be renewed during the life of the assured. All the judges distinguished
the case from that of Pritchard v. The Merchants' Life (m), where the premium
was accepted after the expiration of the days of grace in ignorance of the fact
that the life had already dropped.
Provisions for In fire, burglary, and other similar policies there is usually no
renewal of
life policies provision for revival of the policy after it has lapsed by non-pay-
after the
ment of the premiums, and expiration of the days of grace, but
expiration of
the days of in life policies where forfeiture is a much more serious thing,
grace.
provision is usually made for revival of the policy within a specified
time, and upon the fulfilment of certain conditions such as pay-
ment of a " fine " and satisfactory proof that the Hfe is in good
health {mm). There can be no doubt that during the period
allowed for revival the policy is entirely ineffective, and no claim
can be made for a death happening before the necessary conditions
for revival have been fulfilled.
Pritcliard v. The Merchants' Life (1858), 3 C. B. N. S. 622
Pritchard v. A policy upon the life of a third person contained a provision for revival
The Mer- within three months after the expiration of the days of grace if the assured
chants' Life.
life was in good health and paid an extra
furnished satisfactory proof that the
premium. While the renewal premium was unpaid the life dropped upon the
last of the days of grace. Two days afterwards the assured, in ignorance of the
death, sent the renewal premium to the office, and it was accepted in like
ignorance. In an action upon the policy the assured contended that the policy
had been revived by payment and acceptance of the premium within three
months, and that the insurers had waived proof of health and payment of an
extra premium. The Court, however, held that the operation of the clause
was subject to the implied condition that the life had not already dropped
and that, although the insurers waived any inquiry as to health, the premium
was paid and accepted in the common belief that the person whose life was
insured was still alive, and that the intention was to revive the policy for the
protection of the assured in the future and without reference to the past.
The whole transaction, they said, was founded on a mistake, and was therefore
ineffectual to bind the parties.
Waiver of Where the policy contains the condition that it may be re-
condition that
in^good
life is i
'^^'^^d within a certain time on proof of good health, it is a question
health. of fact, whether acceptance of the overdue premium within that
time constitutes a waiver of the condition or whether it is
(ot) (1858), 3 C. B. N. S. 622. depending on the surrender value of

(mm) Some ofiSces insert an even the policy at the time of lapsing.
more liberal condition providing for Provision is often made for the
revival of a lapsed policy without automatic nonforfeiture of the policy
evidence of the health or the existence by the application of the surrender
of the Jife or lives assured on payment value towards payment of premium
of all arrears and a "fine" within a until the surrender value is exhausted.
period either absolutely fixed or
WAIVER OP CONDITIONS EELATING TO PREMIUM 255
accepted provisionally and subject to the condition that the

assured shall prove to be in good health (n).
Even after the expiration of the period allowed by the policy Renewal of
for renewal, the insurers may ex gratia renew the policy. On after lapse,
doing so they may either insist on examination of the life, or renew

subject to the express condition that the life is in good health. If
-a lapsed policy is renewed without any express condition that the

life is still in good health there is an implied condition that the
life has not dropped (o), but none as to good health (p). The
burden of showing that there was an unconditional renewal rests
upon the assured. If the receipt given to him for payment of
premium after lapse contains a condition as to good health it is
not open to the assured or his representatives to say that he did

not read the condition (g).
Where the assured had under the condition in the policy a
right to be reinstated on proof of good health, and applied for
such reinstatement, but the medical examiner refused to pass
him unless he signed a new application which stated that there
should be no contract until a policy was issued, and he signed
such application and was examined and passed, but died before
a new policy was issued, it was held that notwithstanding the
new application the first policy was revived and the company
was liable (s).
Section VI. —Waiver oj Conditions Relating to Premium
Notwithstanding the provisions in the policy the insurers may Extension of

°^ '^^^'
extend the time for payment of the premium or waive any of the ^^^^
conditions precedent to the continuance of the risk, and even after
the policy has lapsed the insurers may be held to have revived
the insurance upon the same terms by any word or act which
leads the assured to believe that the insurers have reassumed
the risk (m).
(w) Barker v. North British Insur- v. Insurance Co. (1881), 105 U. S.

ance (1831), 9 S. 869 ; Horton v. Pro- 355.
vincial (1888), 16 Ont. R. 382 Wells ; (p) Insurance Co. v. Wolff (1877),
V. Supreme Court (1889), 17 Ont. R. 95 U. S. 326.
317 ; Aetna Insurance V. /Smith (1898), (q) Handler v. Mutual Reserve
88 Fed. Rep. 440 ; Bonald v. Mutual Fund Life (1904), 90 L. T. 192.
Reserve (1892), 132 N. Y. 378; Rice (s) Knight Templars v. Jacobus
V. New England (1888), 146 Mass. 248. (1897), 80 Fed. Rep. 202.
(o) Pritchardsv. The Merchants' Life (u) Kirhpatrich v. South Austra-
(1858), 3 C. B. (N. S.) 622 Benneche
; lian (1886), 11 A. C. 177.
-
Stuart V. rreeman, [1903] 1 K. B. 47
Stuart V. A life policy upon the life of the assured allowed thirty days of grace for
Freeman. payment of the premium. The assured assigned the policy, and the insurers
agreed orally with the assignee that if the original assured did not pay the
premium within the thirty days it would be sufficient if the assignee paid it
upon the following day. The Court held that as between the insurers and the
assignee the policy must be read as if there were thirty-one days of grace
instead of thirty.
A parol agreement to renew a lire policy and give credit for

the premium may be binding notwithstanding the conditions in
the policy (x), but there must be a clear waiver of the conditions
since an alleged oral agreement to renew may be merely a casual
conversation of a preliminary nature or an intimation of willingness
to renew in accordance with the conditions of the policy (y). An
issue of the renewal certificate or receipt for the premium without
obtaining payment may be construed as a waiver of the conditions,
even although it is expressly provided in the policy that the
renewal insurance shall not be binding until the actual payment
of the premium {z).
Extension of A subsequent agreement with regard to a life policy that it

time imports
waiver of
shall not be deemed void if the renewal premiums are paid within
conditions for a reasonable time is a waiver of the conditions in the pohcy, and
audforfei- death occurring before a reasonable time has elapsed will be
*"'^®'
covered although the premium is unpaid (a).
In cases of life insurance in America where there is an express or

implied extension of time for payment of the premium it has
usually been construed not merely as giving time for renewal of
the policy subject to the life being in existence at the time when
payment made, but as a definite waiver of suspension,
is or for-
feiture, if .payment is made within the time agreed (&).
Sometimes a company intimates in its prospectus that it will
grant more liberal terms for the revival of lapsed policies than it
has hitherto done and that those terms will apply to all existing ,
{x) Post V. Aetna Insurance (1864), Fidelity Casualty (1897), 77 Fed. Rep.
43 Barb. 351. 961; Tennant v. Travellers (1887),
(y) O'Beilly v. Corporation (1886), 31 Fed. Rep. 322.
101 N. Y. 575. (a) Dilleber v. Knickerbocker Life
(z) Doherty v. Millers' Insurance (1879). 76 N. Y. 567; Howell v.
(1902), 4 Ont. L. R. 303 ; 6 Ont. L. R. Knickerbocker Life (1871), 44 N. Y.
78 Sordine v. Exchange Fire (1872),
; 276 ; Battin v. North-Western Mutual
51 N.Y. 117; Boehen v. Williams (1904), 130 Fed. Rep. 874.
burgh Insurance (1866), 35 N. Y. 131 ; (6) Homer v. Oua/rdia/n Mutual
Trustees of Baptist Church v. Brooklyn (1876), 67 N. Y. 478.
" (1859), 19 N. Y. 305; ""
:
WAIVER OF CONDITIONS RELATING TO PREMIUM 257
policies as well as to new policies. Such an announcement con-

stitutes a standing offer to existing policy holders which they may
accept by continuing to pay their premiums on the faith of the
announcement or by claiming the benefit of it (bb).
In all cases where there is an extension of the time or other Oral evidence
„ i-j.-
,
1 n i -1 J. 1 1 admissible to
waiver or the conditions tor punctual payment, evidence is properly prove a
admitted to prove an agreement contrary to the terms of the subsequent
^ ° "^
agreement
policy (c) but it must be an agreement or waiver made subse-
; varying the
quent to the making of the original contract because evidence of oriSnai

^
an agreement made before or at the time when the original contract contract,
was made would not be admitted to contradict the written evidence

in the contract itself unless the contract could be rectified on the
ground of mutual mistake (d). Evidence would not be admitted
to prove a custom to give credit contrary to the express terms
of the written contract (e). If the insurers subsequently acted
in accordance with the alleged custom their conduct might
amount to a waiver, but the mere existence of the custom at the
time the contract was made could not vary the express terms
thereof.
There are numerous cases in the American Courts where it has Habitual
°
been held that the conduct of the insurers in continuing to accept oêrduT"^
without objection renewal premiums which are overdue may premiums.
amount not only to a waiver of the forfeiture on each particular
occasion, but to a general waiver for the future of the conditions
in the policy requiring payment on a particular date (e). In one
case it was said " There is no room for question about the rules
(/),
of law applicable. A course of dealing which justifies the assured

in believing that punctuality in paying premiums is not required
or will be excused will relieve him from the consequences of delay.
But it must be dealing which actually creates such belief, and
justifies a jury in finding its existence," and in a case in the
Supreme Court the following direction to the jury was approved {g)
" If the company by its conduct led the assured, as a reasonable
and prudent business man, to beheve that he could make payments
{bb) Salvinv.Jam.es (1805), 6 'East, (1901), 111 Fed. Rep. 113; Beatty
571. V. Mutual Reserve Fund Life (1896),
(c) DeFrecev. National Life (1892), 75 Fed. Rep. 65; Phcenix v. Doster
136 N. Y. 144. (1882), 106 U. S. 30.
{d) UnionMutualv.Moivry [1811), (/) Butler, J., Smith v. New Eng-
96 U. S. 544. land Mutual (1894), 63 Fed. Rep. 769,
(e) Whitehom v. Canada Cfuardian 772.
Fire (1909), 19 Ont. L. R. 535 ; (g) Hartford Life v. Unsell (1891),
Modern Woodmen of America v. Tevis 144 U. S. 439.
I.L. 17
;
a few days after the due date, sick or well, it cannot turn around
now and say, '
You did not pay at the time.' I cannot say to you
as a matter of law that one receipt after the time specified would
make a waiver or that fifty would. It is not in the numbers.
The question is for you to consider and determine from all of them,
and from the whole course of business whether, as a prudent
business man, he had a right to believe that it was immaterial
whether he paid on the day or a few days later. If the course of
conduct was such that he had a right to beheve that he could
pay only in good health then there was no waiver applicable to
the case." Habitual acceptance of overdue premiums under such
circumstances that the insurers are satisfied each time that the
insured life is in good health can hardly justify any inference of
a general waiver of the condition for punctual payment in the
future Qi) although it might be evidence of a waiver to this
;
extent that the insurers would be bound to renew without penalty

or increase of premium if the assured within a reasonable time
tendered the premium, and satisfied the insurers that the life
continued in good health (i). On the other hand, where the insurers
continue to accept overdue premiums without inquiry as to the
health of the assured an intention to waive strict punctuahty
would not be an unreasonable inference {k). Thus, where the
company had habitually received premiums on a life policy seven
to thirty days after they were due without objection or inquiry,
and the final premium was paid nine days after due, and accepted
by the company in ignorance of the fact that the life had dropped
on the previous day it was held that the company were Kable (fc).
An occasional indulgence to the assured by accepting an over-
due premium, more especially if it is accompanied by a warning of
the necessity of prompt payment and danger of delay is no evidence
of waiver of the right to exact punctual payment in the future {I).
In fire insurance and other similar risks even the habitual
receipt of overdue premiums is probably no evidence of waiver.
Where the pohcy contains the usual condition that the company
{h) Thompson v. Inaurcmce Co. (k) Spoeri v. MassactmBetts (1889),

(1881), 104 U. S. 252 ; Mutual Ufe v. 39 Fed. Rep. 752.
Oirard Life (1882), 100 Pa. 172 (I) Bedmond v. Canada Mutual
Crossman v. Massachvêtta (1887), Accident (1891), 18 Ont. A. R.
143 Mass. 435 ; French v. Hartford 335 Schmertz v. V. S. Life (1902),
(1894), 169 Mass. 510; Conway v. 118 Fed. Rep. 250; Smith v. New
Phoenix Mutual (1893), 140 N. Y. 79. England Mutual (1894), 63 Fed. Rep.
(i) Girard Life v. Mutual (1878), 769.
86 Pa. 238.
shall not be liable for any loss occurring before the premium is
paid, the acceptance of an overdue premium is clearly no waiver

of that condition, and even if there is no such condition the
acceptance of an overdue premium where no loss has occurred does
not entitle the assured to assume that it will be accepted in the
future after a loss has occurred (m).
The obligation to pay the premium according to the terms of incapacity to
the contract is prima facie absolute, and no sickness or infirmity ^^^^g^"

will be accepted as an excuse for non-payment so as to avoid a
forfeiture (n). Even where the assured becomes insane, and is
incapable of attending to any business, the incapacity is no
excuse (o). The conditions of the poUcy, however, may be such
as to prevent the insurers insisting on a forfeiture, where non-
payment was due to ill-health. Thus, where the condition in
the pohcy of a mutual benefit society was that " the policy shall
lapse on failure to pay assessments, but for valid reasons given to
ofiicers of the association (such as failure to receive notice of as-
sessment) he may be reinstated by paying assessment arrearages,"
and the assured had, before the assessment was due or notified,
become unconscious, and the assessment was not paid, it was
held that the society were bound to reinstate after death (p).
Equity will not grant any relief against forfeiture of a policy No equitable
for non-payment of the premium within the time limited. EeUef forfeitm'e'for
against a penalty or forfeiture will only be granted when the non-payment.
Court can do it with proper regard for the interests of the

other party. If the Court cannot put him in as good condition
as if the agreement had been performed it will not grant relief {q).
Applying this rule to contracts of life insurance. Woods, J.,
in theSupreme Court of the United States, said (r), " If the

payment of the premiums and their payment on the day they
fall due is of the essence of the contract, so is the stipulation for
the release of the company from liability in default of punctual
payment. No compensation can be made a life insurance company
for the general want of punctuality on the part of its patrons."
(m) Washington Mutual Fire v. pendent Order (1909), 19 Ont. L. R.

Rosenberger (1877), 84 Pa. 373. 613.
(n) Thompson v. Insurance Co. (p) Dennis v. Massachusetts
(1881), 104 U. S. 252. Benefit (1890), 120 N. Y. 496.
(o) Klein v. Insurance (1881), 104 (3) Rose v. Rose (1756), Amb. 331,
U. S. 88 ; Wheeler v. Connecticut 332.
Mutual Life (1880), 82 N. Y. 543 ; (r) Klein v. Insurance Co. (1881),
Hawkshaw v. Supreme Lodge (1886), 104 U. S. 88.
29 Fed. Rep. 770 ; McCuaig v. Inde-
Default in The insurers cannot rely upon unpunctuality of payment

payment
induced by induced by their own conduct. The general principle is thus
the conduct
stated in an American case (s) :
" One, who by the terms of
of the in-
a contract is entitled to a forfeiture thereof to his own benefit
on the occurrence of a certain act or omission which may
be prevented by action taken in time by the other party, may
not intentionally so act as to put the other party off his guard
and induce him to refrain from preventive action. A forfeiture
so induced will not prevail if the party in technical default
with reasonable speed performs or offers to perform the omitted
act. . . . Even if there be no primary hostile purpose in the
action of one who may in a certain event become entitled
to a forfeiture or other right arising from the non-perform-
ance of a condition, if by his act he has induced another to
omit strict performance, he may not take the benefit or exact
forfeiture."
Insurers not Primarily the insurer is not bound to give notice to the
bound to give assured that the premium is due or that if unpaid a forfeiture
notice when
premium is will be incurred (<). Thus, in Simpson v. Accidental Death {u),
due,
where the assured met with a fatal accident, while the premium
was unpaid but during the days of grace, it was held that, even
if payment by the assured's executors would have revived the
policy, there was no duty upon the insurers to intimate to them
that the premium was unpaid, but that they might intentionally
keep silence until the days of grace had expired, and then claim
a forfeiture. Most insurance companies are in the habit of send-
ing a notice to each insurer before his renewal premium falls due,
but the assured is not entitled to rely upon this act of courtesy
being continued and, if for some reason or other a renewal
notice is not sent or received, the assured cannot rely upon the
omission as an excuse for unpunctuality in paying the premium {x).
unless the Where, however, the assured was entitled to dividends as a share-
amount and the practice of the company was to apply the dividend
holder,
payable ia
uncertain, for each year in part-payment of the premium and send a note
of the balance due, it was held that there was no default on the
part of the assured until the usual note of the balance had been
(s) Leslie v. Knickerbocker Life L. T. (N. S.) 108 ; Tredegm-v.Windua

fl875), 63N.Y. 27; axiA see Knight v. (1876), L. B. 19 Eq. 607.
Bowe (1826), 2 Car. & P. 246 ; West-v. (u) (1857), 2 C. B. (N. S.) 257.
Blakeway (1841), 2 Man. & G. 729, (x) Thompson v. Insurance Co.
750. (1881), 104 U. S. 252.
(0 Windus V. Tredegar (1866), 15
.
sent to him (?/). If the insurers have expressly promised to or they have
give notice when the premium is due, the assured is entitled to promSd to
rely upon their doing so {z). Thus, where an assured inquired of give notice,
an agent when the premium was due, and the agent said he would
let him know, but no notice was ever sent, it was held that the
insurers were estopped from claiming a forfeiture. There was

evidence upon which the jury might find that the agent had
authority to promise that the general custom of the company
would be kept up, and that notice would be given (a). But where
it was alleged that a promise to give notice of the due date of the
renewal premiums was made by the agent at the time when the
assured made his application, but the policy contained no such
undertaking, it was held that the alleged promise was incon-
sistent with the terms of the written contract, and that the
assured was attempting to vary that contract by parol evidence.
Evidence of the promise was therefore inadmissible, and failure
to give notice was no excuse for non-payment of the premium (b)
Where an assignee held a policy as security for a debt and the

company promised to give him notice of the default of the
assignor and an opportunity to pay the overdue premium it was
held that there could be no forfeiture, even of the assignor's
interest, until the assignee had after due notice failed to pay
within a reasonable time (c). In one case where the insurers or have other
were in the habit of giving notice and of the the assured to

collecting
premiums by personal call, but suddenly, with the deliberate rely on notice
object of obtaining a forfeiture, omitted to give notice or call, it
was held that they could not take advantage of their own
trickery (d). Where an insurance company had from time to
time given the insured notice of the place where the premiums
could be paid and the receipts obtained, but on one occasion,
having changed its agency, omitted to send the usual notice, it
was held that the company was estopped from refusing to receive
a premium tendered within a reasonable time after the due date(e).
If a company discontinues an agency where the assured has been
(y) Phoenix v. Doater (1882), 106 Cleveland Woollen Mills (1897), 82

U. S. 30. Fed. Eep. 608.
(z) Selvage v. Hancock (1882), 12 {d) Union Central v. Pottker {1S18},
Fed. Eep. 603. 33 Ohio 459.
(o) Leslie v. Knickerbocker Life (e) Insurance Co. v. Eggleston
(1875), 63 N. Y. 27. (1877), 96 U. S. 572; Seaman's v.
(6) Union Mutual V. Momy
(1811), N. W. Mutual 1880), 3 Fed. Rep.
96 U. S. 544. 325.
(c) Mutual Reserve Fund Life v.
262 DURATION OF THE KISK
in the habit of paying renewal premiums, he should, in the absence

of notice,have a reasonable time after the due date to make in-
quiries and pay the premium (jf). Where a company notified the
assured that the receipt for the annual premium was at a specified
bank, and that payment might be made there, but before the
time for payment arrived withdrew the receipt from the bank,
it was held that it was estopped from claiming forfeiture for
Notice vinder unpunctual payment of premium (g). Under the Collecting

the Collecting
Societies Act. Societies and Industrial Assurance Companies Act, 1896 [h),
section 3, a forfeiture shall not be incurred by any member or
person insured in a collecting society or industrial assurance
company by reason any default in paying any contribution
of
until after (i) amount due by him, and informing
notice stating the
him that in case of default of payment by him within a reasonable
time, not being less than fourteen days, and at a place to be
specified in the notice his interest or benefit will be forfeited, has
been served upon him by or on behalf of the society or company,
and (ii) default has been made by him in paying his contribution
in accordance with that notice.
Whether In America the question has been raised whether the insol-
insolvency of
insurers is an vency of an insurance company affords a legal excuse to the assured
excuse for for non-payment of a premium which has fallen due, and it has
non-payment
ofpremium. been held that it is not so unless the company has actually sus-
pended business, or proceedings have been instituted against it

for a winding-up order (i).
Waiver of Forfeiture of a policy on the ground of non-payment of premium
forfeiture by
acceptance of
may be waived by subsequent demand for or acceptance of the
overdue premium under such circumstances as would naturally lead the

premium.
assured to beHeve that the company intended to treat the policy
as subsisting (/c). Where a demand for premium is made, the
assured will have a reasonable time to comply with it, but if he
refuses to comply, or after a reasonable time fails to comply, the

policy will again lapse (I). If a premium has been earned, in that
the insurers have been actually on the risk during the whole or
part of the period in respect of which it is payable, the acceptance
of such premium does not necessarily waive a forfeiture incurred
Briggs v. National Life (1882), (i) People v. Olobe Mutual (1884),

(/ )
11 Fed. Rep. 458. 32 Hun. 147.
[g)
.,„._.,_Duncan
Provident SamngLifev.
(k) Kirkpatrick v. South Australian
Qggg) u a. C. 177 ; Supple v. Cam
( 1902), 115 Fed. Rep. 277. JigSS), 9 Ir. C. L. B. 1.
{h) 59 & 60 Vict. 0. 26. (Z)^ds'ev.i3Mê(1849),18L.J.Ch.l83.
WAIVEE OF CONDITIONS RELATING TO PREMIUM 263
by reason of non-payment (m). And on this principle where a

premium note is taken for the whole or part of a premium on
condition that if the note is not paid at maturity the policy
shall be null and void, a demand for payment of an overdue note
does not necessarily revive the policy {n), but it may be made
in such a way, or in such circumstances, as to induce the assured
to believe that the policy would be valid if he complied with the
request, and if so, the insurers will be estopped from relying on
non-payment as a forfeiture (o). Similarly an extension of the time
for payment of an overdue note may be (p), but is not necessarily,
a waiver of the forfeiture (q). In the case of mutual societies
where the policy of the member is conditional on the punctual
payment of assessments or death dues a forfeiture for non-payment
is not 'primd facie waived by demand for assessments which have
fallen due before the forfeiture was incurred (r), but a demand
for assessments which have fallen due subsequently is primd facie
a waiver of the forfeiture (s).
As a general rule a forfeiture for non-payment of premium No waiver

cannot be waived by any word or deed on the part of the insurers ""gêrs have
unless they knew, or ought to have known, that a forfeiture had knowledge of
in fact been incurred (i). Thus, in Busteed v. West of England (u)
where the insurance company's agent had, without either actual
or apparent authority, given the assured credit for premiums,
but included them in his own monthly account with the com-
pany, it was held that the acceptance of the premiums by the
company could not be construed as a waiver of an irregularity
of which they had no notice. But where the insurers are put
upon inquiry by the fact that the agent has not forwarded the
premiums to them in due course they cannot plead entire
ignorance of the irregularity (x). And if the company, having
(ot) McQeachie v. North American v. Cochran (1878), 88 Pa. 230 Rice;
Ufe (1894), 23 Can. S. C. 148. v. Grand Lodge

(1894), 92 Iowa, 417 ;
(n) McQeachie v. North American Oarhutt v. Citizens^ Life (1892), 84
i>i/e(1894), 23Can. S. C. 148 ; MowM- Iowa, 293; Lycoming County v.
faeturers' Life v. Gordon (1893), 20 SchoUenberger (1863), 44 Pa. 259.
Ont. A. R. 309 ; Duncan v. Missouri (s) Knights of Pythias v. Kalinshi
Sôie ii/e (1908), 160 Fed. Bep. 646. (1895), 163 U. S. 289; Beatty v.
(o) Hodsdon v. Guardian Life Mutual Reserve (1896), 75 Ped. Rep.
(1867), 97 Mass. 144; Palmer v. 65.
Phoenix (1881), 84 N. Y. 63. («) Bennecke v. Insurance Co. (1881),
(p) Insurance Co. v. Norton (1877), 105 U. S. 355 ; McGonnell v. Provi-

96 U. S. 234. dent Savings Life (1899), 92 Fed. Rep.
(g) Wall -v. Home Insurance (1867), 769.
36 N. Y. 157. (u) (1857), 5 Ir. Ch. R. 553.
(r) Mandego v. Centennial Mutual (x) Hodsdon v. Guardian Life
(1884), 64Iowa, 134; Crawford County (1867), 97 Mass. 144.
received a premium in ignorance of a forfeiture, does not, on

becoming aware of the forfeiture, immediately return the premium,
it may be bound [y).
If the company has knowledge of the forfeiture, but accepts a
premium through inadvertence it may probably return it and

insist on the forfeiture if it does so promptly and before the
assured has, by reliance on the company's act, changed his
position for the worse. Thus, in Kelly v. Solari (z), an insurance

company paid a loss in forgetfulness of the fact that the policy
'
had lapsed for non-payment of premium, and it was held that
they could recover the money so paid by mistake but in Canada ;
where a mutual company having cancelled a fire policy in their

books for non-payment of assessments subsequently in forget-
fulness called for and received an assessment from the assured
it was held that there was a waiver of the forfeiture (a). In
an American case a life policy was issued to a man in favour of
his wife. After the premium was in arrear the wife called at
the company's office and stated that she had come to attend to the
premium. The secretary looked in his books and said the premium
had been paid. Subsequently the wife discovered that the premium
had not been paid, and tendered it, but it was refused. It was
held that the statement of the agent created no waiver or estoppel.
There could be no waiver where there was no knowledge of the
fact that the premium had not been paid, and, as the policy was
already forfeited at the time, the assured was in no way prejudiced
by the delay so as to create an estoppel against the company (b).
Section VII. —Authority of Agents to Waive Conditions Belating

to Premium
Authority to Agents of an insurance company, not being general agents
mkTms other.
"^^^^ fuU Contractual powers, have primd facie no authority to
wise than in gjve credit for premiums (c), or accept bills or notes (d), or other
CaSll*
{y) Busteed v. West of England (1880), 5 Ont. A. R. 190 ; MiUer v. Life

(1857), 5 Ir. Ch. R. 553, 570. Insurance Co. (1870), 12 Wall. 285;
(2) (1841), 11 L. J. Ex. 10. Supreme Court v. Taylor (1903), 121
(o) Smith V. Mutual Insurance Fed. Rep. 66 ; Union Central lAfe v.
(1877), 27 U. C. C. P. 441 ; Lyon v. Berlin (1898), 90 Fed. Rep. 779;
Globe (1877), 27 U. C. C. P. 567. MerseroM v. Phoenix (1876), 66 N. Y.
(6) Robertson v. Metropolitan (1882), 274 ; and see contra, Baker v. Com-
88 N. Y. 541. mercial Union (1894), 162 Mass. 358 ;
(c) Acey v. Fernie (1840), 7 Farnum v. Phoenix (1890), 83 Cal.
M. & W. 151 ; Busteed v. West of 246 Insurance Co. v. Colt (1874), 20
;
England (1857), 5 Ir. Ch. R. 553; Wall. 560.

Western Assurance v. Provincial (d) Conway v. Phoenix (1893), 140
AUTHORITY OF AGENTS 265
consideration (e) in lieu of cash payment.

Where an agent was
commission sixty-five per cent, of the first
entitled to retain as his
premium on a life policy, and gave the assured credit as to that
part only it was held that he had no authority to do so, and the
policy was void for non-payment of the premium (/). Where the
agent has actually funds of the assured in his hands an agreement
by the agent to apply such funds or part of them towards payment
of premium is a sufficient payment {g).
An agent would probably be presumed to have authority to Authority to

^'^® credit,
receive a cheque as conditional but not as absolute payment
of the premium (fe). Authority to give credit or accept bills for
premium may be inferred from a previous course of dealing on
the part of the agent known to and recognised by the company {%)
or from a local custom generally recognised by those carrying on
the business of insurance in the particular county or district in
question (fc). Authority to give credit for premiums may also
be inferred from the terms of the instructions given to the agent
by the company. In Acey v. Fernie (l) the instructions were that
if the premiums on a life policy were not paid within fifteen days
the agent was " to give immediate notice to the office of such fact,
and in the event of your omitting to do so your account will be
debited for the amount after the fifteen days are expired, and
you will be held responsible to the directors for the same." It was
held that this gave no authority to the agent to give credit to the
assured, it merely prescribed the penalty if he exceeded his
authority ; but in an American case (m) where the instructions
were as follows, " Agents crediting premiums not actually received
N. Y. 79 ; Canadian Fire -v. Robinson v. Union (1884), 22 Fed. Rep. 586;

(1901), 31 Can. S. C. 488; Union Mutiial Life v. Logan {189S), STFed.
Central Life v. BoUnson (1906), 148 Rep. 637 ; Dean v. Aetna Life (1875),
Fed. Rep. 358 ; Smith v. New Eng- 62 N. Y. 642 Marcus v. St. Louis
;
ZojidiVfM«MoZ(1894), 63Fed. Rep. 769. (1876), 68 N. Y. 625; Tennant v.

(e) Tiernan v. People's Life (1896), Travellers (1887), 31 Fed. Rep. 322 ;
23 Ont. A. R. 342 ; Hoffman v. Han- Church v. La Payette (1876), 66 N. Y.
cocfcJlfM«iiaZ(1875), 92U. S. 161. 222; Payne v. Mutual Ufe (1905),
(/) Mutual Reserve Fund v. Sim- 141 Fed. Rep. 339.
mmis (1901), 107 Fed. Rep. 418 ; (h) Manufacturers' Association v.
Union Central Life V.Robinson (1906), Pudsey (1897), 27 Can. S. C. 374;
148 Fed. Rep. 358. Moffat v. Reliance (1881), 45 U. C.
(g) Chickering v. Olobe Mutual Q. B. 561 ; Conway v. Phoenix {I89d),
(1874), 116 Mass. 321. 140 N. Y. 79.
{h) Aetna Ufe v. Green (1876), 38 (I) (1840), 7 M. & W. 151.
U. C. Q. B. 459 ; Taylor v. Merchants' (m) Smith Provident Savings
v.
Fire (1850), 9 How. 390. Life (1895), 65 Fed. Rep. 766 see ;
(i) Miller v. lAfe Insurance Co. Paine v. Pacific Mutual Life (1892),
(1870), 12 Wall. 285 ; White v. Con/nec- 51 Fed. Rep. 689.
ticut (1876), 120 Mass. 330 ; O'Brien
266 DURATION OP THE EISK
do SO at their own risk, and must look to the policy holder for re-
imbursement. The society does not ask or desire you to take
this risk," itwas held that there was an implied authority to give
credit and waive the condition requiring prepayment of the pre-
mium. Where the usual course of business was to transmit the
renewal receipt to the agent and charge him with the premium,
it was held that, if the agent delivered the receipt to the assured
without receiving payment of the premium, the punctual payment

of the premium was waived (n).
Authority to Similarly an agent has not, prima facie, authority to waive
revive lapsed
policies.
forfeitures and revive lapsed policies unless he be a general agent
with authority to contract on behalf of the company (o) but ;
authority to waive forfeitures may be implied from a course of

previous dealing recognised by the company (p).
Condition In order to protect themselves from liability arising out of
that agents
are not
the unauthorised acts of their agents a condition is frequently
authorised to inserted in the policy to the effect that agents are " not authorised
waive for-
feiture to make, alter, or discharge contracts or waive forfeitures," or
that " nothing less than a distinct agreement indorsed on the
policy shall be construed as a waiver." Such conditions are
valuable in that they give notice to the assured of a definite re-
on the agent's authority, and may prevent the company

striction
being bound by acts which would otherwise be within the agent's
may be apparent authority (g), but, like all other conditions in thepoHcy,
waived by
subsequent they may be waived by the subsequent conduct of the company or
conduct of of the company's agent recognised and permitted by the company.
In the Supreme Court of the United States, Bradley, J. (r), said,
with reference to such a condition, " The policy contained an

express declaration that the agents of the company were not
authorised to make, alter, or abrogate contracts or waive for-
feitures. And these terms, had the company so chosen, it could

have insisted on. But a party always has the option to waive a
condition or stipulation made in his own favour. The company
was not bound to insist upon a forfeiture though incurred, but
(to) Fidelity cmd Casualty v. Willey Cleveland (1897), 82 Fed. Bep. 508;
(1897), 80 Fed. Bep. 497. Wyman v. Phoenix (1890), 119 N. Y.
(o) Post V. Aetna Insurance (1864), 274; Insurance Co. V. Norton {1877),
43 Barb. 351. 96 U. S. 234.
( p)
Campbell v. National Life {q) Marvin-v. VniversallAJe{1881),
(1874), 24 V. C. C. P. 133;' Aetna 85 N. Y. 278.
Insurance v. Smith (1898), 88 Fed. (r) Insurance Co. v. Norton (1877),
Rep. 440 ; /TOSwmnce V. Wolff (1877), 96 U. S. 234, 240.
95 U. S. 326; Mutual Reserve v.
;
AUTHOKITY OP AGENTS 267
might waive it. It was not bound to act upon the declaration
that its agents had no power to make agreements or waive for-
feitures but might at any time at its option give them such
;
power. The declaration was only tantamount to notice to the

assured which the company could waive and disregard at pleasure."
Conditions, therefore, may be waived by an agent, notwith-
standing the provisions of the policy if subsequent to the granting
of the policy, the words or conduct of the agent known to and
acquiesced in by the company have been such as to induce the
assured to believe that a forfeiture will not be insisted in or that
other conditions in the policy will be waived (s).
(s) Miller v. lAfe Insurance Co. St. Louis (1876), 68 N. Y. 625 ;
(1870), 12 WaU. 285 ; White v. Con- Campbell v. National Life (1874),

necticut (1876), 120 Mass. 330 24 U. C. C. P. 133 ; Mutual Reserve
O'Brien v. Union (1884), 22 Fed. v. Cleveland (1897), 82 Fed. Rep.
Rep. 586 ; Dean v. Aetna Life (1875), 508 ; Wyman v. Phainix (1890), 119
62 N. Y. 642 ; Tennant v. Travellers N. Y. 274.
( 1887), 31 Fed. Rep. 322 ; Marcus v.
; —
CHAPTER V
Voidable Policies
Section I. —Generally
Grounds for A CONTRACT of insuranoe may be void or voidable on one of
avoiding the
contract.
these four grounds (aa) :
—
breach of warranty ;
misrepresentation
non-disclosure ;
mistake.
Breach of A warranty is what in other contracts is known as a condition
warranty.
of the contract. The liability of the insurer depends upon the
existence of the fact or thing warranted (a). If in a fire risk
there is a warranty that the premises are slate roofed, the insurer
would be absolutely discharged if they were not so in fact, or if
there is a warranty that a night watchman shall be kept on the
assured's premises, the insurer would be discharged if the assured

ceased to employ a night watchman. The essential characteristics
of a warranty are briefly these :
It must be part of the written contract.

The matter warranted need not be material to the risk.
It must be Uterally fulfilled.

A breach discharges the insurer notwithstanding
that the loss has no connexion with the breach,
that the breach has been subsequently remedied.
False repre- A warranty must firstly be distinguished from a. representation.
sentation.
A representation is not part of the contract, but is something
stated by the one party as an inducement to the other party to
make the contract. It may be made before or at the time the
(aa) The avoiding of the policy on (a) Hambrough v. The Mutual

the ground of want of insurable (1895), 72 L. T. 140 ; Barnard v.
interest or illegality of object is dealt Faber, [1893] I Q. B. 340.
with in Chapter II., supra, p. 103.
,
GENERALLY 269
contract is concluded, and may be oral or in writing, and if the

latter may be separate from or written upon the same paper
as the contract itself.The essential characteristics of a representa-
tion are that it makes the contract voidable if it is
substantially false,
material to the risk, and
an operative inducement to the contract.
The case commonly cited on the elementary distinction between
a warranty and a representation is that of Pawson v. Watson (b)
before Lord Mansfield. On a marine policy the insured vessel

was warranted to carry twelve carriage guns and twenty men, and
it was held that the warranty must be literally fulfilled, and that
it would not do to carry ten carriage guns and nine swivel guns
and sixteen men and eleven boys, even although the latter might
be the stronger force. " If
there is a warranty," said Lord
Mansfield, " nothing tantamount will do or answer the purpose ;
it must be strictly performed as being part of the agreement."

And in another case (c) the same judge said, " There is a material
distinction between a warranty and a representation. A repre-
sentation may be equitably and substantially answered, but a
warranty must be strictly complied with. ... A warranty in a
contract of insurance is a condition or contingency, and unless
that be performed there no contract. It isis perfectly immaterial
for what purpose a warranty is introduced, but, being inserted,
the contract does not exist unless it be literally complied with."
Whereas all contracts are voidable on the ground of false Non-
disclosure
representation of material facts, it is only certain classes of con-
tracts which are voidable on the ground of non-disclosure of
material facts. The general rule is that each party to a contract
is entitled to make the best bargain he can, and although he must
not make any false statement, he is, on the other hand, not bound
to draw the attention of the other party to everything that might
influence his judgment. But in certain classes of contracts the
knowledge is almost exclusively on one side, and with regard to
them the rule has been established that in order to make fair
dealing possible, the party in possession of all the information

must make a full disclosure, so that the other may be in a position
to make some reasonable estimate of what he is undertaking.
(6) (1778), Cowp. 785.

(c) De Hahn v. Hartley (1786), 1 T. R. 343, 345.
270 VOIDABLE POLICIES
Contracts of insurance have always been considered as contracts

of this nature, and the rule has been laid down over and over
again in the most emphatic manner, that no policy of insurance
can stand where the assured has not made a complete disclosure
of everything which was material for the insurer to know in order
to judge (1) whether he should accept the risk ; (2) what premium
he should charge (d).
Mistake or Contracts of insurance are void when there is a mistake as to
êssentMibm. some matter which must be tacitly understood to be the basis of
the whole contract. When the mistake is as to a fact upon

which the whole contract necessarily depends, the aggrieved
party need not show that his mistake was induced by the mis-
representation or non- disclosure of the other party, nor need he
show that there was an express warranty relating thereto. The
contract cannot stand if the facts upon the supposed existence
of which it was based are found to be non-existent.

In Pritchard v. Merchants' Life an insurance company(e)
obtained a policy by way of reinsurance upon a Hfe which they

had insured. They allowed the premium to remain unpaid for more
than thirty days, and under the conditions of the pohcy were only
entitled to reinstatement on payment of a fine and satisfactory proof
of health. The reinsurers subsequently accepted the overdue
premium unconditionally, but unknown to either party the life had
dropped two days.before the overdue premium was paid. It was
held that the transaction for renewal was void, since the whole
transaction was founded on the mutual assumption that the life
was still in being.

In Strickland v. Turner (/) it was held that a contract for the
purchase of an annuity was void if at the time the contract was
made the annuitant had died. The basis of the contract was
the continued existence of the annuity.
In Attorney-General v. Bay (g) a grant of an annuity made by
the Commissioners for the Eeduction of the National Debt under
10 Geo. 4, c. 24, to a life insurance company, was held to be void
on the ground that the age of the annuitant had been erroneously
certified by the company. The mistake, which was entirely innocent
on the part of the directors, was only discovered after the death of
(d) Lynch v. Hamilton (1810), 3 (/) (1852), 7 Exch. 208.

Taunt 37. (?) (1874), L. B. 9 Ch. 397.
(e) (1858) 3 C. B. (N. S.) 622.
GENERALLY 271
the annuitant. The contract was declared void on the ground that
the age of the annuitant was necessarily the basis of a contract to
pay an annuity. In this case there was a misrepresentation by the
grantee, but it is conceived that the innocent misrepresentation
would not have been sufficient to avoid the contract when the
parties could not be restored in integrum, unless the matter mis-
represented had been matter going to the root of the contract,
and that the true ground of the decision was mistake or error in
essentialibus.
In Hemming v. Sceptre Life (h), Kekewich, J., held that a life
policy issued upon the basis of the assured being 41 years old, could
be repudiated by the insurance company upon discovering that
the assured was in fact 44 years old.
The consequence of mistake as to essential facts is to render the Effect of
contract void, and not merely voidable. The contract without its
essential subtratum can have no existence, and the Court will not
make a new contract for the parties (i). The premium or other
consideration for the contract is returnable as money paid upon a
mistake of fact (i).
The consequence of false representation, or non-disclosure, is Effect of
to make The party aggrieved, usually

the contract voidable. sentation
the insurer, has the right, when the matter comes

to his know-
îggj°°„j,e
ledge, to elect whether or not he shall continue bound by the
contract (fe) but unless and until he makes his election and by
;
word or act repudiates the contract, it remains as valid and

binding as if it had not been tainted at all (Z).
If the insurer has done nothing to affirm the contract as a defence
after he became aware of the true facts, he may plead either

false representation, or non-disclosure, as a defence to an action
upon the policy (m). On the other hand, if after full know-
ledge of the facts, the insurer by his acts treats the contract as a
subsisting contract, he cannot afterwards repudiate it in conse-
quence of facts which were then known to him (n) : as, for instance,
where the insurers, after knowledge of a misrepresentation
(h) [1905] 1 Ch. 365. [1909] A. C. 330, 339, and cases there
Bay "ited.
(i) Attorney-General v. (1874), ,^ , n,
T -6
L. K. 9a nv, QQ7
Oh. d97. (»») Adreveno v. Mutual Reserve
^j^^ ^jggg^^ gg p^^ j^^p g^jg
(k) Morrison v. Umversal Manne (^) Holdsworth v. Lancashire and
(1872), L. R. 8 Ex. 40, 197. Yorkshire Insurance (1907), 23 T. L.R.
(l) United Shoe Co. v. Brunet, 521.
as to age in a proposal for a life policy, subsequently accepted

two premiums (o).
Misrepresen- In the case of false representation and non-disclosure, the con-

tation and
non-dis- tract may be set aside in Mo, and therefore the insurer may call upon
closure the Court to exercise its equitable jurisdiction and, even before any
as ground for
cancellation. claim has arisen upon the poHcy (p), to make an order for its cancel-
lation and delivery up (q). After a claim has arisen the company
has still the same right to cancellation and deUvery up of the
policy, but the propercourse for the company is not to take proceed-
ings for cancellation, but to repudiate the contract at the first
opportunity and wait for an action to be brought on the policy,

and plead the misrepresentation or non- disclosure as a defence
and counterclaim for cancellation (r). The company could not, by
bringing an action in the Chancery Division for cancellation,
deprive the assured of the right to bring an action in the King's
Bench Division and have the issue of misrepresentation or con-
cealment tried by jury (s).
Effect of The consequence of breach of warranty is to discharge the

breach of
insurers from liability as from the date of the breach but without
warranty.
prejudice to any liability incurred by them before that date.
Breach of warranty does not entitle the insurer to have the policy
cancelled and delivered up (t). The contract still subsists although
the insurers are discharged from habihty. If a long time may
elapse before a claim can be made on the policy, as in the case of a
life policy which is forfeited early in life by some breach of war-
ranty, and there is danger of evidence being lost, the only imme-
diate remedy available to the insurers is an action to perpetuate
testimony (u). The Court will not make a declaration that the
pohcy has been forfeited (u). When, however, the statements
made by the assured before the contract is made are warranted,
the poHcy may be cancelled on the ground of misrepresentation
(o) Hermningsv. Sceptre Life Ass., (r) Griesa v. Mutual Life (1909),
Ltd., [1905] Ch. 365.
1 169 Fed. Rep. 509.
( p)
Fennv. Craig (1838), 3 Y. & C. (s) Hoare v. Brenwidge (1872),
Ex. 216 Traill v. Baring (1864), 4
; L. R. 8 Ch. 22 ; Life Ass. of Scotland
De G. J. & S. 318 Brooking v.
; V. McBlain (1875), Ir. R. 9 Eq. 176.
Mandslay (1888), 38 Ch. D. 636; («) Thornton v. Knight (1849), 16
London Assurance v. Mansel (1879), Sim. 609 ; Brooking v. Mandslay
11 Ch. D. 363 British Equitable v.
; (1888), 38 Ch. D. 636. See India and
Musgrave (1887), 3 T. L. R. 630. London Life v. Dalby (1851), 15 Jur.
(q) Barker v. Walters (1844), 8 982..
Beav. 96 ; Prince of Wales v. Palmer («) Brooking v. Mandslay (1888),
(1858), 25 Beav. 605 ; French v. 38 Ch. D. 636.
Connelly (1794), 2 Anstr. 454.
GENERALLY 273
notwithstanding that the misrepresentation also amounts to a

breach of warranty («).
Where the insurers during the currency of a policy repudiate Repudiation

it on the ground of want of insurable interest, breach of warranty, ^y insurers,
misrepresentation or mistake, the assured is not entitled to come

immediately to the Court for a declaration that the policy is a
valid and subsisting insurance. The assured has the option of
treating the company's repudiation as a linal breach, and bringing
an action for damages upon which he could recover the then
surrender value of the policy, if any, or of treating the contract
as still subsisting, and continuing to tender the premiums until
the time of payment arrives {w).
Honour v. Equitable Life U.S.A., [1900] 1 Ch. 852
Upon tender of the third semi-annual premium on a life policy the company Honour v.
repudiated the policy on the ground of want of insurable interest and fraudulent Equitable
misrepresentations. The assured brought an action for a declaration that •'
the policy was vaUd and subsisting. The Court was prepared to dismiss the
action upon the com^pany undertaking that they would not subsequently rely
upon non-payment of the premiums upon the due dates as a defence to the
claim. The Company, however, intimated that they were prepared to waive
their objection to the form of the action if the plaintiff's counsel would put his
client in the witness-box. This was done, and upon cross-examination of the
plaintiff and evidence of witnesses for the defendants the court declared the
policy void, and gave judgment for the defendants on the claim and upon
the counterclaim for delivery up and cancellation.
Warranties are distinguished from representations in that the Warranties

latter are not part of the contract, but warranties must also be
from°other
distinguished from certain other terms which are part of the terms of
contract, but the breach of which does not entirely vitiate the
whole insurance.
A term in the policy may be merely a collateral promise Collateral
P"^"™'^®-
to do some act without making the assured's right to recover
dependent upon promise (x). Here the remedy
his fulfilment of the
of the insurers is by way of counterclaim for damages, and although

the Court will not readily infer that the intention of the insurers
was to Hmit the effect of a proviso so as to make it practically
futile, yet the careless wording of a condition may have this result.
(«) Smith V. Grand Orange Lodge {x) Loridon Guarantee v. Fearnley

(1903), 6 Ont. L. R. 588. (1880), 5A. C. 911, 916 ; Cowellv. York-
(w) See Supreme Council v. shire Provident (1901), 17 T. L. R. 452.
Lippincote (1904), 134 Fed. Rep. 824.
X.L. 18
Thus in Bradley v. Essex and Suffolk Accident (y) a condition in

an employer's liability policy that the assured should keep a
proper wages book was held not to be a condition precedent to
hability but merely a collateral condition relating to the adjust-
ment of premium, and in Stoneham v. Ocean Railway (yy) where the
condition " in case of fatal accident notice must be given to the
company within seven days " was held not to be a condition
precedent to recovery, but merely 'a term imposing an obligation
upon the assured's representatives to reimburse the company for
any extra expense which they might incur from having to
investigate the circumstances of an accident at a long interval

after its occurrence.
Suspensive A warranty must also be distinguished from a merely suspensive
conditions.
condition. An absolute warranty must be completely satisfied,
and if there is a breach for however short a period, the insurer

is discharged, and remains so even after the breach has been
remedied (z). For instance, if a fire policy warrants that no
naphtha or kerosene shall be kept on the premises, the keeping of
either of those articles involves a forfeiture, even although it has
been removed before the fire, whereas if the pohcy had provided
that the insurer should not be responsible in case of fire while
any naphtha or kerosene was kept on the premises, the operation
of the policy would be merely suspended to take effect again when
the prohibited article was removed (a).
Exceptions. Other conditions take the form of exceptions from the general
risk described in the policy, as, for instance, " not to cover loss
arising from explosion of gunpowder." Here the contract is
neither avoided nor suspended, but the general risk described in

the policy is limited by certain classes of loss being excluded.
Conditions Lastly, there are conditions which neither avoid the policy
precedent to
nor limit the but impose certain obligations to be performed
risk,
recovery.
by the assured after loss and before recovery can be had. These
are conditions precedent to recovery, such as giving notice of
loss, proof of loss, reference to arbitration, and the like.
Whetiier When a policy is void or voidable or the insurers are dis-

policy void- charged from liabiUty as against the original assured an assignee
able against
assignee. takes no better title unless the company has entered into an
(y) (1911), 27 T. L. R. 455. (1815), 3 Dow. 255 ; Kyte v. Com-

mercial (1889), 149 Mass. 116.
(yy) (1887), 19 Q. B. D. 237.
(a) Putnam v. Gom/monwealth In-
(z) Newcastle Fire v. Macmorran surance (1880), 18 Blatchf. 368.
FRAUD AND MISREPRESENTATION 275
independent contract with him or there is a condition in the poUcy

saving the rights of assignees (aa).
Section II. —Fraud and Misrepresentation
Fraud is proved when it is shown that a false representation Fraud,

has been made (6)
(1) Knowingly, or
(2) Without behef in its truth, or
(3) Eecklessly without care whether it be true or false.
It is fraud if a man upon himself to make

takes it a state-
ment of fact as to the accuracy of which he knows that he is entirely
ignorant (c). There is no fraud if a false statement is made

merely through want of care in investigating or stating the facts.
It may be that such a statement affords good ground for avoiding
the contract, but amount to fraud, at any rate accord-

it does not
ing.to the common law view
of what fraud is. The Court of
Chancery undoubtedly took a wider view of fraud, and it will be
considered below how far the equitable rule went beyond the
rule of the common law but " fraud " must now be always
;
interpreted according to the strict limitations laid down in Derry

V. Peek, and if there is a condition that the policy cannot be
disputed except on the ground of fraud, it will probably have to

be shown that there is fraud in that sense, and not merely that
carelessness in making statements which the Court of Chancery
considered sufficient ground for rescission, and sometimes called
" legal fraud."
It has been said that a contract voidable for fraud cannot be As ground for
^^°^^^^°^-
avoided when the other party cannot be restored to his status
quo (d) ; but this does not mean that he must be placed in as good
a position as he was in at the time the contract was made, and it
is probably sufficient if the aggrieved party can return the actual

consideration which he has received. Thus a merchant who has
been induced by fraud to purchase goods may rescind the contract
{aa) North British and Mercantile V. (c) Breev. HoZ6ec/i. (1781), 2 Dougl.
Tourville (1895), 25 Can. S. C. 177. 654; Pawaon v. VFateore (1778), Cowp.
Oral statements made by the assured 785 ; Evans v. Edmonds (1853), 13
to third persons as to his health and C. B. 777. And see cases cited in Lord
habits were held admissible against Herschell's judgment in Derry v.
an assignee of the policy to prove the Peeh (1889), 14 A. C. at p. 359.
inaccuracy of statements in the (d) Sheffield Nickel Co. v. Unwin
proposal. Hews v. Equitable Lije (I8n),2 Q. B. D. 214, 223 ; Clarke v.
(1906), 143 Fed. Rep. 850. Dickson (1858), E. B. & E. 148,
(6) Derry v. Peek (1889), 14 A.C.337.
if he can restore the goods, but the fact that the market value
has fallen does not entitle the vendor to resist the claim for rescission
on the ground that he cannot be restored to his status quo. In
Kettlewell v. Befuge (e) the assured on a weekly policy was induced
to continue the payment of premiums by the fraudulent statement
of the company's agent, to the effect that if she continued to pay
the premiums for five years, she would get a free policy. On
ascertaining that the company would not grant a free policy, the
assured claimed rescission of her policy and return of the premiums

paid. The Court of Appeal were unanimous in the opinion that
she was entitled to a return of the premiums, but Buckley, L. J., so
held on the ground that a principal could not retain profits made
through the fraud of his agent and he thought that the contract
could not be rescinded, because the assured had had the benefit
of the company being on the risk, and that benefit could not be
restored. Alverstone, L.C.J., and Sir Gorell Barnes, P., thought

that the contract could be rescinded, and that there was
no such performance of the contract by the company as
would prevent rescission. It is submitted that this latter
opinion is right. The assured had never had any actual benefit
from the contract, and the chance of benefit, which she had from
the company being on the risk, is very similar to the chance which
a purchaser of goods or shares would have of the contract turning
out for his benefit if the market rose. Where there is fraud, the
party defrauded may elect to affirm the contract if it has proved
beneficial to his interest, but this chance of benefit does not
deprive him of the right to rescind if the contract has not proved
beneficial (ee). Where the insurer seeks to rescind the policy, on the
ground of fraud, it would seem that, contrary to the rule applicable
to other contracts, he is not even bound to restore the considera-
tion which he has received, and that he may elect to cancel the
policy without offering to return the premiums (/ ), and certainly
he is entitled to resist any claim upon a policy which has been
obtained by fraud, and is not bound to return the premiums (g).
(e) [1908] 1 K. B. 545. Affirmed of the company's misrepresentation,

in the House of Lords without and this after the policy had been
opinion, [1909] A. C. 243. six years in force.
(ee) In the case of Mutual Reserve (/ ) British Equitable v. Muagrave
Life V. Foster (1904), 20 T. L. in K (1887), 3 T. L. R. 630.
the House of Lords the assured ob- (g) Hambrough v. Mutual Life
tained a decree for rescission and (1895), 72 L. T. 140.
return of premiums on the ground
When misrepresentation falls short of fraud, it may either be Misrepresen-

tation not
(1) carelessly made by some mistake or forgetfulness ; (2) made amounting
without any reasonable grounds for beheving it to be true ; or to Fraud.
(3) made under a misapprehension, but without carelessness and
with good grounds for believing in the truth of the statement made.
In each of these cases there is an honest behef in the truth of the
representation, and therefore no fraud ; but in (1) and (2) the
party who makes the statement is not altogether free from blame,
whereas in (3) he is absolutely innocent. Now there is no doubt Practice of
the Chancery
that before the Judicature Act, the Court of Chancery would have Courts.
set aside a contract in cases where, although there was no fraud,
yet there was fault Qi), and, therefore, such ground ought still
to be sufficient for rescission, just as much as where there is fraud

in the strict legal sense. Whether or not the Court of Chancery
ever granted rescission of a contract on the ground of absolutely
innocent and blameless misrepresentation, is The
very doubtful (i).
Court would not decree specific performance where there was

any material misrepresentation (k) but the reported cases where
;
rescission was granted may be summed up under four heads,
(1) cases where there was no honest belief in the statement made ;
(2) cases where there was some carelessness or forgetfulness in

ascertaining or stating the facts (Z) (3) cases where the represen-
;
tation had been made a term in the contract and (4) cases where ;
the representation was of some fact which was essentially the basis
(h) Pulsford V. Richards (1853), 17 Campbell (1880), 5 A. C. 935 ; Smith

Beav. 96 see Romilly, M.R., at
; V. Kay H. L.
C. 750, 775.
(1859), 7
p. 94 ;Burrowes v. Locke (1805), 10 (I) Burrowes v. Locke (1805), 10
Ves. 470 Slim v. Croucher (1860),
; Ves. 470 ; Legge v. Croher (1811), 1
1 De G. J. & F. 518 Beese River v.
; Ball & Beaty, 506 ; Edwards v.
/Smi«;i ( 1 869), L.R. 4 H. L.64; Rawlins McLeay (1818), 2 Swanst. 287;
V. Wickham (l?.5%), 3 De G. & J. 304. Price V. Macaulay (1852), 2 De G.
The judgment of Romilly, M.R.,
(i) M. & G. 345 ; Pulsford v. Richards
in Pulsford v. Richards shows clearly (1853), 17 Beav. 96; see Romilly,
that the Court of Chancery would M.R., at p. 94; Rawlins v. Wickham
grant relief where no action for deceit (1858), 3 De G. & J. 304; Slim v.
would have lain at common law, and, Croucher (1860), 1 De G. J. & F. 518 ;
on the other hand, that case and many Higgins v. Samels (1862), 2 J. & H.
others such as Rawlins v. Wickham 460 ; Charlesworth v. Jennings (1864),
show that equity judges about the 34 Beav. 96 ; Ship's Case (1865), 2
middle of last century, including De G. J. & S. 544 Smith's Case (1867)
;
Romilly, M.R., Knight Bruce, and L. R. 2 Ch. 604 ; Re^se River v. Smith
Turner, L.J J., thought that they (1869), L. R. 4 H. L. 64; Central
must find something in the nature Railway of Venezuelan. Kisch (1867),
of fault or neglect before they could L. R. 2H. L. 99, 118 ; Hart v. Swaine
order rescission. (1877), 7 Ch. D. 42 ; Brett v. Clowser
Wilde V. Gibson (1848), 1
(k) (1880), 5 C. P. D. 376 Joliffe v. ;
H. L. C. 605, 633 ; Mortlock v. Buller Baker (1883), 11 Q. B. D. 255 Jen- ;
(1804), 10 Ves. 307 Attwood v. Small

;
nings V. Broughton (1853), 17 Beav.
(1838), 6 CI. & F. 232; Brownlie v. 234.
of the contract (m). Now the first of these cases is fraud in the
strict legal sense ; the second is the class of case where the Courts
of equity granted rescission on the ground that there was fault
if not fraud ; the third is where the representation, by being made
a term in the contract, has been given the force of a condition
precedent or warranty ; and the fourth is the class of case where
the contract is void on the ground of mistake or error in essen-
Modern tialibus. But although there may be no definite authority in
doctrine as
to innocent the old Chancery reports, it appears to be now settled by modern
misrepre-
decisions {n) that absolutely innocent misrepresentation is suifi-
sentation.
cient ground for rescinding a contract provided, (1) that the contract
has not been completely executed (o) ; (2) that the party who
made the misrepresentation can be restored substantially to the
same position as if made (p). The
the contract had never been
aggrieved party have the contract set aside, and to
is entitled to
an indemnity against such obligations as he may have incurred
under the contract {q) but not to recover damages so as to be
;
put in precisely the same position as if the contract had never

been made (r). Applying the principle of these decisions to the
contract of insurance, an insurer would not be entitled after a

loss had occurred to rescind the policy on the ground of the
assured's innocent misrepresentation, but before loss he would

probably be entitled to rescind if the assured was still in a position
to effect iasurance elsewhere on terms as favourable as he could
have obtained at the time the insurance was effected. In the
case of innocent misrepresentation by the insurer the assured
would, at any time, be entitled to rescind and claim return of
premiums (s). In all applications for rescission on the ground of

misrepresentation the application must be made without undue
delay after the misrepresentation complained of has been dis-
covered {ss).
(m) Stewart v. Alliston (1815), 1 (r) Whittmgton v. Seale - Hayne

Mer. 26; Madeley v. Booth (18i8), 2 (1900), 82 L. T. 49.
De G. & Sm. 718; Durham v. Legard (») Kettlewell v. Refuge, [1908] 1
(1865), 34 Beav. 612 Aberaman Iron
; K. B. 545 ; Foster v. Mutual Reserve
Works V. Wickens (1868), 4 Ch. 101. Life (1904), 20 T. L. R. 715 ; Cross v.
(n) Redgrave v. Hurd (1881), 20 Mutual Reserve Life (1905),21 T. L. R.
Ch. D. 1, 12 ; Derry v. Peek (1889), 15 ; Merino v. Mutual Reserve Life
14 A. C. 337, 347, 359 ; Wauton v. (1905), 21 T. L. R. 167 ; Molloy v.
Coppard, [1899] 1 Ch. 92. Mutual Reserve Life (1905), 22 T. L. R.
(o) Seddon v. North Eastern, [1905] 59 ; Duffell v. Wilson (1808), 1 Camp.
1 Ch. 335. 401 ; Garter v. Boehm (1766), 3 Burr.
(p) Hindle v. Brovm (1907), 98 1905, 1909 ; contra. Angers v. MuMal
L. T. 44. Reserve Life (1904), 35 Can. S. C. 330.
{q) Newbigging v. Adam (1886), (ss) Foster v. Mutual Reserve Life
34 Ch. D. 582. (1904), 20 T. L. R. 715.
The contract of marine insurance was always treated as an Innocent mis-
exception from the common law rule that innocent misrepre- tSnând^'
sentation did not affect the validity of a contract. It was recog- policies of
marine
nised at an early date that misrepresentation, short of fraud, was insurance,
a good defence to an action on the policy (<), and although the
decisions were originally based on various unsatisfactory reasons,

such as " legal fraud,"
it was ultimately recognised that the proper
ratio decidendiwas that there is in every marine policy an implied

condition or warranty that no material misrepresentation has been
made in or about the procuring of the policy (u). In the absence
of any definite authority, it is doubtful whether this principle
would be extended to insurance contracts other than on marine
risks (aj). In Wheelton v. Hardisty [y) the Exchequer Chamber
declined to extend it to life insurance, and held that an innocent
misrepresentation was not sufficient to vitiate a life policy. In
Anderson v. Fitzgerald (z), too, Lord Oranworth said, with reference
to life insurance, " a misrepresentation, even if material, but
there is no fraud in it, and it forms no part of the contract, cannot
vitiate the right of the party to recover." On the other hand, in
the same case, Lord St. Leonards seems to have thought an
innocent misstatement was sufficient to vitiate the policy, although
not disentitling the assured to recover back his premiums. The
bulk of authority, however, is to the effect that this rule is peculiar
to the contract of marine insurance (a). In Canada and America
misrepresentation, although entirely innocent, has been held to
afford a good defence to an action on a life policy (h).
Eecent decisions appear to ignore the distinction between ubemmnfides

fraud as interpreted by the common law courts, and fraud as ^ggu'ient
interpreted by the Court of Chancery, and in the case of most misrepre-
contracts representations which are not fraudulent, in the strict
(t) Fitzherbert v. Mather (1785), 1 (a) Hambrough v. Mutual (1895),

T. R. 12 Macdowallv. Fraser {1119),
; 72 L. T. 140, 141 ; Fowkes v. Man-
1 Dougl. 260 ; Comfoot v. Fowke Chester (1863), 3 B. & S. 917, 929 ;
(1840), 6 M. & W.
358, 379 ; Dennis- Behn v. Burness (1863), 3 B. & S. 751,
toun V. Ullie (1821), 3 Bligh. 202; 753; Ducket v. Williams (1834), 2
Anderson v. Thornton (1853), 8 Ex. Crom. & M. M8, 351; Byrne v. Muzio
425; Anderson v. Pacific (1872), {1S81), 81,. H. Ir. S96; North British
L. R. 7 C. P. 65, 68; lonides v. /wswrance v. i%(^ (1854), 10 Ex. 523;
Pacific (1871), L. R. 6 Q. B. 674, 683. Fisher v, Crescent Insurance (1887),
(u) Blackburn v. Vigors (1886), 17 33 Fed. Rep. 544.
Q. B. D. 553, 578, 683. (6) Jordan v. Provincial Provident
(a;) Davies v. National Fire and (1898), 28 Can. S. C. 554; Garrollton
Marine, [1891] A. C. 485. Furniture Co. v. American Indemnity
(y) (1857), 8 E. & B. 232, 235. (1902), 115 Fed. Rep. 77.
(z) (1853), 4 H. L. C. 484, 504, 508.
. —
legal sense as defined in Deny v. Peek, must be treated as entirely

innocent, and affording no ground for rescission, unless there can
be full restitution. But contracts of insurance call for uberrima
fides on the part of the assured. The contract is voidable on the
ground of non-disclosure of material on the ground facts, as well as
of misrepresentation, and innocent non-disclosure is just as fatal

as fraudulent non-disclosure. Carelessness and forgetfulness afford
no excuse. It seems to follow that a misrepresentation, due to
carelessness, although not fraudulent, would be a breach of the
uberrima fides, and ought to afford a sufficient defence to an

action upon a contract of insurance, although it might not be a
defence to an action upon other contracts (c).
Effect of The right of the insurer to avoid the risk on the ground
misrepre-
sentation of misrepresentation by the assured may, therefore, be summed
summed up.
up as follows :
1 Fraudulent, careless or negligent misrepresentation

(a) is ground for rescission at any time,
(&) affords a good defence to any claim.
2. Absolutely innocent misrepresentation
(a) is ground for rescission at any time before loss, pro-
vided the assured is not so prejudiced by lapse of time

as to be unable to insure elsewhere on the same terms
as he- could have obtained when the insurance in
question was effected,

(i) does not afford a good defence to a claim which has
arisen before the insurer exercised his right of
rescission.
The assured may, at any time, rescind the contract and claim
return of premiums on the ground of misrepresentation by the
insurer whether fraudulent, careless, or absolutely innocent.
Onus of proof. If the insurers rely on misrepresentation as ground for avoid-
ing the contract of insurance, the onus on them to prove clearly is
that a false representation was made to them by or on behalf of

the assured (d). The representation rehed on may have been
made in writing, either in the proposal form or elsewhere, or
by word of mouth or even by significant action. If it is proved
(c) Thomson v. Weems (1884), 9 (1839), 1 Story 57j Imperial Fire v.
A. C. 671, 682; Traillv. Baring (1864), Murray (1873), 73 Pa. 13.

33 L. J. Ch. 521, 524 Jordan v. Pro- ; (d) ibaviesv. National Fire Marine,
vincial (1898), 28 Can. Sup. Ct. 554 ; [1891] A. r. 485, 489 ; Joel v. Law
Campbell v. New England Life (1867), Union and Crown, [1908] 2 K. B.
98 Mass. 381 ; Carpenter v. American 863.
—
that the assured has by his words or deeds in any manner con-
veyed a substantially erroneous version of material facts to the
insurer there is a misrepresentation.
An assured cannot, by making use of ambiguous expressions, Ambiguous
lead the insurers into error, and then turn round and say that the
insurers put a wrong construction on the words used, and that
in their proper sense, they were accurate representations of the
facts. If through the fault of the assured a statement is capable
of more than one interpretation, it is open to the insurers to say
that they understood it in a certain sense, and that in that sense
it was false ; but if they understood it in one sense, and in that
sense it was accurate, they cannot be heard to say that in reality
it meant something else, and that in that other sense it was false.
It is only where the insurer has understood an ambiguous expres-
sion in a false sense that he can possibly say he has been misled (e),
and if the representation is so obviously ambiguous that no

reasonable person would accept it without inquiry, the duty of
the insurers is to ask for an explanation before acting upon it (/).
It is obvious that a false impression can be conveyed by the Suggestio

**'
•'"
assured to the insurers without any definitely false statement
having been made, but the effect on the insurers may be the same
as if a false statement had been made in plain terms, and the law
considers the one a misrepresentation just as much as the other.
It is not, therefore, necessary that the insurers should be able to
put their fingers on any single statement and prove that that is
false, it is enough if they can show that the language taken as

a whole, and reasonably interpreted by them, gave them a false
impression as to what the real facts were. In reference to repre-
sentations of this kind, Lord Halsbury has said, " It is said there
is no specific allegation of fact which is proved to be false. Again
I protest, as I have said, against that being the true test. I
should say, taking the whole thing together, was there a false
representation ? I do not care by what means it is conveyed
by what trick or device or ambiguous language, all those are
expedients by which fraudulent people seem to think they can
escape from the real substance of the transaction. If, by a
number of statements you intentionally give a false impression,

and induce a person to act upon it, it is not the less false, although
(e) Jessel, M.R., in Smith v. Chad- (/ ) Lebanon Ins. v. Kepler (1884),

vnck (1882), 20 Ch. D. at p. 45. 106 Pa. 28.
if one takes each statement by itself, there may be a difficulty in
showing that any specific statement is untrue " (g).
The omission of a material fact may amount not only to non-

disclosure, but to actual misrepresentation, as where the truth, but
not the whole truth, is told about any particular fact, or set of
facts, thus impliedly representing that there is nothing more to

tell Qt).
When the If among the questions put to an applicant for life insurance,
statement
made is
was the question, " How
often has medical attendance been
apparently required ? " and the answer was " Two years ago for a disordered
complete.
stomach," and, in fact, the assured had had a serious illness, and
was attended by two doctors within a year of the proposal, there

would, in substance, be an absolutely false statement, although
it might have been Uterally true that two years before he was
attended for a disordered stomach (i). Where an applicant

for hfe insurance was asked whether he had made any previous
proposals to any other office or offices, and whether they had
been accepted or refused, answered simply that he had been
accepted by two offices, whereas, in fact, he had also been
refused by five others, the answer was false, for although Hterally
a true statement in so far as it went, it carried with it the
inference that he had never been decUned, which was false (fc).
And where the question was whether the risk was insured
so
elsewhere, and in what offices, and the answer mentioned three
only out of four offices in which the assured was insured, it was
held that the answer was not accurate (T), and similarly a statement
that the tenants of a building were A, B, and C, whereas there
was also D, was held to be untrue (w).
When the In all the cases just referred to the answer given was, on the
statement Different prin-
face of it, a complete answer to the question asked.
made is
obviously ciples apply where the answer is, on the face of it, incomplete. Thus,
incomplete.
in Perrins v. Marine and General Travellers (n), the applicant for
(g) Lord Halsbury, L.C., in Aarons {k] London Assurance v. Mansel

Beefs V. Twiss, [1896] A. C. 273, 281, (1879), 11 Ch. D. 363, 371; Scottish
and see Lord Colonsay in Peek v. Providentv. Boddam (1893), 9 T. L. R.
Gumey (1873), L. R. 6 H. L. 377, 400. 385 ; Be General Provincial Life
(h) Dimmock v. Hallet (1866), L. R. (1870), 18 W. R. 396.
2 Ch. 21, 27, 28 ; Pulsford v. Richards (l) Penn. Mutual v. Mechanics
(1853), 17 Beav. 87, 96. (1896), 72 Fed. 413.
(i) Cazenove v. British Equitable (m) Abbott V. Shawmut Mutual
(1859), 6 C. B. (N. S.) 437 see Dil-
; (1861), 85 Mass. 213.
leber v. Home Life (1877), 69 N. Y. (w) (1859), 2 E. & E. 317.
256.
. :
insurance on his own life was required to state the " name, resi-
dence, profession or occupation of the person whose Hfe is proposed
to be insured," and he filled in the blank as follows :
" I. T. P.
Esquire, Saltley Hall, Warwickshire." He did not disclose that
he was by occupation an ironmonger. As the answers were
warranted accurate, the question arose whether this statement was
inaccurate or merely incomplete, and the Court held that there
was no inaccuracy, and that the policy could only be avoided on
the ground of non-disclosure if the jury found that the concealment
of the fact that the applicant was an ironmonger was material to
the risk. Where an answer is obviously incomplete, the acceptance
of the incomplete answer without making further inquiry, may
operate as a waiver of further information on the subject (o).
Thus in a case in the Supreme Court of the United States (p),
the following question and answer appeared on the proposal
" Q. Has any apphcation been made to this or any other company
for assurance on the life of the party ? If so, with what result ?
What amounts are now assured on the life of the party, and in
what companies ? A. $10,000 Equitable Life Assurance Society."
In fact there had been an unsuccessful application for additional
insurance which was intentionally concealed but it was held ;
that the acceptance of the incomplete answer was a waiver of

the right of the insurers to set up that the omission to disclose
such application was material.
Where a question in the proposal is left entirely unan- Questions on
swered, the issue of the policy, without further inquiry, has been P''°P°^*^ ^°^^
held to be a waiver of information {q), and it would seem that

the omission to answer a question cannot be regarded as a mis-
statement of fact (r), unless the obvious inference is that the
applicant intended the blank to represent a negative answer (s)
The case of Perrin v. Marine and General Travellers (ss) shows importance of
that the distinction between a misstatement and non-disclosure distinguishing
misrepre-
may be of the utmost importance. If the accuracy of the answer sentation
is warranted, and the omission amounts to a misstatement, the disclosure'

insurers may, without further proof, avoid the policy, whereas if
(o) Gates v. The Madison Mutual (1882)^ 108 U. S. 498 ; London and
(1851), 5 N. y. 469. Lancashire v. Honey (1876), 2 Vict.
{p) Phcenix Life V. Raddin (18ST), Law, 7; Brown v. Greenfield Life
120 U. S. 183. (1899), 172 Mass. 498.
(q) Armenia Fire V. Paul (1879), 91 (s) Fitzrandolph v. Mutual Relief
Pa. 520. (1890), 17 Can. S. C. 333.
(r) OonnecHcut Mutual v. Luchs {ss) (1859), 2 E. & E. 317.
the omission is a mere non- disclosure, it cannot affect the validity
of the policy unless it was material to the risk.
Representa- Apart from Warranty, a false statement does not affect the
^ Contract unless it is material to the risk. It is not, however,
material!*
necessary for the insurers to prove that the fact misrepresented
was one that was essential to the proper calculation of the risk.
if they can show that the fact was one which would
It is sufficient
have influenced the judgment of a rational insurer governing
himself by the principles and calculations on which insurers of
his particular class do in practice act (t) . Thus, statements as to
whether a risk has or has not been proposed to other insurers are
undoubtedly material {u). If the assured were to state that the
same risk was insured in some well-known company at a certain
premium, that does not affect the calculation of the actual risk,
for the risk would be the same whether he was insured elsewhere
or not but such a statement does affect the mind of every
;
reasonable insurer, and companies are often influenced in their

decisions by knowing that some other company has or has not
accepted the same risk. In a marine insurance case where, in
order to obtain an insurance at a certain rate, the assured falsely
represented that the same risk had been effected at Lloyd's at

eight guineas per cent., the insurance was held to be vitiated, and
Lord Eldon said, " The Courts in this country would say that
this was a fraud, not on the ground that the misrepresentation

affected the nature of risk, but because it induced a confidence
without which the party would not have acted " {x). Thus, where
a company, on applying to reinsure part of a Ufe risk, said they

intended to retain one-third of the risk, but before the reinsurance
was completed had got rid of the whole risk, it was held that
there had been a misrepresentation of material fact, and the in-
surance was set aside {y) The proper test, therefore, of materiality
.
in questions of misrepresentation appears to be not, " Was the
misrepresentation material to the risk? " but rather, "Was the
misrepresentation material to the inducement ? " {z) that is to
say, would a reasonable insurer have been influenced thereby?
(t) Blackburn, J., in lonides v. (x) Sibbald v. Hill (1814), 2 Dow.

Pender (1874), L. R. 9 Q. B. 531, 538 ; 263, 266.
Quin V. National (1839), Jones & {y) Traill v. Baring (1864), 4
Carey, 316, 331. De G. J. & S. 318.
(u) London Assurance v. Mansel {z) Gordon v. Street, [1899] 2 Q. d.
(1879), 11 Ch.D. 363,370; Marshallv. 641, 645.

Scottish Employers (1902), 85 L.T.757.
Questions and answers relating to previous losses (a), or to incum-

brances on property insured (&), are undoubtedly material.
The question as to whether a fact misrepresented is or is not Question for
material, is one for the jury, under a proper direction of law (c), * ® ^^^^'
and with the assistance, if necessary, of expert evidence (d).
It is clear that aU matters which substantially affect the nature Trivial misre-
P"^^®^"
of the risk are material but, on the other hand, a misstatement
;
may be so trivial that the Court will be of opinion that it could

not have affected the mind of the insurers at all, or induced them
to enter into the contract (e). In the case of In re Universal Non-
Tariff Fire Company (/), a fire policy was subject to a condition
that any material misdescription of the property would render the
policy void. The premises were described as roofed with slate,
whereas a small portion of them was roofed with felt. Malins,
V.C., held that the misdescription was not material, and said,
" The principle applicable to this case is, I think, that stated in
Smith's Mercantile Law :
'
If the description of the property be
and a more accurate statement would not
substantially correct,
"
have varied the premium, the error is not material.'
If the effect of the misrepresentation is such that the risk Premium a
was taken at a smaller premium, than would have been the case materiality.
if the insurers had known the truth, then the representation must
have been material (h) ; but proof that the facts misrepresented
would not have varied the premium is not conclusive proof of
their immateriality, since there may be circumstances where the
insurers might have declined the risk, although, if they had taken
it they would have taken it at the same premium.
Where
there are misstatements in answer to questions in the Questions and
, J. 1,1 1 1 TJ!
answers made 1
proposal form, and the proposal form and answers are made the the basis ot
,
contract.
basis of the contract, the Court will assume that the answers to ^^'^
these questions are material, and neither party can be heard to

say that they are not (k).
(a) Life and Health v. Yule (1904), (/) (1875), L. R. 19 Eq. 485, 496.
6 F. 437. (h) Columbian Insurance v. Law-
(6) Connecticut Fire v. Manning rence (1836), 10 Pet. 507, 616.
(1908), 160 Fed. Rep. 382. (h) London Assurance v. Mansel
(c) Scanlan Y. Sceales (1849), 13 (1879), 11 Ch. D. 363, 371; 4?idersoM
Ir. L. R. 71, 79; Wainwright v. Bland v. Fitzgerald (1853), 4 H. L. C. 484;
(1835), 1 Mood. & Rob. 481, 488. Marshall v. Scottish Employers {1902},
(d) Quin V. National (1839), Jones 85 L. T. 757; Jeffries v. Life Insur-
& Carey, 316, 333 ; Perm. MutualUfe ance Co. (1874), 22 Wall. 47 ; Camp-
V. Mechanics (1896), 72 Fed. Rep. 413. bell v. New England Mutual (1867),
(e) Jessel, M.R., in Smith v. Chad- 98 Mass. 381 ;Mutual Benefit Life v.
wick (1882), 20 Ch. D. 45, 46. Wise (1871), 34 Md. 582; Miller v.
Questions and Where questions and answers in the proposal form or in the
answers not
made the medical officer's report in the case of life insurance, are not expressly
basis of the stated to be the basis of the contract, their materiality is an
contract.
open question for the jury {!), although the fact that the same
or similar questions may be asked by practically every insurer
is very strong evidence that they are material.
Substantial But even although a particular question and the answer thereto
accuracy is
sufficient.
are deemed to be material, it does not follow that the slightest
inaccuracy in the answer is material, and unless the answers are
warranted accurate, an immaterial inaccuracy will not affect the
contract (m). For instance, although a question as to the age of
an applicant for life insurance is undoubtedly material, an inac-
curacy of only four days in stating the age would not be material,
unless the difference would have taken the Hfe past a birthday
and so involved an additional premium (w). In Craig v. Imferial
Vnion{o) an applicant for accident insurance was asked, "Have you
ever been insured with any accident company ? " and answered,
" Insured for twelve years with P.O." In fact he had also been
insured with another company, and this was not disclosed. It
was held that the inaccuracy or omission was not material and,
therefore, did not affect the contract. This merely illustrates
the rule that whereas a warranty must be strictly performed, a

representation need only be substantially compUed with.
Representa- In marine insurance the rule has been established that repre-
tions made to
another in-
sentations made to the first underwriter on the pohcy must be
surer on the deemed to have been made to all the other underwriters, and
same risk.
therefore, if the first underwriter has been induced by a false
statement to accept the risk, all the underwriters may plead such
false statement as a defence to any action on the pohcy (p). Lord
EUenborough refused to extend this rule to representations made
to any underwriter other than the first, and intimated that the rule
as to the first underwriter depended rather upon precedent than
reason (g). The rule, therefore, is not likely to be extended to
Mutual Benefit (1871), 31 Iowa, 216 ;

Missouri Trustv.German Bank {1896),
Stott V. London and Lancashire Fire 77 Fed. 117 ; Carollton Furniture Co.
(1891), 21 Ont. 312 ; Carollton Furni- V. American Indemnity (1903), 124
ture Co. V. American Indemnity {1903), Fed. Rep. 25.
124 Fed. Rep. 25. {n) Mutual Belief V. Webster {18S9),
{I) Joel V. Law Union and Crown, 16 Can. Sup. Ct. 718.
[19081 2 K. B. 863. (o) (1896), 1 Scots L. T. 646.
(m) Campbell v. New England {p) Bell V. Carstairs (1810), 2
Mutual (1867), 98 Mass. 381 Phoenix ; Camp. 543.
Life V. Raddin (1887), 120 U. S. 183 ; (?) 2 Camp. 543.
other classes of insurance, or to insurances by different companies

on their own policies. In a Canadian case, however, where an
applicant for fire insurance upon his vessel, stated to an agent for
B and C companies, that he desired to insure £3000 distributed
between three companies and subsequently informed the agent
that he had placed £1000 with A company, whereupon he was
accepted by B and C companies for £1000 each, it was held that
the aggregate insurance was in effect one insurance, and that
false and fraudulent misrepresentation to A company was a
defence to an action against B and C companies (s).
When an insurance obtained by fraud or a collusive Decoy

P"'"'*^^'
insurance is put forward as a decoy to induce other insurers to
accept the same risk, the pohcy obtained by means of such repre-
sentation,' is voidable. In a case in New South Wales an applicant,
in answer to the usual question, stated that he was insured else-
where, but the insurances mentioned had been obtained by fraud,
and the policy obtained upon the faith of the representation that
there was other insurance was set aside (<). In an early English
case, an appUcant for life insurance induced one insurer to under-
write a policy as a decoy, and thereby other insurers were drawn
in to underwrite the policy. The whole policy was cancelled on
the ground of fraud (w).
Apart from the possible effect of special conditions it would The represen-
appear that, however fraudulent or wicked a misrepresentation induce the
may be, it has no effect upon the validity of a policy unless it contract,
operated on the minds of the insurers as an inducement to them to
accept the risk (x). Eomilly, M.E., speaking of misrepresentation,
says " Th^re must be a representation dans locum contradui
(y),
that is a representation giving occasion to the contract ; the

proper interpretation of which appears to me to be, the assertion
of a fact upon which the person entering into the contract relied,
and in the absence of which it is reasonable to infer, that he would
not have entered into it ; or the suppression of a fact, the know-
ledge of which it is reasonable to infer would have made him
abstain from the contract altogether," and Lord Wensleydale
says {z), " Now I take it to be perfectly clear that, in order to
(«) Orcmt V. jSltna Fire (1860), 11 {x) Plinn v. Headlam (1829), 9

Low Can. R. 128. B. & C. 693.
(t) Hcmley v. Pacific Fire (1893), (y) Puls/ord v. Richards (1853), 17
U N. S. W. R. (Law) 224. Beav. 96.
(m) Whittingham v. Thornburgh (z) Smith v. Kay {1859), T 11,11. C.
(1690), 2 Vern. 206. 750.
set aside a deed on the ground of fraud, there must be moral

fraud, and fraud causing the contract, dolus dans causum con-
tradui ; not necessarily a fraud which is the sole cause of the
contract, but a fraud without which the contract never would
have been made."
induoemeut It would, however, in most cases be extremely difficult for an
presume .
insurance company to prove definitely that any particular state-
ment in any particular application was, in fact, relied on by them
and operated as part of the inducement to accept the contract, and,
therefore, it is presumed as a fair inference of fact that, where a
material misrepresentation is made and a pohcy is issued, the
insurers acted upon the misrepresentation, and were misled by

it (a). Jessel, M.E., in Smith v. Chadwick (b), says, " Agam, on
the question of the materiaUty of the statement, if the Court sees
on the face of it that it is of such a nature as would induce a person
to enter into the contract, or would tend to induce him to do so,
so that it would be a part of the inducement to enter into the
contract, the inference is, if he entered into the contract, that he
acted on the inducement so held out, and you want no evidence

that he did so act ; but even then you may show, in fact, that he
did not so act in one of two ways either by showing that he knew
the truth before he entered into the contract, and therefore

could not rely on the misstatements ; or else by showing that he
avowedly did not rely on them, whether he knew the facts or
not " (fl). It is obvious that a misrepresentation is rarely, if ever,
the sole inducement to the insurers to enter into the contract.
All the facts are taken into consideration, and it is impossible
to analyse the mental impressions created by each particular
statement on, say, a board of directors who accepted the risk

perhaps many years before. The only practical way, therefore,
of determining whether they were misled or not is to assume that
they were, if the fact misstated is one which would have influenced
ordinary and reasonable insurers, in considering a similar risk,
and then the assured, in order to recover, must show that the
insurers were not in fact influenced by the misstatement, that
is to say, they must clearly prove that even if the misrepresentation
(a) Traill v. Baring (1864), 4 approved by Lord Halsbury, L.C.,

De G. J. &S. 318, 330. in Arnison v. Smith (1889), 41 Ch. D.
(6) (1882), 20 Ch. D. 27, 44. 348, at p. 368 ; and see Smith v. Kay
(c) 20 Ch. D. at p. 44, cited and (1859), 7 H. L. C. 750, 769, 770.
had not been made, the insurers would have accepted the risk on
the same terms {d).
The assured who has made a misrepresentation may prove that Presumption
it did not influence the insurers by showing (i) that it was never ™butted
communicated to them or (ii) that they were aware of the truth
; ;
or (iii) that they acted on their own investigation without reliance

on the representation.
It is clear that if the insurers accept a proposal in ignorance of if tbe repre-
a misrepresentation which has been made by

the assured, they never com-
cannot afterwards say that they were misled by such misrepresenta- mumcated to
' ''
.
the insurer,
tion. Thus a misrepresentation made to an agent of ar insurance
company cannot affect the validity of the policy unless it has been
communicated by the agent to the directors or unless the
directors have acted upon the agent's report, which but for the
representation might have been unfavourable.
Neither can the insurers be misled if they knew the truth, if the insurer
When, however, the assured has made a false statement, it will ^^^^ aliunde,
not do for him to say that the insurers had the means of discovering
the truth for themselves if they had taken the trouble to do so (e).
The effect of a false representation is not to be got rid of on the
ground that the person to whom it was made was guilty of negli-
gence (/). Thus if the assured shows to the insurer papers or
plans relating to the risk, and at the same time states what is
contained in them, he cannot say afterwards that the insurers
ought to have verified his statement by an examination of the
documents. So, too, the insurers may once have known the
truth and forgotten it, but that does not entitle the assured
who has made a statement to say that the insurers ought
to have remembered the truth and known that the statement
was false. When the facts are known to the company's agent and
his knowledge can be properly imputed to the company, that is
where was the agent's duty to have communicated them to the

it
company but he has not done so, the company cannot plead
ignorance {g).
See Lord Cranworth in Smith

(d) (/) Jeesel, M.K., in Redgrave v.
V. Kay (1859), 7 H. L. C. 750, at Hurd (1881), 20 Ch. D. 1.
p. 770 ; and Lord Chelmsford, L.C., (g) Bawden v. The London, Edin-
in the came case, at p. 758; Marshallv. hurghand Glasgow, [1892] 2 Q. B. 534 ;
ScottishEmployers (1902), 851i.T.15T. Holdaworth v. Lancashire and Yorh-

Mackintosh v. Marshall (1843),
(e) shire Insurance (1907), 23 T. L. R.
IIM. &W. 116; Scottish Equitable w. 521; Reddick v. Saugeen Mutual
Bmm<(1876), 3R. 1078. (1888), 15 Ont. A. R. 363; John
I.L. 19
if the insurer If the assured can prove that the insurers, instead of relying
relied solely
on his own in-
on the false statement which was made to them, investigated the
vestigation. facts for themselves, and acted on the result of that investigation,
then, whether they have actually discovered the truth or not,
the false statement becomes immaterial, for the insurers disre-
garded it and acted on their own inquiry {h). But it must be

shown clearly that the insurers both investigated the facts and
relied solely on their own investigation. It is not sufficient to show
that they investigated the facts carelessly and inefficiently, for their
imperfect investigation may have been due to faith in the definite
statement made by the assured. The test is not whether the insurers
investigated the facts for themselves, but whether it is to be inferred
from manner of doing so that they intended to rely upon
their
that investigation and not upon the statement of the assured {i).
Where the agent of the insurers examines the premises proposed
for a fire risk, it may probably be assumed that the insurers
act upon the result of their agent's examination rather than
upon the representations of the assured upon matters which
must have been obvious to the agent when he examined the
premises (k).
Whether It is sometimes said that if a representation is fraudulent,

fraudulent
representa- there is no necessity to prove that the false statement was
tion must be material {I).In The Bedouin (m), a marine insurance case. Lord
material.
Esher, M.E., said, " The assured bound to tell the underwriter
is
not every fact, but the material facts and his obligation is this,
;
—
that if he is asked a question ^whether a material fact or not—
by the underwriters, he must answer it truly. If he answers it
falsely, with intent to deceive, though it may not be a material
fact, it will vitiate the policy." If the insurers were influenced
by the fraudulent statement, no doubt the assured, who had
practised deception with a view to a particular end which had been
attained would not be permitted to say that the statement was
not material (n), but it is doubtful whether insurers could rely
Hancock Mutual v. Houpt (1901), 113 {k) Cumberland Valley Mutual v.
Fed. Rep. 572 Queen Insurance v.

; Schell (1857), 29 Pa. 31.
Union Bank (1901), 111 Fed. Rep. (l) Valton V. National Fund (1859),
697. 20 N. Y. 32 ; Fidelity and Caamlk
(h) Sweeney V. Promoter Life {186Z), V. Bank (1905), 139 Fed. Bep.
14 C. L. R. 476.
Ir. 101.
(i) Jessel, M.R., in Redgrave v. (m) [1894] P. 1, 12.
Hwrd (1881), 20 Ch. D. 1, 15, 17 Att- ; (n) Gordon v. Street, [1899] 2 Q. B.
wood V. Small (1838), 6 CI. & F. 232, 641, 646.
344, 497.
PEAUD AND MISREPRESENTATION 291
upon a fraudulent statement which was not material, and which

did not influence them in their acceptance of the risk (o).
Strictly speaking there can be no representation as to facts A statement
injuturo, and, therefore, a statement relating to such facts must ''•'""™
be either (1) a promise ; (2) a statement of intention ; or (3) a
statement of belief or expectation.
If tantamount to a promise, may con-
a statement relating to the future is
it must be included become a term in the IromLt

in the policy so as to
contract and cannot be binding as a promise or warranty unless
it is found in the written instrument. It is sometimes said that
there can be a promissory representation, which, although not
part of the contract, yet, having operated as an inducement to the
contract, must be fulfilled or the contract will be voidable. In
Dennistoun v. Lillie (jp), a marine insurance case, the House of
Lords held that where the underwriters accepted the risk on the
faith of a statement that the ship would sail on a certain date,
even although there was no warranty or term in the policy to that
effect, the policy became voidable on the ground of misrepresen-
tation if the ship did not sail on the date stated. This may
be sufficient authority for saying that, in marine insurance, there
is now a rule that a representation as to the future must be ful-
filled, although not warranted ; but the general rule in the law
of contract is that promises de futiiro, if binding at all, must be
so as part of the contract. Mellish, L.J., thus states the law as
to contracts in general, " I should remark that there is a clear

difference between a misrepresentation in point of fact, a repre-
sentation that something exists at that moment which does not

exist, and a representation that something will be done in the
future. Of course a representation that something will be done

in the future cannot either be true or false at the moment it is
made, and although you may call it a representation, if it is any-
thing it is a contract or promise " (q). As Dennistoun v. Lillie
has never been followed, except in marine insurance cases, it may

" promissory represen-
be confidently asserted that the theory of
tations " will not now be applied to fire and life insurance contracts,
so as to make them voidable on the ground of non-fulfilment of
a promise which has not been made part of the contract, but is
alleged to have been an inducement to the insurers to accept the

(o) Andersonv. Fitzgerald {] 853), 4 (?) Lord Selborne. L.C., in Maddi-
H. L. C. 484. Fide m/ra, pp. 315,316 son v. Aldersmi (1883), 8 A. C. 467,
(p) (1821), 3 Bligh, 202. at p. 473.
;
risk Such a promise, however, or even an expression of

(r).
intention may be good ground for refusing specific performance

although not for cancellation. Lord Cairns said of a promise of
this kind in a contract for the sale of house property, " I quite
agree that this representation was not a guarantee. It was not
introduced into the agreement on the face of it, and the result of
that is that in all probability the plaintiff could not sue in a court
of law for a breach of any such guarantee or undertaking, and
very probably he could not maintain a suit in a court of equity
to cancel the agreement on the ground of misrepresentation. At
the same time, if the representation was made, and if that repre-
sentation has not been, and cannot be, fulfilled, it appears to me
upon all the authorities that it is a perfectly good defence in a suit
for specific performance, if it is proved in point of fact that the

representation so made has not been fulfilled " (s). Therefore, if,
for instance, an applicant for a fire insurance policy promised or

expressed an intention to have some alterations made on the
premises so as to minimise the risk of and the company there- fire,
upon accepted the proposal, they would not be bound to issue a

pohcy until the promised or intended alterations had been made
but if they issued a policy without insisting on the alterations and
without any promise or warranty in the policy, they could not
afterwards resist a claim on the ground that the representation was
not fulfilled, even although the loss arose directly by reason of its
non-fulfilment,
may be If the assured makes a representation de futuro relating to
^Mssion of something which is or may be within his control, if it is not a promise

intention or warranty, must be a mere expression of his intention made
it
without prejudice and without any undertaking that it will be

realised, and therefore strictly it is not a representation as to the
future at all, but a representation of the assured's present inten-

tion. The statement of intention must be in accordance with his
actual intention at the time the contract is concluded (t), and if
it is so a subsequent change of intention or acts done contrary to

the expressed intention will not defeat the policy. Thus, in an
American life case (w), where in the proposal form the applicant
(r) See Whitlaw v. Phcsnix (1877), 523, 529 ; Chappell v. Gregory (1863),
28 U. C. C. P. 53 ; Kimball v. Aetna 34 Beav. 250.
(1865), 91 Mass. 540. (t) Traill v. Baring (ISSi), 4 De
(s) tiOidCairnain Lamarev. Dixon G. J. & S. 318.

(1873), L. R. 6 H.L. 414, 428; and see (m) Kneeht v. Mutual Life (1879),
Myers V. Watson (1851), 1 Sim. (N. S.) 90 Pa. 118.
PEAUD AND MISREPRESENTATION 293
declared " that he does not now nor will he practise any pernicious
habit which obviously tends to shorten life," and the condition in
the policy was that if any of the statements or declarations made

in the proposal should be found in any respect untrue, the policy
should be void, was held that there was no promise or warranty
it
as to future habits, and that if the declaration was made in good

faith, the policy could not be set aside on the ground of subsequent
intemperance. Similarly a representation de futuro relating to

something which is not within the control of the assured, if not or expeota-
a warranty must be an expression of belief or expectation, and

amounts to nothing more than a representation of the existing
state of the assured's mind. These, then, are not representations
as to the future, but as to the present, and will be considered as
such.
A representation therefore must be as to past or present facts in Representa-
order to entitle the insurer to avoid the contract on the ground as'to'pastor
of the representation being inaccurate. The state of a man's present facts.
mind, however, is as much a fact as anything else (a;), and there-
fore when a man states not that such and such a thing is so, but
that he believes it is so, or expects or intends it to be so, he is still
stating a fact, although a different fact from that which he would

have stated if he had said the thing was so. In each case the
fact stated may be proved to be false, in the first by showing
that the thing was not so, and in the second by showing that the
man did not believe or expect or intend it to be so (y), and it
is immaterial whether the want of belief arises from a knowledge

that the facts are not in accordance with the statements made
or from entire ignorance of the subject matter.
The form of a statement may be sometimes that of a positive Representa-
statement of and yet the subject or context may show that

fact, opinion o^
'
the assured was only stating his belief or expectation. Thus a expectation,
statement as to matters on which the assured cannot have any

accurate knowledge wiU, if not in the express form of a warranty,
be most readily construed, not as a statement of fact, but as a
statement of belief (z). Certain matters, too, are obviously matters
as to which a man can only state his opinion, such as questions
[v)Bovf en,!,. J., in Edgington-v.Fitz- (z) Hubbard v. Olover (1812), .3
maMrtce(1885),29Ch.D. 459,atp.483. Camp. 313; Brine v. Featherstone

(y) Paw8onv.Watson(m8),Cowp. (1813), 4 Taunt. 869; Bowden v.
785 ; FKnn v. Tobin (1829), Moo. & Vaiighan (1809), 10 East, 415.
Mai. 367.
of valuation (a) or statements as to health (h). Where, therefore, in

substance a statement is one not of positive fact, but of the assured's
belief, opinion, or expectation as to the facts, the only thing that
the assured has to show is that he stated his belief, opinion, or
expectation honestly ; in other words, that he accurately repre-
sented the state of his mind (c). Where the assured has dishonestly
stated that his belief or intention is what it is not, there is good
ground for rescission (d), and where the assured has honestly
stated his beUef (e) or intention (/), but changes his belief
or intention before the contract is concluded, he must com-

municate his change of belief or intention, or the insurance will
be set aside. In a Canadian case a statement in the company's
circular as to future benefits from a reserve fund was held to be
merely a statement of the manager's expectation, and did not

entitle the assured to cancellation and return of premiums on the
ground that the statements proved to be untrue (g).
A representation in the form of an expression of opinion may

be tantamount to a statement of fact as where the assured said
that " he thought " the ship insured under the name " Socrates "
was a Norwegian ship of that name, and the Court held that the
policy was issued on that basis (h).
Represen- If the assured has made a representation as to a matter of
^^ ° was
law°°^ ^^'^» *^® insurance cannot be set aside on the ground that it
erroneous if it was honestly made. All are supposed to know

the general law of the land, and, therefore, it must be presumed
that the insurers could not have been misled by an erroneous
statement as to matters on which they must be taken to be as
well informed as the assured (i). But if the assured has made a
(a) Dacey v. Agricultural (1880), Hunger (1837), 15S. 800 and a gross
;
21 Hun. 84 ; Williamson v. Com- over-valuation is strong evidence of

mercial Union (1876), 26 Can. C. P. wilful over-valuation Shannon v.
:
591 ; Bedford v. Mutual Fire (1876), Hastings (1875), 25 V. C. C. P. 470;

38 U. C. Q. B. 538 Franklin Fire
; Sly v. Ottawa (1879), 29 TJ. C. C. P.
V. Vaughan 92 U. S. 516 ;
(1875), 28, 557 ; Dichson v. Equitable I'm
Harringtonv.FitchburgMulual(lS78), (1859), 18U. C. Q. B. 246; and see
124 Mass. 126. Edgington v. Pitzmaurice (1885), 29
(6) Joel V. Law Union and Crown, Ch. D. 459, 483.
[1908]2K. B. 863; it/eyl«soc«o«io»iv. (e) Davies v. London Provincial
Foster (1873), 11 M. 351 ; Deldhaye v. Marine (1878), 8 Ch. D. 469.
British Empire Mutual Life (1897), (/) Traill v. Baring (1864), 4
13 L. T. R. 245. De G. J. &S. 318.
{c) Jones V. Provincial (1857), 3 (g) Angers v. Mutual Reserve Fund
C.B.(N.S.)65; Glasgow Assurance, Sc. (1904), 35 Can. S. C. 330.
V. /S'2/«ionii«ow(1911), 16Com. Cas.109. (h) lonides v. Pacific Insurance
(d) As when property was wilfully (1871), L. R. 6 Q. B. 674, 683.
over-valued, Riach-v. Niagara District (i) Rashdall v. Ford (1866), L. R. 2
(1871), 21 U. C. C. P. 464 Hercules v. ; Eq. 750, 754 ; Beattie v. Lord Ebuty
PBAUD AND MISREPRESENTATION 295
wilful misstatement as to the law or as to the effect of any deeds

or other documents, the policy is probably voidable (fc) either on
the ground that in equity fraud would override the legal presump-
tion of knowledge of the law or else on the ground that there
was a false representation of the assured's opinion or belief, on
which the insurers relied rather than on their own opinion. And
if a representation as to the law contains any direct or implied
representations of fact there may be sufficient ground for setting
aside the policy if the facts are incorrectly stated, whether inno-
cently or fraudulently. Thus, a representation by the assured that
he has certain rights under certain deeds is a representation of
fact, i.e. that those deeds give him certain rights {I), although if
he were merely to indicate certain clauses in a document, and

state their legal effect that would be a statement of law. So, too,
a statement that a man is the owner of certain property is a
representation of fact, although it may be the result also of matter
of law (m).
The assured may be induced to insure or continue an insurance As to the
by the misrepresentation of the company or its agent as to the ^êt"of the

meaning and effect of the contract. Where the company, by its contract,
advertisements, prospectus, or proposal form, represents to the

assured that the contract offered by it is different from the
contract contained in its poUcy, the assured may obtain rectifica-
tion of the pohcy on the ground that the policy as issued did not
contain the real contract made between the parties, but the
question then is not what representations were made to induce the
party to contract, but what was the actual contract made? (n).
made by an agent of the company
\Vhere similar representations are
the question is whether he had authority to make such representa-
tions ? If he had, the company will be bound to rectify the policy so
as to conform to the contract in fact made by the agent. If he
had not, there is no contract at all, unless the company elects to

ratify the act of its agent, and, if it does not, the assured will
(1872), L. E. 7 Ch. 777, 802 ; Eagles- 1, 5 ; West London Commercial Bank

fieldv. Marquis of Londonderry {181G), v. Kitson (1884), 13 Q. B. D. 360;
4 Ch. D. 693, 709. A
.statement as to Bowen, L.J., at p. 362.
the law of a foreign country (including (I) West London Commercial Bank
Scotland if the contract is made in v. ffi^son (1884), 13 Q. B. D. 360, 363.
England) is a statement of fact and (m) Cooper v. P/ii66s (1867), L. R. 2
not a statement of law within the H. L. 149, 170.
mieaning of this paragraph. (n) Wood
v. Dwarris (1856), 11
(k) Hirschfield v. London, Brighton, Ex. 493 Anstey v. British Natural
;
and South Coast Ry.(lST6), 2 Q.B.B. Premium Life (1908), 24T. L. R. 871.
be entitled to a return of premiums paid. But where the repre-
sentation of the company or its agent merely goes to explain the

meaning of the written conditions in the company's proposal
forms or policy, the assured can have no by way of
relief either
rescission or rectification, unless there has been fraud (o). If
the representation of the agent has been fraudulent, the assured

is entitled to rescind the contract and claim a return of premiums
paid (p). If the representation is not as to the meaning of
the written contract, but as to the practice of the company inde-

pendently of its contractual obligation, as, for instance, if a
representation is made to the effect that the company will grant
a free policy after so many years, or will pay certain bonuses, the
assured, although unable to prove that such representation formed
part of the contract, might obtain rescission of the contract and
return of premiums if the representation as to the practice of the
company was untrue, even although innocently made (q).
Time when Eepresentations and warranties as to present facts must be read
tatio?mus°" ^^ Continuing up to the time when a binding contract is concluded

be true. between the parties. In marine insurance, the material time is
the issuing of the slip (r), and no change in the circumstances

occurring after that date need be notified to the insurers, the
reason being that the insurer who has issued a slip is in honour
boand to issue a policy. In other classes of insurance there is no

such rule of practice, and the insurer is in no sense bound to the
assured until he has made a contract legally complete. This,
then, must be the material time for representation and disclosure,
and if after a statement has been made the circumstances alter
before the contract is completed, and that fact is not disclosed,

the original statement becomes untrue, and the apphcant is guilty
not only of non- disclosure, but of misrepresentation (s). Thus,
where a hfe had been " accepted," but was seriously injured before
the pohcy was issued, the representations as to health became

untrue(i). A declaration in the proposal form that the applicant
was not insured elsewhere became untrue when the applicant
(o) Wheelton v. Hardisty (1858), 8 Marine (1878), 8 Ch. D. 469 Barnes ;
E. & B. 232. V. Fidelity Mutual (1899), 191 Pa.

( p)
Kettlewellv. TheBefuge, [1908] 618 ; Equitable Life -v. McElroy (1897),
1 K. B. 545. 83 Fed. Rep. 631 Piedmont and
;
(a) Kettlewell V. The Eefuge, [190S} Arlington Life v. Ewing (1875), 92

1 K. B. 545. U. S. 377 ; Cables. U.S. Life (1901),
{r) Lishman v. Northern Maritime 111 Fed. Rep. 19.
(1875), L. R. 10 C. P. 179. {t) Canning v. Farquhar (1886), 16
(g) Davies v. London and Provincial Q. B. D. 727.
FRAUD AND MISKE PRESENTATION 297
did insure elsewhere before the issue of the policy (u). And so
where an applicant for life insurance, who had been medically
examined and " accepted," subsequently became alarmed about
his health and consulted a specialist, the statement in the proposal
form that he ordinarily enjoyed good health became untrue (x).
And where in an application for reinsurance on a life policy, the

applicant company stated that it intended to retain a certain
proportion of the risk, but the directors changed their minds before
the contract of reinsurance was concluded, there was a mis-
representation as to their intention (y).
A representation made some previous negotia-

in the course of
tionsand not with relation to the particular insurance in question
cannot be relied on by the insurer as a continuing representation
so as to affect the contract {z).
In cases of reinsurance the question may be whether the In oases of

'^^'"s"''^""'^-
company seeking reinsurance adopts the statement of the original
assured, and so becomes responsible for their accuracy as at the
date of reinsurance, or whether it merely presents these state-
ments as the statements of the .assured made at the time of the
original insurance.
Poster V. Mentor Life (1854), 3 E. & B. 48
B company insured the life of Count D'Orsay, and some six years afterwards Foster v.
desired a reinsurance of part of the risk. They applied to M company, send- -"^^ntor Life.
ing them the original application form and declarations made by and on behalf
of the assured. M then sent to B a blank proposal form adapted for an original
insurance on the life of a third party containing questions to be answered and
a declaration to be signed by the life that the answers to the questions were true
and a declaration to be signed by the assured accepting the declaration of the
life as the basis of the contract. The manager of B bracketed the questions
and wrote opposite to them this direction, " For these particulars, see B papers
attached." He also filled in the name of as the life and B as the assured in
the declaration. The manager of B signed this form opposite the bracket and
direction, but did not sign the declaration. The original application contained
certain statements as to the health of 0, which were true when made, but had
ceased to be true at the date of reinsurance, although this was unknown to
either party. The policy contained a recitation that B had caused to be
delivered into the office of Ma declaration or statement . . . setting forth
the age and the past and present state of health of the life . . . and a pro-
viso that if anything in the said declaration should be untrue the policy should
{u) Marshall v. Scottish Employers {y) Traill v. Baring (1864), 4

(1902), 85 L. T. 757. De G. J. & S. 318.
{x) British Equitable v. Oreat (z) Dawson v. Atty (1806), 7 East,
Western (1869), 38 L. J. Ch. 314. 367.
be null and void. In an action on the policy it was admitted by the plaintifis
that if the signature of their manager related to the declaration at the foot of
the proposal form, then there was a breach of warranty since the declaration
clearly referred to the present state of health, but they contended that the
signature was only appended to part of the form, viz. the reference to the
original papers, and that that reference confined the answers to the conditions
existing when the
original proposal was made. The jury found a general
verdict for the plaintiff, and on a motion for a new trial the Court were equally
divided. Wightman and Erie, JJ., thought that the recital in the policy prima
facie excluded the plaintiffs from denying the construction then put upon the
contract, although it was not an absolute estoppel if they could explain their
acceptance of the policy and their acquiescence in its terms. Campbell, C.J.,
and Coleridge, J., thought that the recital did not in any way estop the
plaintiff, but was merely evidence in favour of the defendants' construction,
and it was a question for the jury to say whether the signature of the
plaintiff's manager was intended to do anything more than refer the insurers
to the original statements of the assured. The verdict for the plaintifis was
accordingly allowed to stand.
When one When one policy is issued to supersede another which is there-
policy ia
issued in lieu upon surrendered, the representations made with reference to the
of another. first pohcy will, in the absence of some express provision, be equally
the basis of the second (b). The usual practice in such cases is to
insert a specific recital in the substituted policy. If there is no
increase of sum assured or immediate benefit, nor any reduction
of premium unaccompanied by reduction of sum assured, but only
a rearrangement of benefits leaving the insurers' risk no greater
than it was before, the substituted policy is expressly stated to be
based on the original proposal and declaration. If the insurers'
risk is in any way increased a new declaration is required.
When the In fire policies and similar risks where the insurers may decline
policy ia
renewed. to renew the policy at the expiration of the original period, each
renewal is made on the faith of the continued truth of the original
representations, and if there has been any change, that must be
disclosed when the renewal premium is tendered (d).
Conditions As we have seen, no condition in the policy is necessary to

relating to
misrepresen- render it voidable on the ground of misrepresentation (e). But the
tation. conditions in the poUcy may either limit or extend the consequences
of misrepresentation. Thus, the consequences may be hmited
where there is a condition in the policy declaring it void if there
(b) Martin v. Home Insurance (e) Huguenin v. Rayley (1815),

(1870), 20 U. C. C. P. 447 ; Cahan v. 6 Taunt. 186; Abbott v. Howard
Continental (1877), 69 N. Y. 300. (1832), Hayes, 381 Moens v. ;
(d) Hanleyv. Pacific Fire (1893), U Heyworth (1842), 10 M. & W. 147,

N. S. W. K. (Law) 224 ; Pirn v. Reid 157.
(1843), 6 Man. & Gr.l, 25.
has been fraudulent misrepresentation. Innocent misrepresenta-

tions might under certain circumstances vitiate the policy, if
there were no conditions, but a clause of this kind excludes innocent
misrepresentation from having any effect (/).
Where a policy is made " indisputable," either from the com- indisputable
Pol'î^^-
mencement or after it has been in force for a specified time, it
cannot be challenged on the ground of misrepresentation, unless

the policy was procured by fraud (9).
Anstey v. British Natural Premium Life (1908), 24 T. L. E. 871
The answers of the assured were warranted accurate, but the policy con- Anstey v.
tained the condition that it
''
will be indisputable from any cause (except British
"'.'*
fraud) after it shall have been continuously in force for two years." One of „"
the answers was not accurate, but there was no fraud, and more than two years Life.
had elapsed since the policy was effected. The company argued that as there
had been a misrepresentation and breach of warranty at the time the contract
was efieoted, it never came into force at all, and therefore the indisputable
condition did not apply. The Court of Appeal held that such a construction
would reduce the condition to sheer nonsense, and that its obvious meaning
was that after the lapse of two years neither misrepresentation nor breach of
warranty could be advanced as a defence unless there was fraud.
Even where a policy is declared in general terms to be indis-

putable and there is no express exception of fraud it would seem
that, under the general rule of law that no person can take
advantage of his own fraud, neither the assured nor his represen-
tatives could recover. And by reason of the same principle
fraud would probably vitiate the contract even in the hands of an
innocent assignee for value, since unless he was a party to the
contract in his own right he could take no better title than his
assignor. Where the insurance is on the life of a person not the
assured and the policy is stated in general terms to be indisputable,
even fraudulent misrepresentation on the part of the life will not
vitiate the contract (h).
On the other hand, the effect of misrepresentation may be Statements

enlarged by the express conditions of the policy, as where facts
stated are warranted to be accurate or are made the basis of the
(/) Fowkes v. Manchester and (g) v. British Natural Pre-

Anstey
London (1863), 3 B. &
S. 917 ; Scot- mium Life (1908), 24 T. L. R. 871 ;
tish Provident v. Boddam (1893), 9 General Provincial Life (1870), 18
T. L. R. 385 ; Reid and Co. v. Em- W. R. 396.
players' Accident (1899), 36 S. L. R. (h) Vide infra, ^. 350.
825.
contr?ct (i). When the condition states that if any misrepresen-

tation be made, in the proposal form or otherwise, in effecting the
insurance the poUoy shall be void, it is probably not a warranty
of accuracy, but merely a statement of the general rule of law (k).
Section III. —Non-disclosure

General The general principles upon which the assured is required to
principles
stated by disclose all material facts within his knowledge, are clearly stated
Lord by Lord Mansfield in Garter v. Boehm Q). This well-known leading
Mansfield.
case in the law of insurance was an action on a policy for the
benefit of George Carter, the Governor of Port Marlborough,
against the loss of Fort Marlborough in the island of Sumatra in
the East Indies by its being taken by a foreign enemy. It was
alleged that the weakness of the fort and the probability of its
being attacked by the French ought to have been disclosed. The
jury found a verdict for the plaintiff, and on a motion for a new
trial, which was refused, Lord Mansfield said, " Insurance is a
contract of speculation. The special facts upon which the con-

tingent chance is to be computed he most commonly in the know-
ledge of the assured only ; the underwriter trusts to his representa-
tion, and proceeds upon confidence that he does not keep'back any
circumstance, in his knowledge, to mislead the underwriter into
a beUef that the circumstance does not exist. The keeping
back such circumstance is a fraud, and therefore the policy is
void. Although the suppression should happen through mistake,

without any fraudulent intention, yet still the underwriter is
deceived and the policy is void ; because the risque run is really
differentfrom the risque understood and intended to be ru:n at

the time of the agreement. The pohcy would be equally void
against the underwriter if he concealed. Good faith forbids . . .
either party, by concealing what he privately knows, to draw

the other into a bargain from his ignorance of the fact, and his
believing the contrary " (m).

Full dis- Itmust be observed that Carter v. Boehm was not a marine
closure re-
quired in all
insurance case, but more in the nature of a fire or burglary insur-
classes of ance than an insurance against the perils of the sea. The law
(i) Anderson v. Fitzgerald (1853), 381 ; but see Button v. Waterloo Life
4 H. L. C. 484 ; Thomson v. Weems (1859), 1 F. & F. 735.
(1884), 9 A. C. 671. (I) (1766), 3 Burr. 1905, 1909.
(k) Campbell v. New England (m) 3 Burr. 1909, 1910.

Mutual (1867), 98 Mass. 381 ; 73 Pa.
NON-DISCLOSURE 301
too, is laid down by Lord Mansfield generally as applicable to

all classes of insurance. It has been contended, however, in
subsequent cases, that the rule of disclosure does not apply to
certain kinds of insurance ; but this contention has been repudiated
over and over again, and the rule has been stated as applicable to
insurances of all kinds (n). It is well known, and acted on in
marine insurance (o), where it is undoubtedly of peculiar import-
ance, but it has been applied also to life and guarantee policies,
and there is not the least doubt that it is applicable also to fire,
burglary, and accident insurance. In Lindenau v. Desborough (jp),
a hfe insurance case, Bayley, J., said,

" I think in all cases of
insurance, whether on ships, houses, or lives, the underwriter
should be informed of every material circumstance." And Little-
dale, J., in the same case said, " It is the duty of the assured to
disclose all material facts within their knowledge. In cases of
life insurance, certain specific questions are proposed as to points
affecting in general all mankind. But there may be circumstances
also affecting particular individuals, which are not likely to be
known to the assurers, and which, had they been known, would
no doubt have been made the subject of specific inquiries." In
Wheelton v. Hardisty (q), Lord Campbell, C.J., said, " The uberrima
fides is to be observed with respect to life insurances as well as
marine. The assured is always bound not only to make a true
answer to the questions put to him, but spontaneously to disclose
any fact exclusively within his knowledge, which it is material
for the assurer to know," and Jessel, M.E., in London Assurance
V. Mansel (r), said, " The first question to be decided is, what is
the principle on which the Court acts in setting aside contracts

of assurance ? As regards the general principle, I am not prepared
to lay down the law as making any difference in substance between
one contract of assurance and another. Whether it is life, or fire,
or marine assurance, I take it good faith is required in all cases,
and though there may be certain circumstances from the peculiar

nature of marine insurance, which require to be disclosed, and
which do not apply to other contracts of insurance, that is rather,
in my opinion, an illustration of the application of the principle
(n) Brownlie v. Campbell (1880), (o) Lynch v. Hamilton (1810), 3

5 A. C. 925, 954 Moens v. Heyworth
; Taunt. 37, 44.
(1842), 10 M. & W. 147, 157; Dal- {p) (1828), 8 B. & C. 586, 592.
glish V. Jarvie (1850), 2Mac. & G. 231, (?) (1857), 8 E. & B. 232, 270.
243. {r) (1879), 11 Ch. D. 363, 367.
than a distinction in principle." The above dicta were cited

with approval, and acted upon by the Court of Appeal in Joel v.
Law Union and Crown (s). This was a Hfe case, and Vaughan
Williams, L.J., based the duty of disclosure on " the implied
contract, by an applicant for a poHcy, to make full disclosure of all
facts material to the risk."
Non-dis- Guarantee insurance requires much as

full disclosure, just as
closure in
guarantee any other class of insurance (f). But guarantee insurance must
insurance. be distinguished from the ordinary contract of guarantee. Where
a man goes to an insurer and asks him to insure the solvency of
his debtor, he must disclose the whole circumstances relating to
the risk, but where a debtor asks some one to become surety for
him, and the latter consents, that places no obligation on the

creditor to make any disclosure to the surety (m).
Seaton v. Heath, [1899] 1 Q. B. 782
Seaton v. A policy was underwritten at Lloyd's guaranteeing the tuivenoy of a

Heath. person who was surety for the repajnment of a debt due to the assured. The
defence was non-disclosure of material facts, and was argued on behalf of
it
the assured that the contract was one of suretyship, and not of insurance, that
in contracts of guarantee no disclosure was required, and further that, even
if this was an insurance, the duty of disclosure was one founded on mercantile
custom, and, as it had never been applied to insurances other than marine life
and fire, the Courts would not now extend it to insurances of this kind. The
Court Appeal held, on the authority of Carter v. Boehm {x), that the
of
principle was applicable to all insurances, and that the contract was a contract
of insurance, and not merely a contract of guarantee. Romer, L.J., pointed
out (y) that in general contracts of guarantee are between persons who occupy
or ultimately assume the positions of creditor, debtor, and surety, and thereby
the surety becomes bound to pay the debt or make good the default of the
debtor. In general the creditor does not himself go to the surety or represent
or explain to the surety the risk run. The surety often takes the position from
motives of friendship to the debtor and generally not as the result of any
direct bargaining between him and the creditor or in consideration of any
remuneration passing to him from the creditor. The risk undertaken is
generally known to the surety, and the circumstances generally point to the
view that as between the creditor and surety it was contemplated and
intended that the surety should take upon himself to ascertain exactly what
the risk was. But a guarantee may be an entirely different thing, not
involving the ordinary relations of creditor, debtor, and surety, but being in
(«) [1908] 2 K. B. 341. (1854), 10 Ex. 523 ; Bailton v. Mat-

(«) Seaton v. Heath, [1899] 1 Q. B. thews (1844), 10 CI. & F. 934 ; Lee v.
782. Jones (1864), 17 C. B. (N.S.) 482.
(m) Davies v. London and Pro- (k) (1766), 3 Burr. 1905.
vincial Marine (1878), 8 Ch. D. 469 ; (y) At p. 792.
North British Insurance v. Lloyd
NON-DISCLOSURE 303
substance an insurance at a fixed premium against a loss which it is anticipated

may result from the failure of a debtor to pay from the dishonesty
his debt, or
of servants or other persons. Here are all the attributes of any other kind of
insurance. The insured puts the risk before the insurer as a business transac.
tion, and the insurer on the risk stated fixes a proper price to remunerate him
for the risk to be undertaken ; and the insurer engages to pay the loss incurred
by the insured in the event of certain specified contingencies occurring. There
is no reason why there should not be full disclosure here as in other contracts
of insurance, and on the same principle that the person desiring to be insured
has means of knowledge as to the risk and the insurer has not the means or not
the same means.
The Federal Courts in America have decided that in the case
of fideUty bonds issued by insurance companies there is not the

same necessity for full disclosure as in other classes of in-
surance {z), but since the decision in Seaton v. Roaih {a) it is
clear that there must be full disclosure in all contracts of this

nature.
The same duty of disclosure is imposed on the insurer who Reinsurance,
on the assured on an original risk (b).

reinsures as
The duty of an applicant for life insurance is not confined to Applicant for
answering the questions put to him in the proposal form or by the

medical examiner. There may be something outside the range
of the questions which it is material that the assured should know,
and this must be disclosed (c).
Huguenin v. Eayley (1815), 6 Taunt. 186

The assured did not disclose the fact that she was in gaol for debt at the Huguenm v.
"'^j/fet/.
time the insurance on her life was effected, and although there was nothing ex-
press in the terms of the policy which required the imprisonment to be stated,
nor any omission or misstatement in answering the questions on the proposal
form, the Court ordered a new trial on the ground that it ought to have been
submitted to the jury to say whether the imprisonment was a material fact,
forif it was the keeping it back would be fatal to the policy.
(z) Quarantee Co. v. Mechanics may arise partly from the fact that
(1896), 80 Fed. Eep. 766. the questions asked in the proposal
(a) [1899] 1 Q. B. 782. or by the medical examiner are ex-
(6) v. Royal
China Traders' Ins. tremely numerous and detailed as
Exchange, [1898] 2 Q. B. 187, 193. compared with the general practice
(c) Joel v. Law Union and Croiim, in this country. Clark v. Manu-
[1908] 2 K. B. 431; Piedmont and facturers' Ins. (1850), 8 How. 248,
Arlington Life v. Ewing (1875), 92 249 ; Rawls v. American Mutual
V. S. 377. The tendency, however, (1863), 27 N. Y. 282 Supreme ;
in America is to take the view that if Council v. Fidelity (1894), 63 Fed. 48 ;
the assTired answers all the questions Penn. Mutual v. Mechanics (1896), 72
put to him frankly and fully he has Fed. 41 3.
no further duty of disclosure. This
Morrison v. Muspratt (1827), 4 Bing, 60

Morrison v. The assured proposed her life for insurance,and was examined by a medical
Muspratt.
man on behalf of the insurance company. The proposal was not accepted
for some three months, and then the assured was again examined on behalf
of the insurance company. Between the dates of the two examinations the
assured had been troubled with a cough and become emaciated, and had con-
sulted and been attended by a doctor, who, however, thought there was no
disease of structure. Nothing of this was disclosed to the insurance company.
A verdict was returned for the plaintiff, but the Court ordered a new trial on
the ground that it was not left to the jury to say whether the illness and attend-
ance of the doctor was a material fact which ought to have been disclosed.
Lindenau v. Desborough (1828), 8 B. & O. 586
Linde.nau v. An insurance was effected by the

on the life of the Duke of Saxe
plaintiff
Desborough. Gotha. The company, through their agent in Germany, submitted questions
to the duke's physicians. These, although answering the questions accurately,
did not disclose the fact that the duke had lost the use of his speech and mental
faculties.Lord Tenterden at the trial proposed to leave it to the jury to say
whether that fact was material, and, if it was, to direct them that the policy
was void. The plaintiff elected to be nonsuited, and moved for a new trial,
which was refused and the direction held to be good.
Abbott V. Howard (1832), Hayes, 381
Abbott V. The assured answered fully and correctly the questions put to him, but did
Hoicard. not disclose the fact that some years previously he bad been operated on for a
^
tumor. According to the medical evidence, such a tumor indicated a debili-
tated constitution. It was argued for the assured that the Court could not
travel outside the written contract and that therefore if the answers made to
the questions were in themselves correct and there was no breach of warranty,
the policy could not be avoided except on the ground of fraud. One of the
and supported it in a long and elaborate
judges. Smith, B., adopted this view,
judgment, but the majority of the Court held that it should have been left to
the jury to say whether the existence of the tumor and the operation were
material facts of which the insurer ought to have been informed, and that if
they had found it to be so, there should have been a verdict for the defendants.
Geach v. Ingall (1845), 14 M. & W. 95
Oeach v. The declaration of the assured stated inter alia that he had not had any
Ingall. spitting of blood. It was proved at thethat the assured had on one
trial
occasion, about four years before the policy was effected, spat blood and ex-
hibited other symptoms of consumption. The Court were of opinion that the
declaration referred to the disease called spitting of blood, and might there-
fore be true but in any case the assured ought to have disclosed the fact that
;
he spat blood if even on only one occasion, since that would have put the in-
surers on inquiry as to the cause of it.
NON-DISCLOSUBE 305
Non-disclosure of intemperate habits may, even although no intemperate

^^'
question asked, be sufficient ground for avoiding the pohoy (/ ).
is ^
In an American case it was left to the jury to say whether the Threats of
™"'^'^'^^-
fact that the assured's life had been threatened was material,
and ought to have been disclosed (g).
Similarly in fire insurance the insured, even although he may Applicant for
fire insurance.
have accurately answered all questions put to him, must disclose
anything else within his knowledge which is material.
Buse V. Turner (1815), 6 Taunt. 338

Application was made for insurance upon a warehouse without disclosing
™''"6»".
that there had been a fire the same evening in a house nearly adjoining, and
that there was danger of it breaking out again. In fact, after the insurance
was effected the fire did break out again, and the warehouse was burned. In
an action on the policy to recover the loss the jury, although they acquitted
the plaintifE of any fraudulent intention, found a verdict for the defendants,
and the Court refused to set the verdict aside.
It has been held that an appUcant for fire insurance ought to Previous
disclose the fact that there have been previous fires on the same jnoendkry
premises, whether the question is asked or not The
(h). fact threats,
that there have been attempts made to set the premises on fire,
or that there have been threats of incendiarism should undoubtedly

be disclosed although if the threats are of an apparently
(i),
trivial nature, and Ukely to occasion no serious apprehension in

the mind of a reasonable man, they may be disregarded as imma-
terial (k).
But although the usual series of questions which are put to Questions put
the applicant for insurance does not entitle him to conceal all
°f ^he*^'*'""^
material facts as to which there no interrogation, yet the form
is tract may
and nature of the questions or the declaration by the assured, or duty of

the conditions in the poHcy may substantially modify the duty of disclosure.
disclosure. It may frequently be inferred that, when certain

matters are not inquired into, nor made the subject of warranty,
and other kindred matters are expressly dealt with, the intention
of the insurers is to invite information on these matters which
they deem material, and waive information as to other matters
{/) Rawlins v. Desborough (1840), (i) Wait v. Union (1884), 5 N. S.

2 Mood. & Rob. 328, 333. W. R. (Law) 48.
{g) Connecticut Mutualv. M'Whdrter
(1896), 73 Fed. 444. {k) Curry v. Sun Fire (1893), 155
{h) Hanley v. Th'e Pacific Fire Pa. 467.
(1893), 14 N. S. W. R. (Law) 224.
I.L. 20
which they deem immaterial (l). Thus, if the question were put
whether any of the assured's parents, brothers or sisters, had died
of consumption, or been afflicted with insanity, there is an obvious
waiver of similar information with regard to more remote relations,
and the insurers could not avoid the policy on the ground that
an uncle or aunt had died of consumption or been insane.
So, too, the insurers may, by asking the applicant whether he
believes there is anything else material to be disclosed, limit
their right to disclosure, and make the assured the judge of
materiality instead of the jury.
Jones V. Provincial Insurance (1857), 3 C. B. (N. S.) 65
Jones V. Pro- The assured, on applying for a policy on his life, signed a declaration to
vincial Insur- the effect that he had not had certain specified diseases, and that " he was
ance.
not aware of any disorder or circumstance tending to shorten life or to render
an insurance on his life more than usually hazardous." The assured had had
severe bilious attacks shortly before the insurance, which, however, he did not
disclose. Medical opinion differed as to whether such attacks tended to shorten
Ufe. The judge told the jury that if the assured honestly believed at the time
he made the declaration that the bilious attacks had no effect upon his health
and did not tend to shorten life or to render an insurance upon it more than
usually hazardous, the fact that he was aware that he had had those attacks,
even though (without his knowledge) they had such a tendency, would not
defeat the policy. This direction was upheld upon appeal, and Cresswell, J.
in delivering the judgment of the Court, distinguished the case from Lindenau v
Deshorough (n), and while admitting that the general rule was that the assured
must disclose all material facts, and that it was a question for the jury whether
any particular fact was material, yet, he said, " it was equally clear that the
underwriters may in any particular case limit their right in this respect to that
of being informed of what is in the knowledge of the assured not only as to its
existence in point of fact, but also as to its materiality " (o).
The duty to disclose will be still more restricted if the poUoy

is declared to be indisputable, except on the ground of fraud.
When such is the case, or if it is declared that the policy shall be
voidable if there is any " fraudulent concealment," a non-dis-
closure will not affect the policy unless it- is made with intent to
deceive (p).
Absolute duty Apart, however, from such modifications introduced by the
to disclose
Eawlsv.AmericanMutual{18G3),
(l) (p Fowkes
) V. Manchester a/nd
27 N. y. 282 Penn. Mutual Life
; London (1863), 3 B. & S. 917 ; Scot-
V. Mechanics (1896), 72 Fed. Rep. 413. tish Provident v. Boddam (1893), 9
(n) (1828), 8 B. & C. 586. T. L. R. 385 Naughter v. Ottawa
;'
(o) 3C. B. (N. S.), atp. 86. Agricultural {18^S), 43 U. C. Q. B. 121.

NON-DISCLOSURE 307
special contract, the duty is an absolute duty to disclose every- all facts
thing within the knowledge of the proposer or his agent, which influence a
^^^^°"-^^
would judgment of a rational insurer governing himself
affect the
by the principles and calculations on which insurers do in practice

act(g), and which might induce such an insurer either to refuse the
insurance altogether, or not to effect it except at a larger pre-

mium (r). On the one hand, he may have to disclosemore than
is actually relevant to the estimate of the risk, and on the other
hand, he is not bound to disclose everything which might influence
the mind of the particular insurer with whom he is dealing.
In lonides v. Pender (s), there was a valued policy insuring Over-valua-
^'^"^
goods against marine risks.The valuation was much in excess poUoy.
of the real value of the goods, and this fact was not disclosed.
The evidence showed that where there is excessive valuation,

underwriters at Lloyd's consider the risk speculative, and that
may induce them to refuse the risk, although, of course, in a valued
policy the fact of over-valuation does not affect the actual risk
run. This principle is equally applicable to fire, life, and other
insurances. Anything which although extraneous to the actual
risk is usually a matter for consideration by insurers, must be
disclosed. Thus it has been held that where the assured had, Previous
with reference to previous insurances with the same underwriters, frauds"

acted fraudulently by undervaluing their shipments declared
under open marine policies, this fact ought to have been disclosed
on their making application for further open policies (t). This is
a strong case, but perhaps it is hardly sufficient authority for
saying that a man is bound, on applying for insurance, to disclose
any fraud which he may have previously resorted to in obtaining
insurance policies from or in making claims against the same or
other insurers. No doubt such matters are taken into considera-
tion by insurers in considering appHcations, and if they knew,
for instance, that the appHcant had previously made a fraudulent
claim against some other insurers, it is most probable that they
would decline the risk. On principle, therefore, it would seem that
such things ought to be disclosed. In America, however, it has Assured's bad
been said that a man cannot be bound to, nor could it be expected
that he should, speak evil of himself (u). " Good manners," said
lonides v. Pendef (1874), L. R.

{q) (») (1874), L. R. 9 Q. B. 531.
9 Q. B. 531; Stribley v. Imperial (t)Rivaz v. Oerussi (1880), 6
Marine (1876), 1 Q. B. D. 507. Q. B. D. 222.
(r) Elton V. Larhins (1832), 5 (u) New York Bowery Fire v. New
C. & P. 385, 392. York Fire (1831), 17 Wend. N. Y. 359,
a New York judge, " on the part of the underwriter, and self-
respect on the part of the applicant, would forbid a conversation

on the subject of character. If the underwriter wished informa-
tion on that point, he would naturally seek it from some other
In case of source." The Supreme Court, however, held that in a case of
reinsurance.
reinsurance, the character of the original assured was material,
and if known to be bad, this ought to be disclosed (x). In that case,
a fire insurance company, having taken a fire risk on dry goods
and clothing, reinsured part of their risk in another company.
Previous to the reinsurance they heard that their assured had a
bad character with insurance offices, that he had been twice
burned out, and had difficulties with his claims. This they did
not communicate on applying for reinsurance, and it was held
that the reinsurance policy was voidable on that ground.
Previous It would seem that in marine insurance it is not necessary,
refusals.
as a rule, to disclose the fact that the risk has been refused else-
where (y). But probably in life poUcies and all other risks except
marine, the fact of a previous refusal ought to be disclosed,
although no questions are asked {z). Jessel, M.E., took this view
in London Assurance v. Mansel (a), but the case itself is not an

authority on the point, because the question was asked, and
imperfectly answered, and the Court held that the answer was
untrue. In another case, Malins, V.C, said that he did not think
the Court would oblige a person to say, without being questioned,
by what offices he had been refused (b). The fact, however, that
there has been a refusal is undoubtedly material (c), and is always
taken into consideration by insurance offices when known, and
on would seem that it is a material fact
principle, therefore, it
which ought to be disclosed. In New South Wales it was held

that where the assured had made proposals to other companies,
and withdrawn them, there was no obligation on him spontaneously
to disclose such incomplete negotiations (d).
a
Retirement In a Scottish case an insurance was effected on the life of
from business.
366,367 Sun Mutttalv. Ocean {1882),

;
(z) Moore v. Citizens' Fire (1888),
107 U. S. 485, 510 Penn. Mutual
; 14 Ont. A. R. 582 ; Parsons v.
Life V. Mechanics (189 6), 72 Fed. 413. Citizens (1878), 43 U. C. Q. B. 261.

(x) New York Bowery Fire v. New (a) (1879), 11 Ch. D. 363, 371.
York Fire (1837), 17 Wend. N. Y. (6) General Provincial, In re (1870).
359. 18 W. R. 396.
Lehonv. Straits Insurance {189i), (c) Sihbald V. Hill (1814), 2 Dow,
(y)
10 T. L. R. 517 ; Glasgow Assurance 263, 266.
V. Symondson (1911), 16 Com. Cas. (d) Wattv. Union Insurance {\88i),
109, 119. 5 N. S. W. R. 48.

NON- DISCLOSURE 309
commercial agent then resident in Iceland. Before the issue of

the policy the assured resigned the agency at three months' notice.
It was held that the fact of resignation was not material, and
that there was no obligation to disclose it (e).
It has been held that the assured is not bound to disclose the other
™™rance.
fact that he is insured elsewhere, unless the question is asked or
it is made a condition of the policy (/).
Matters affecting the insurers' right to subrogation ought Facta only
probably to be disclosed, for, if the assured has so placed himself subrogation,
that the insurers will be deprived of their right to make good
their loss by proceeding against third parties, the ultimate risk
is undoubtedly increased.
Tate V. Hyslop (1885), 15 Q. B. D. 368

The rates of premiums upon marine insurances, Tate v.
insurers advertised two
which included and unloading, the lower rate to be charged Hyslop.
risks of loading
when the insurers had a remedy over against the lightermen, and the liigher
rate when they had no recourse against the lightermen. The assured knew
that the insurers charged these difierent rates, but they accepted a pohcy at
the lower rate without disclosing the fact that they had contracted with the
lightermen on the terms that they should be Uable only for negligence. The
Court held that there was concealment of a material fact, and that the policy
was vitiated. The judgments of the Court lay stress upon the fact that the
insurers had decided to charge a higher premium when there was no recourse,
and that this was known to the assured. Brett, M.R., says, " If they had
kept this resolution in their own breasts it would have had no eSect upon the
matter which is here in question, as it would only have affected salvage, and
would not therefore have been material." Bowen, L. J., does not place quite so
much reliance on the fact that the assured knew of the different rates. He
says, " It is impossible to say that the existence of such an arrangement was
not material, that is to say, a fact wliich a prudent and experienced under-
writer would have taken into consideration in estimating the premium. It
is not necessary to discuss the question whether what would merely lessen the
salvage is a matter which ought to be disclosed, nor to enter into the nature of
the arrangement between the plaintiffs and the lightermen. What I found my
judgment upon is this, that at the time of effecting these policies there was
an arrangement which was intended by the assured to be acted upon and which,
as found by the jury, was a material fact affecting underwriters in estimating
the premium."
In America the tendency is to follow the dictum of Brett, M.E.,

in the above case, and so it has been held that there is no obKga-
tion on the assured to disclose arrangements, whereby others
(e)Turnhull v. Scottish Provident 43 U. C. Q. B. 261; M'Donell v.

(1876), U
Scots L. R. 146. Beacon (1858), 7 U. C. C. P. 308.
(/) Parsons v. Citizens (1878),
may be relieved from liability and get the benefit of the insurance,
unless (1) the assured knows that it would affect the premium if
known to the underwriters ; or (2) there is a condition in the

policy specifically subrogating the insurers to all rights of the
assured against third persons responsible for the loss (g). If in
any particular class of risk it is known that insurers do not, in
fact, consider their right of subrogation as an element in estimat-
ing the risk, there would clearly be no duty to disclose the fact
that third persons had been released from liability (h). And
where it is the usual course of any particular business to contract
on the terms that one of the parties shall be relieved entirely, or
in part, from his common law liability, the insurers are deemed to
be acquainted with such course of business and therefore to have
knowledge of the usual terms of contract. In a New South
Wales case certain concurrent insurances were specified in the
policy, and was held there was no duty to communicate the
it
fact that during the currency of the policy these had been allowed
to lapse (i).
Nature or It would seem that, apart from special questions or conditions,

extent of
interest in
the assured is not bound to disclose either the nature or extent of
the subject his interest in the subject matter of the insurance {k). In an early
matter.
American case (Z), Story, J., pointed out how important a question
the interest of the assured might be. The smaller his interest the
less likely was he to use the necessary precautions to avoid
the calamity insured against, and Story, J., thought that it was
a matter which ought to be communicated. But the protection
of fuU insurance will probably make the assured as careless as the
man whose original interest is small, and therefore the nature or
extent of the assu red's interest, so long as it is a substantial

insurable interest, is not likely to affect the insurer's estimate of
the and the authorities show that it is not as a rule a material

risk,
fact which ought to be disclosed in the absence of inquiry (m).
Phcenix v. Eric Transportation

(g) (h) Crowley v. Cohen (1832), 3
(1886), 117 U. S. 312; Jackson v. B. & Ad. 478, 485 ; Mackenzie v.
Boylston Mutual (1885), 139 Mass. Whitworth (1876), 1 Ex. Div. 36.
508 British and Foreign Marine v.
; (I) Colurribian Insurance v. Law-
Gulf (1885), 63 Tex. 475; Payer- rence (1836), 10 Pet. 507.
weather v. Phoenix (1890), 118 N. Y. (to) Reddick v. Saugeen MuUial
324 Lett v. Guardian Fire (1889),
; (1888), 15 Ont. A. R. 363 ; Klein v.
52 Hun. 570. Union Fire (1883), 3 Ont. R. 234;
{h) Pelzer Manufacturing Co. v. Clement v. British American (1886),
St. Paul (1890), 41 Fed. Kep. 271. 141 Mass. 298 ; Cumberland Valley
(j) Hordern v. Commercial Union Mutual V. Mitchell (1864), 48 Pa.
(1884), 5 N. S. W. L. R. (Law) 309. 374.
NON-DISCLOSURE 311
From this it follows that it is unnecessary for the assured

spontaneously to disclose his title to the property insured (n). He
need not disclose that he has merely an equitable title (o), such as Title to
that of a vendee before completion If he holds the legal P''°P^'^*y-

(p).
title, as in the case of a mortgagee or trustee, and insures for the
fuU value, he need not disclose the fact that he is not beneficially
interested to the full amount (g). It was held in a Canadian case Incum-
'^'^*°°^-
that, even although no questions were asked, an appUcant for fire
insurance in a mutual company, was bound to disclose the fact
that the premises were mortgaged (r). This is, however, a some-
what special case, as the mutual insurance company had a statutory
lien on all property insured with it, and it was therefore of more
than ordinary importance for the company to know the state of

the title. In ordinary cases an appHcant is not bound, apart from
special iaquiry or condition, to disclose incumbrances on the
property insured (s). Where questions are asked as to title interest,
or incumbrances, a correct and full answer must be given {t).

The assured must not only which he has Rumours and
disclose facts of
actual knowledge, but if he hears any rumour or receives anv ?^'^-°T ™^*
opinion or information as to material facts, he must disclose all
that has reached him (m). And even although he may not himself
believe the rumour to be true, or the opinion to be sound, that is
no answer to a charge of non- disclosure (x). He must com-

municate it what it is worth,
to the insurer for may
so that he
exercise his own judgment upon it. And even if a rumour should
ultimately turn out to be false, or an opinion unsound, the insurance
may be avoided on the ground that it was not communicated (y).
British Equitable v. Great Western (1869), 38 L. J. Ch. 314
Prior to the insurance of hislife the assured had consulted a specialist, who British
told him he was in a very dangerous state of health. His own physician said ^2"«to^'e
TFerfcrn.
(n) Kemochanv.New York Bowery (s) Klein v. Union Fire (1883), 3
(1858), 17 N. Y. 428; Clement v. Ont. R. 234; Cumberland Valley
British American (1886),141 Mass. 298; MiUual v. Mitchell (1864), 48 Pa. 374.
KZemv. t7m(m(1883) 3 Ont. R. 234. {t) Parsons v. Bignold (1846), 15
(o) Gilman v. Dwelling House L. J. Ch. 379.
(1889), 81 Me. 488. (u) Durrell v. Bederley (1816),
(p) Rumêy v. Phoenix (1880), 17 Holt, N. P. 283, 285; De Costa v.
Blatchf. 527. Scondre<(1723),2PeereWimams, 170.
(q) Provincial Ins. v. Eeesor (1874), {x) Morrison v. Universal Marine
21 Grant, 296. (1872), L. R. 8 Ex. 40, 197, at p. 53 ;
(r) Bleakley v. Niagara District Shirley v. Wilkinson (1781), 3 Dougl.

(1869), 16 Grant, 198, 201 ; Coulter v. 41.
Equity Fire Insurance (1904), 9 Ont. {y) Lynch v. Hamilton (1810), 3
L. R. 35 ; Reddick v. Saugeen Mutual Taunt. 37, 45.
(1888), 15 Ont. A. R. 363.
the specialist was wrong, and the assured did not disclose the matter to th
office. The policy was rescinded. The opinion of the specialist, even although
wrong, was a material fact which ought to have been disclosed.
Sources of Probably thereis no duty to disclose information which is not

possible
information itself material, but which might lead to the discovery of important
need not be facts. In Joel v. Law Union (a), Buckley, L.J., said that the
disclosed.
fact that the assured was attended by a brain specialist was not
in itself a material fact. the specialist attended on the advice
If
of a family doctor, and the assured had no suspicion of brain
trouble, and was not told that there was anything seriously wrong,
the mere attendance was not material. The name of the specialist
was merely a source of information which might or might not'
prove material.
Test of In order to show that a fact is material and should have been
materiality.
disclosed, it is not necessary for the insurers to prove that they
would have acted differently if the facts concealed had been
disclosed, it is quite sufficient for them to say that these facts
might have induced reasonable insurers to decline the risk or
increase the premium.
Traill v. Baring (1864), 4 De G J. & S. 318

Traill v. An insurance company making an application to another company for
Baring. reinsurance stated that they intended to retain a portion of the risk. Subse-
quently, before the reinsurance was completed, they changed their minds and
reinsured the whole balance of the risk with other insurers. It was argued
that the change of intention was not material to the risk. Turner, L.J. (6),
said that this argument was entirely beside the question. " Had this repre-
sentation of what had occurred and of the change of intention on the part of
the defendants been communicated to the plaintiffs it is impossible to say what
—
course the plaintiffs would have pursued whether they would or would not
have accepted the policy. They might have done so, but it is equally clear
that they might not and we cannot say whether they would or would not.
;
But it was to them the communication should have been made in order that
they might exercise their option upon the subject."
Innocent The duty on the part of the assured to disclose all material facts
omission or
mistake does within the knowledge of himself or his agents is absolute, and
not excuse although he may have had no fraudulent intention to keep anything
the assured.
back, if he has in fact done so, the insurance may be avoided by
the insurers (c). It is no answer for the assured to say that he
(o) [19081 2KB. 863. Boehm (1766), 3 Burr. 1905, at

(6) At p. 330. p. 1909 Blackburn, J., in lonides v.
;
(o) Lord Mansfield in Carter v. Pender (1874), L. E. 9 Q. B. 531;

;
,
NON-DISCLOSUKE 313
made a mistake (d). " It is well-established law," said Cook-

burn, O.J., in Bates v. Hewitt (e), " that it is immaterial whether
the omission to communicate a material fact arises from intention
or indifference or a mistake, or from it not being present to the
mind was one which it was material
of the assured that the fact
to make known." The policy may be void on the ground of non-

disclosure, notwithstanding that the assured may have acted
with perfect good faith and honesty of intention (/).
The opinion of the assured as to the materiality of a Assured's
fact will not as a rule be considered, and he cannot plead materUi,lity*i°
in answer to the defence of non-disclosure that he did not unimportant,
know that the fact was one material to be disclosed (g). The
question is whether any particular circumstance was in fact
material, and not whether the party believed it to be so (h).
Care, however, must be used in applying this rule to disclosures as Application of
to health by applicants for life insurance (i). It is obvious that a

gyj^p^ngôf
man may have some slight symptom, and be aware of its presence, disease,
and yet think it so entirely trivial that it would never cross his
mind to mention it to any one. But a physician would detect
in the same symptom the incipient stage of a fatal disease, and
therefore it might be said that the fact was one which ought to
have been disclosed and that the assured's opinion as to the
triviality symptom was immaterial. To place such an
of the
obligation upon every applicant for life insurance would be an
obvious absurdity, and indeed the argument which would impose
such obligation is based upon a fallacy. The assured is only
bound to disclose what he knows. If all he knew was that he had
a slight discomfort that was a fact which was not material. It
could only become material by the addition of the further fact that
in the opinion of medical men this particular discomfort was a
Abbott V. Howard (1832), Hayes, 381 1909 ; Lindenau v. Desborough (1828),

Lord Campbell, C.J., in Wheelton v. 8 B. & C. 586 ; Traillv. Baring (1864),
Hardisty (1858), 8 E. & B. 232, at 4 De &
S. 318, 328.
G. J.
D. 255 ; Best, C.J., in Morrison v. (1867), L. E. 2 Q. B. 695, at
(e)
Muspratt (1827), 5 L. J. (O. S.) C. P. p. 607.
63, 65; Joel v. Law Union, [1908] 2 (/) Willes, J., in Anderson v.
K.B. 863. The dictum of Lopes, L.J. Pacific (1872), L. R. 7 C. P. 65, at
in Hambrough v. Mutxial Life (1895), p. 68.
72 L. T. 140, to the effect that in the {g) Lindenau
v. Desborough (1828),
absence of fraud mere silence is no 8 B. & 586, 592 ; Bolfe, B., in
C.
ground for rescission is contrary to DaZg'Ks^ v. Jarwe (1850), 2 Mac. & G.
authority, and is expressly dis- 231, 243.
approved in JoeZ V. Law Union, [1908] (h) Bayley, J., 8 B. & C. p. 592.
2 K. B. 431. (i) Swete v. Fairlie (1833), 6
(d) Lord Mansfield, C.J., in Carter C. & P. 1.
V. Boehm (1766), 3 Burr. 1905, at p.
serious symptom of disease, and if that additional fact is not known

to the assured there is no obligation to disclose.
Life Association of Scotland v. Foster (1873), 11 M. 351
Life Associa- At the time an insurance on her life the assured had a slight
of effecting
tion of swelling in her groin. gave her no pain or uneasiness of any kind, and, since
It
Scotland v.
Foster.
she attached no importance to it whatsoever, she did not mention it to the
company's doctor. To a medical man this swelling would have indicated the
presence of a rupture which might become dangerous to life, and it was there-
fore argued that there had been a non-disclosure of a material fact. The Court
refused to adopt this view, and in giving judgment for the representatives of
the assured Lord President Inglis thus stated the law as to non-disclosure [l) :
" Contracts of insurance are in this, among other particulars, exceptional,

that they require on both sides uberrima fides. Hence, without any fraudulent
intent and even hona fide, the insured may fail in the duty of disclosure. His
duty is carefully and diligently to review all the facts known to himself bearing
on the risk proposed to the insurers, and to state every circumstance which any
reasonable man might suppose could in any way influence the insurers in con-
sidering and deciding whether they will enter into the contract. The fact . . .
undisclosed may not have appeared to the insured at the time to be material,
and yet if it turn out to be material, and in the opinion of the jury was a fact
that a reasonable and cautious man proposing insurance would think materia]
and proper to be disclosed, its non-disclosure will constitute such negligence
on the part of the insured as to void the contract. The only question, there-
fore, is whether the existence of the swelling in Mrs. Foster's groin was such
a and that question in the present case we are to decide as jurymen. My
fact,
opinion is, upon a consideration of the whole circumstance as disclosed in the
evidence that the swelling which is proved to have existed at the date of the
contract of insurance has not been shown to be such a fact as a reasonable and
cautious person unskilled in medical science and with no special knowledge of
the law and practice of insurance would believe to be of any materiality or in
any way calculated to influence the insurers in considering and deciding on
the risk."
Fletcher In Joel V. Law Union and Crown, Fletcher Moulton, L.J.,

Moulton, L. J.,
in Joel V. states the extent of the applicant's obligation to disclose the
Law Union presence of any physical symptom of disease.
and Croiim.
" The duty is a duty to disclose, and you cannot disclose what you do not
know. The obligation to disclose, therefore, necessarily depends upon the
knowledge you possess. I must not be misunderstood. Your opinion of the
materiality of that knowledge is of no moment. If a reasonable man would
have recognised that the knowledge in question was material to disclose, it is
no excuse that you did not recognise it. But the question always is. Was the
knowledge you possessed such that you ought to have disclosed it ? Let me
take an example. I will suppose that a man has, as is the case with almost
occasionally a headache. It may be that a particular one of those
all of us,
headaches would have told a brain specialist of hidden mischief. But to the
(l) 11 M. p. 359.
'
NON-DISCLOSURE 315
man was an ordinary headache undistinguishable from the rest. Now, no

it
reasonable man would deem it material to tell an insurance company of all

the casual headaches he had had in his life, and if he knew no more as to this
particular headache than that it was an ordinary casual headache there would
be no breach of his duty towards the insurance company in not disclosing it.
He possessed no knowledge that it was incumbent on him to disclose because
he knew of nothing which a reasonable man would deem materia] or of a
character to influence the insurers in their action."
Although it may be proper for the Court to lay down the Materiality is
°^ ^^^
general principles upon which certain matters are or are not
"^
material, the question is ultimately one of fact to be decided by a

jury (m). It cannot be determined purely as a matter of law (n).
In marine insurance cases the jury are assisted by expert evidence

of underwriters who speak to the practice of underwriters in giving
consideration to any particular facts and circumstances (o).
It was at one time much doubted whether such evidence was

admissible, but now it is invariably received without objection (p) ;
and in the case of life, fire, and other insurances similar evidence
would doubtless be received (q).
Some facts may be so obviously material that if the evidence but verdict of
^
is undisputed a finding of the jury that they were immaterial getâsTdf if
would be perverse (r). In such cases the judge would be entitled there is no
to withdraw the matter from the jury, or if it were left to the jury support it.
a perverse verdict might be set aside (s). Thus, where there was
undisputed evidence of previous insanity, constant raising of blood,
or of consumption, or of equally serious matters, no reasonable
men could honestly come to any other conclusion but that the
facts But where the question was whether the fact
were material.
that the assured's parents had consumption was material, the Court,
in view of the conflict of opinion among medical men as to whether
consumption was hereditary, left it to the jury (i).
As in the case of misrepresentation so with concealment, it Must fraudu-

lent conoeal-
(m) Morrison V. Muspratt (1827), 4 (q) Quin National (1839), Jones

v.
Bing. 60 ; Rawlins v. Desborough & Carey, 316, 333 Penn. Mutual v.
;
(1840), 2 Mood. & R. 333; Lindenau Mechanics' Savings Bank (1896), 72

V. Desborough (1828), 8 B. & C. 586 ;
Fed. 413 Hanley v. The Pacific Fire
;
Huguenin v. Rayley (1815), 6 Taunt, and Marine (1893), 14 N. S. W. R. 224.

186; Swete v. Fairlie (1833), 6 0. & (r) Mallory v. Travellers (1871),
P. 1. 47 N. Y. 52 Smith v. Aetna (1872),
;
A. L. Smith, L.J., in Seaton v.

(n) 49 N. Y. 211.
Heath, [1899] 1 Q. B. 782, 791. (s) Brown v. Greenfield Life (1899),
(o) Herring v. Janson (1895), 1 172 Mass. 498.
Com. Cas. 177, 179. {t) Weber v. Metropolitan (1895),
{p) Arnould's Marine Insurance, 172 Pa. 111.
5626.
ment be also is sometimes said that if there is proof of fraud the insurance will
material ?
be vitiated, whether the fact concealed was material or not (m).
It may be doubted whether in law this is strictly accurate, but in

practice it is not of much importance, since, if the jury are satisfied
that the assured withheld information with intent to deceive,

they will certainly find that the information was material.
Facts which " There are many matters," said Lord Mansfield in Garter v.
need not be " as to which the insured may be innocently silent. He
disclosed. Boehm {x),
need not mention what the underwriter knows what waly :
soever he came to the knowledge. The insured need not mention

what the underwriter ought to know what he takes upon himself
:
the knowledge of or what he waives being informed of. The

;
underwriter need not be told what lessens the risque agreed and
understood to be run by the express terms of the pohcy. He
needs not to be told general topics of speculation, and either
party may be innocently silent as to grounds open to both to
exercise their judgment upon."

Pacts known It is obvious that the insurers cannot complain of having been
to the
insurers.
deceived when from some other source they had knowledge of the
facts which they say were not communicated (y). As Cockburn,
C. J., put it in Bates v. Hewitt (z), the insurers cannot set up the
defence of non-disclosure, not because the assured will have
comphed with the which rested on him to communicate
obligations
that which was material, but because it will not he in the mouth of
the underwriter to say that a material fact was not communicated
to him, which he had present to his mind at the time he accepted the
insurance. Probably even if the non-disclosure by the assured was

and fraudulent, the insurers cannot set aside the pohcy
intentional
when the fraud by reason of their knowledge had no influence on
them, or effect in inducing the contract.
and present In order that the plea of knowledge may avail the assured,
to their
minds.
he must show that the facts not disclosed were present to the
minds of the insurers at the time when they accepted the risk,
otherwiseit is the same as if they had been entirely ignorant,

and the assured is not reheved of his obligation to disclose.
The assured cannot say, " You, the insurers, once had the
This was assumed to be so by

(m) {x) (1766), 3 Burr. 1906, 1911.
Mathew, J., in the questions put to (y) Lindenawv. Deaborough (1828),
the jury in Herring v. Janson (1895), 8 B. & 0. 586 ; Pirn v. Leiois (1862),
1 Com. Cas. 177, at p. 180. Vide 2 F. &F. 778.
supra, p. 290. (2) 1867), L. R. 2 Q. B. 595, 605.
NON-DISCLOSUBE 317
knowledge of these facts, and you ought to have remembered

it." It is the assured's duty to gather the facts together and
present them to the insurers, and the insurers are not bound to
rack their brains for forgotten information which they may
previously have possessed (a).
It is not sufficient for the assured to say that the insurers had Means of
the means of information, and that if they had chosen to make ôt'^fficimt!
inquiries or to examine the materials in their possession they would
have ascertained the facts (6). This would be as much as saying that
the insurers should have performed the assured's duty. It is the
duty of the assured, and not of the insurers to make inquiries and
examine the materials. But, on the other hand, if reasonably
sufficient information has been placed before the insurers, and they
choose to neglect the information, they cannot take advantage of
their own blindness and negligence ; if they shut their eyes to the
light it is their own fault (c). Actual present knowledge has been
said not to be essential if the insurer knew that he had the
means of knowledge (d). That is to say if it was present to
his mind that a certain matter was important, and he knew
that the information was lying at his hand, or could be had

for asking, it would be unfair to allow him to say afterwards that
he did not know (e).
If the information of the insurer is mere rumour and report, Knowledge

that mil not entitle the assured to say that the insurer knew ^'^^'^^
^
•'
complete
the fact of which the assured had definite knowledge (/). If knowledge,
the assured has more complete knowledge of certain material
facts he is bound to give the benefit of his knowledge to the insurers,
even although they may have a general, but less complete, know-
ledge (g). If not disclosed the question will be whether the
additional detailed information possessed by the assured was in
fact material.
If the insurer waives information on any particular subject Where insurer
he cannot afterwards say that the facts were not as he expected

fnformatfon
them to be, and complain of non-disclosure (h). But information Accepting
incomplete
(a) Bates v. Hewitt (1867), L. R. 2 (e) Joel v. Law Union and Crown, answers.
Q. B. 595, 606. [1908] 2 K. B. 863 ; Freeland v. Glover
(b) Bates v. Hewitt (1867), L. R. 2 (1806), 7 East, 457 ; Oaheley v. Ood-
Q. B. 595; Morrison v. Universal deere (1861), 2 F. & F. 656.
iW"ann6(1872), L. R. 8Ex. 40, 197. (f) Lindenauv. Desborough {1828),
(c) Bates v. Heiritt (1867), L. R. 2 8 B. & C. 586.
Q. B. 695, 605. (g) SunMutualv. Ocean (1882), 107
(d) Foley v. Tabor (1861), 2 F. & F. U. S. 485.
663. {h) Carter v.Boehm (1766), 3 Burr.
;
is not necessarily waived by the insurers accepting without

com-
ment imperfect answers to questions which they have put to
the assured (i). The natural inference may be that there was
nothing more of any importance to communicate in answer to
the question. In a Scottish case (k) the insurers accepted a state-
ment where the question, " Can you give any, and what, informa-
tion respecting his habits ? " was left unanswered. The Court
held
that there was no waiver of information as to the habits of the life
insured, and one of the judges said that " an implied abandon-
ment, or waiver, does not relieve from a distinct and conscientioug
obligation to disclose everything material " (Z). It is conceivable,
however, that if certain questions were left unanswered the insurers
might be held to have waived the information by not insisting on
an answer (m).
Assured's own The assured is not bound to disclose what is merely matter of
opinion.
inference or judgment from the facts. He is bound to supply the
insurers with the facts, but he is not bound to think for them (n).
Legal advice. Neither is the assured bound to provide the insurers with
legal advice, and so long as he fully discloses the facts he is not
bound to point out their legal consequences (o).
Where Certain facts, too, the insurer must be presumed to have
knowledge of
knowledge of, and he cannot be heard to say that he was ignorant.
insurer may-
be presumed. Thus, he is supposed to know all matters of public notoriety (jp).
For instance, on an insurance on a sovereign's life at the time of

a coronation or other royal pageant the insurer would probably
be presumed to have all such knowledge as to his health and
habits as was in the possession of the public generally.
As to the The insurer is always taken to have knowledge of the ordinary

ordinary man insures a private dwelling
attributes of a risk. Thus, if a
attributes of
a risk, house, he need not disclose the fact that he has coal or gas fires,
or that the house is lit with gas or electricity. Unless specific
questions directed to the particular matter are asked, nothing

need be disclosed which one would ordinarily expect to find
1906, 1911 ; Court v. Martineau (n) Carter v. Boehm (1766), 3 Burr.

(1782), SDougl 161; Everett v.Des- 1906, 1911 ; Bates v. Heivitt (1867),
borough (1829), 5 Bing. 503, 520. L. B. 2 Q. B. 595, 605 Gandy v.
;
{i) London Assurance v. Mansel The Adelaide Marine (1871), L. R. 6

(1879), 11 Ch. D. 363, 367 Forbes v.
; Q. B. 746.
Edinburgh Life (1832), 10 S. 451. (o) The Bedouin, [1894] P. 1, 12
(fc) Forbes v. Edinburgh Life {1832], Crittenden v. Springfield Go. (1892),
10 S. 451. 85 Iowa, 652.
(Z) IDS. at p. 461. (p) Bates V. Hewitt (1867), L. B. 2
(m) Connecticut Mutual v. Luchs Q. B. 595.
(1882), 108 U. S. 498.
NON- DISCLOSURE 319
in the premises as described. All these are* inferred from the

description of the risk taken. It is only unusual elements
in the risk thathave to be disclosed (q). An insurer is not bound
to state whether a dwelling house insured is occupied or unoccupied,
or whether it is occupied by himself or another (r).
The insurer is presumed also to know not only the ordinary and the
incidents of ordinary risks, but the ordinary incidents of peculiar praotioYand

risks if he undertakes them (s). Thus, if a company insures a custom of
building where celluloid is stored, if they are informed of that which he
'"^'"^^'
fact they cannot afterwards complain that they did not know
that celluloid was peculiarly inflammable; or if a company
insures any premises where any specified process of manufacture
is carried on the assured is not bound to explain to them what
the different processes are or what their peculiar dangers are.

" Every underwriter," said Lord Mansfield, " is presumed to
be acquainted with the practice of the trade he insures. If he

does not know it he ought to inform himself " (<). If, however,
the assured carries on his manufactures by a more hazardous
process than is usual in that particular trade he must disclose the
fact.
In the insurance of risks depending on contractual rights and

obligations the insurers are presumed to know the ordinary terms
or conditions under which the contracts in question are usually
made (w). Thus in insuring the honesty of servants and em-
ployees the assured is not bound to state the terms of employment,
unless there is something unusual in them, and in contracts of
reinsurance the original risk will be presumed to be subject to
all the clauses or conditions usually inserted in policies of that
particular class, and the reinsured will only have to disclose such
omissions or additions as one would not expect to find in such
policies (x).
In America it has been held that if an insurer insures a par- and of all
"°"^ "^^"
ticular house he is presumed to know that which is obvious with °
regard to it, including the natural perils to which it is exposed (y).
{q) Baxendale v. Harvey (1859), 4 Dougl. 510, 512 ; Western v. Home

H. & N. 445. Insurance (1891), 145 Pa. 346.
(r) Browning v. Home Insurance (u) The Bedouin, [1894] P. 1.
(1877), 71 N. Y. 508. (x) Charlesworth v. Paher (1900),
(s) Noble V. Kennoway (1780), 2 5 Cora. Cas. 408.
Dougl. 510; Stewart v. Bell (1821), (y) Hey v. Guarantors (1897), 181
5 B. & Aid. 238 Olasgow Assurance
; Pa. 220 Saiterthwaite
; v. Mutual
v.Symondson {1911), 16 Com. Cas. 109. (1850), 14 Pa. 393.
(0 Noble V. Kennoway (1780), 2
In one case it was held that the insurer ought to know the technical
language of the business he insures, and that the words in the
poHcy must be construed in the technical sense, and thus evidence

was admitted to show that " room " in relation to a particular
class of factorymeant "stoiej"{z). In Canada it has been held that
the insurer must be taken to know what goods a tradesman of
the particular class insured would have in his store, and if dangerous
goods were ordinarily included in such stock, it was unnecessary
to disclose the fact (a).
Matter Where a matter is covered by an absolute warranty it is not

covered by necessary for the assured to disclose facts which are relevant only
a warrantj'.
to the matter warranted (fc). The reason for this is that the
insurer has full protection in the warranty. Thus, in a case of
Ufe insurance the life is warranted good, or there is an absolute

warranty that the life is in good health. It is not, then, necessary
for the protection of the insurer that he should be informed of
symptoms which tend to show that the life is not in good health (c),
for if, in fact, the hf e is not good, he is discharged from all liabiUty
by reason of the warranty, whereas if the hfe is in good health the

symptoms are immaterial. If there had been no warranty that
the life was in good health there would have been an obligation
to disclose the symptoms, and even although ultimately they
turned out to be trivial and of no importance the policy might
have been avoided if they were not disclosed.
Matters, however, which actually fall within a warranty ought
to be disclosed. Concealment of facts leading up to a breach of
warranty are immaterial, but it has never been held that a con-
cealment of what actually falls within a warranty is not conceal-
ment which would avoid the insurance apart from the warranty {d).
This principle is perhaps not of much practical importance, but

there might be cases where it would be better for the insurer to
rely on non-disclosure than breach of warranty, as, for instance, if
he desired to sue for cancellation during the currency of the risk.

Until a The material date up to which full disclosure must be made
binding
is the moment when a binding contract is concluded (e). Any
contract is
made
(z) Daniels v. Hudson River Fire (c) Boss V. Bradshaw (1760), 1
(1853), 66 Mass. 416. W. Bl. 311.

(a) Nicholson v. Phwnix (1880), (d) Seymour v. London and Pro-
45 U. C. Q. B. 359. vincial '(1872), 41 L. J. (0. P.)
(6) Haywood v. Badgers (1804), 4 193.
East, 590, 598 ; Grant v. Aetna Fire (e) Ante, p. 206.
(1860), 11 Low. Can. R. 128.
NON-DISCLOSURE 321
information received up to that time must be communicated to applicant
the insurer with due diligence, and by the customary methods ^mmunioate
of communication (/). On the one hand, the assured must not with duo
. .
diligence,
delay making the communication, but, on the other, he is not bound
to make any extraordinary effort or to incur any extraordinary
expense {g). It has been questioned whether if, say, a proposal
for fire insurance is made by letter the assured is bound to
telegraph any change of circumstances which may occur after
the dispatch of the letter, but before the time when in due course
it would be received and a cover note issued. Communica-
tion by telegraph cannot now be deemed an unusual or expensive
method of communication, and the applicant would undoubtedly
make use of it if his own interests depended on an early com-
munication. On principle, therefore, it would seem that in ordinary
cases he ought to telegraph any information which might influence
the insurer in dealing with the risk.
If the assured has failed in his duty of making full disclosure, Consequence
the insurer may, on discovering the facts concealed, elect to rescind dLolosiire.
the contract, and he may do this either before or after a loss has
occurred. In a hfe case it was argued that, since there could be
no restitution after the life had fallen the contract could not be
set aside, but it was held that the right to avoid the contract for
non- disclosure does not depend on the ability to grant restitu-
tion Qi). Probably, however, the insurer must disclaim liability
on the ground of non-disclosure within a reasonable time after
he discovers the facts. He cannot sit quiet and take the premiums
and refuse to pay when a loss occurs.
The onus of proving non-disclosure is on the insurer. In Burden of
Joel V. The Law Union and Crown (h) the company alleged that the fng^^rer."
assured had concealed the fact that she had suffered from nervous
depression after influenza, and had been attended by a brain
speciahst. In support of this allegation they put in evidence the
printed form containing the questions put by the medical examiner.
The medical examiner was instructed to put the questions with
" any necessary explanation," and to write down the answers and
obtain the applicant's signature to a declaration that the answers
were true. The answers were filled in and the declaration was
signed by the assured. In answer to the question, " What medical
(/) T7aA:ev.4«2/(1812),4Taunt.493. (h) Joel v. Law Union and Croion,

(g) Snow V. Mercantile Mutual [1908] 2 K. B. 863.
(1874), 61 N. Y. 160.
I.L. 21
men have you consulted ? " the names of two doctors were filled
in, but no mention was made of the brain specialist. The medical
examiner who put the questions and filled in the answers was not
called as a witness, although he was in Court at the trial. The
Court held that there was no evidence of non-disclosure. The
printed form and answers proved nothing because they did not
know what the questions plus the explanations were, and the
whole facts might have been disclosed to the medical man.
High It has been said that a high rate of premium may be evidence
premium
evidence of that the insurer had knowledge or at least waived information
disclosure. as to the facts alleged to be concealed (i). In lAndenau v.
Deshorough Lord Tenterden held that the fact that a large
(k)
premium had been paid was not relevant to the issue whether full
disclosure had been made in the case of a hfe policy. It would
seem, however, that the fact that a large premium has been paid
is at least some evidence to go to a jury on the question of
knowledge on the part of the insurers.
Section IV. —Warranties

No question A warranty is independent of all questions of materiality {I).
of materiality.
If a warranty is not fulfilled the policy is vitiated, whether or not
the fact warranted really affected the risk or in any way influenced
the insurer when he accepted it. The assured cannot say to the
insurer, " Although there is a variation from the terms of the
warranty the risk is and you would have accepted
just the same,
it at the same premium." The whole object of having a warranty
is to avoid the difficult position into which an insurer is put who
has to satisfy a jury that a representation was not only false, but
was material, and induced the risk. The insurer and assured are
entitled to make a bargain that the whole contract is to depend
on the existence of certain facts, and if such a bargain is made it
must be adhered to, even although the thing warranted may be

trivial or absurd (m).
In Thomson v. Weems (n) Lord Watson said, " When the truth
of a particular statement has been made the subject of warranty
(i) Court V. Martineau (1782), 3 Imperial Fire v. Coos County (1893),

Dougl. 161. 151 U. S. 452 ; Cfrant v. Aetna In-
(k) (1828), 3 C. & P. 353. surance (1862), 15 Moore P. C. 516.
Piedmont and Arlington Life v.
(I) (m) Scealea v. Scanlan (1843), 6
Ewing (1875), 92 U. S. 377; Aetna Ir. L. R. 367, 381, 401.
Life V France (1875), 91 U. S. 510 ; (m) (1884), 9 A. C. at p. 689.
WARRANTIES 323
no question can arise as to its materiality or immateriality to

the risk, it being the very purpose of the warranty to exclude all
controversy upon that point," and in And&rson v. Fitzgerald (o)
Lord Cranworth said, " Nothing therefore can be more reasonable

than that the parties entering into the contract should determine
for themselves what they think to be material, and, if they choose
to do so and to stipulate that unless the assured shall answer a
certain question accurately the policy or contract which they are
entering into shall be void, it is perfectly open for them to do so,
and his false answer will then avoid the policy." Thus, where
it is warranted that a man
and temperate habits, the
is of sober
only question is whether he was

he was not, it is no answerso, and, if
for the representatives of the assured to say that he was a man of

exceptionally strong constitution, and that the occasional intem-
perance to which he gave way had no effect upon his system (p) ;
or if the assured warrants that he has not been attended by a

medical man since a certain date the insurance will be vitiated,
if he has in fact been attended, although a jury might think
that the attendance was immaterial for the purposes of the
insurance (g).
So in a case of fire insurance, where the risks were classified

by
description in the ordinary way, and there was a warranty that
the premises insured came within Class 1, it was held that the policy
was void if the premises did not correspond to the description of
Class 1, and that it was immaterial that the variation might not
have affected the risk (r). Lord Eldon, C, said (s), " There was
another very material point of defence stated, that this mill which
was warranted as being of the first class, with a stove pipe of two
feet, was in reality of the second class, with a stove pipe exceeding
two feet in length. The Court
. . . of Session seems to have
thought it immaterial whether it was of the first or second class.
But if the mill was warranted of the first class and was in reality
of the second class, the judgment of the Court below was clearly
erroneous : for it is a first principle in the law of insurance on all
occasions that where a representation is material it must be
compUed with, if immaterial that immateriality may be inquired

into and shown but that if there is a warranty it is part of the
;
(o) H. L. C. at p. 503.
(1853), 4 (r) Newcastle Fire v. Maomorran
{p ) Southcombev.Merriman {lSi2), (1815), 3 Dow. 255.
Car. & Marsh. 286.
(q) Oazenove v. British Equitable («) 3 Dow. at p. 262.
(1859), 6 C. B. (N. S.) 437.
contract that the matter is such as it is represented to be. There-

fore the materiality or immateriaUty signifies nothing. The only
question is as to the mere fact. ... If the Court of Session was
of opinion that the danger and risk was not greater in mills of the
second class than in those of the first class, though that were sworn
to by five hundred witnesses, it would signify nothing. The only
"
question is,
'
What is the building de facto that I have insured ? '
Materiality But the materiality of a term in an insurance policy may be

may be
relevant on important in order to determine whether the parties intended
the question
that the matter should be the subject of a warranty or whether they
whether
there ais intended it to be a mere representation, or to be a collateral
warranty or
not. promise the breach of which would not vitiate the entire poHcy,
but give rise only to a cross action for damages. Thus, in Barnard
V. Faber (t), a fire insurance policy contained the clause, " Warranted
to be on same rate, terms and identical interest as V Company
£800, and G Company, £700." It was maintained that this
was only a collateral stipulation, the breach of which did not
avoid the policy but only gave rise to a cross action for damages.
It was held that it was a warranty or condition precedent, and
Bowen, L.J., after saying that little or no weight could be given
to the use of the word " Warranted," said, " The point turns on
the materiality of this promise. It is because the promise is so
material to the consideration of the risk that it seems to me to
become a condition."
or whether And where an answer to a question or other statement has been
answers
warranted warranted " true " the materiality of the matter inquired into
true are may be relevant to the issue as to whether or not the answer was
" true."
" true " (u). If the answer to a trivial and unimportant question
was substantially correct it might be " true," although if the

matter had been of greater importance greater accuracy would be
demanded before it could be held to be " true " (u).
Loss need If there is a distinct warranty as to a particular matter, and the

not be
connected warranty is not fulfilled, it is unnecessary for the insurer to show
with the that the loss was occasioned by or in consequence of the breach of
breach.
warranty (x). If the warranty is broken the insurer is dis-
charged, and it is immaterial how the loss may have occurred.
(<) [1893] 1 Q. B. 340. Imperial Fire v. Coos County

(x)
(u) Fowhes V. Manchester (1863), (1893),151U.S. 452; 0'JVe«v. Otoitia
3 B. & S. 917, 924; Anderson v. Agricultural (\%nQ),ZOV. CCS.
151;
Fitzgerald (1853), 4 H. L. C. 484, 512 ; Garrett v. Provincial (1860), 20 tJ. C.
Orogan v. London and Manchester Q. B. 200 Hill v. Middlesex (1899),
;
(1885), 53 L. T. 761. 174 Mass. 542.

WARRANTIES 325
Thus, in Glen v. Lewis {y) there was a warranty that " no steam
engine shall be introduced." A steam engine was introduced
experimentally for a few days. The Court held that the policy was
thereby vitiated, and Parke, B., in delivering judgment said (2),
" It appears to have been on the premises insured for several days,
and then the fire happened, whether in consequence of the steam

engine having been worked or not is quite immaterial." Similarly
where there is a warranty that the assured is of sober and temperate
habits the insurers may defend a claim by proving that he was not
so, and it is not necessary for them to show that death was caused
or accelerated by the intemperate habits (a).
In Hambrough v. Mutual Life (h) it was contended unsuccess- Part-per-
warranty as fo"™ance does
fully that even if there was a condition precedent or
to the truth of the statements in the proposal, payment of the breach of
premium and lapse of time was such a part-performance as

^'^^^^^ ^
would cure the breach. It is clear that part-performance can-
not revive the insurer's habihty which has been discharged by
reason of a breach of warranty unless the insurer, having know-
ledge of the breach, has by his acquiescence waived the forfeiture.
If there is a breach of warranty the breach discharges the Subsequent

compliance
insurer as from the date of the breach even although
° the breach
'
with warranty
has been completely remedied before the loss occurs (c). Even does not cure
where the insurance had not, owing to the non-payment of

premium, become effective, a breach of warranty was held to
discharge the insurer, notwithstanding that the warranty was
compHed with before the premium was paid (d). On the other
hand, where the policy was antedated to the date of the pro-
posal, and there was a breach of warranty between that date
and the date when the contract became binding, and the breach
was remedied before the latter date, it was held that the
breach did not discharge the insurer (e). In a Canadian fire
insurance case it was contended that, as there was a fresh contract

at each payment of the renewal premium, a breach
of warranty
would not discharge the insurer in respect any subsequent of
period of renewal, if before renewal the breach had been
remedied. This contention was sustained by the Court of Appeal
(y) (1853), 8 Exch. 607. (c) Kyiev. Commercial (1889), 149

(2) 8 Exoh. p. 617. *^^^^-ir^^- ., r,-
{a) Newcastle F%re v. Macmorran
[a) Thomson v. Weems (1884), 9 (1815), 3 Dow, 255.
^- ^- ^'^l- (e) Wainer v. Milford Mutual
(6) (1895), 72 L. T. 140. (1891), 153 Mass. 335.
but the Supreme Court reversed the decision and held that each
renewal did not make a fresh contract, and that the breach of
warranty discharged the insurer absolutely (/). In life insurance

there is clearly a continuing contract for the whole life subject to
defeasance for non-payment of premium at the time specified,
and therefore any breach of warranty for however short a time
will discharge the insurer absolutely, notwithstanding subsequent
payment of renewal premium and acceptance thereof by the
insurers in ignorance of the breach.
Warranty As a warranty is necessarily part of the contract, it must either
must be
found in the be found in the policy or in some other written or printed document
written
contract.
which is incorporated by reference and made part of the policy (g).
If the warranty was really part of the original contract, and it was
omitted by mistake from the policy, the policy may be rectified,
but it would require very clear evidence of mistake to induce the

Court to rectify a policy in favour of the company who prepared
it (h).
The gummed In marine insurance cases Lord Mansfield held that a separate
slip.
document, although delivered with the poHcy, could not form
part of it (i), and he so held even where the document was
.
watered on to the policy (Jt). Upon this authority the ordinary

gummed slip would not be part of the contract, and a warranty
contained thereon would be treated as merely a representation,
and it has been so held in the United States (l). The following
was printed on a separate piece of paper and
clause in a fire policy
pasted on to the policy " It is agreed and understood to be a
:
condition of this insurance that the assured shall keep a set of

books showing a record of his or their business ; warranted to
be kept in an iron safe at night." The assured, whose attention
had never been directed to the condition, did not keep his books
in an iron safe at night. A loss occurred and the insurers disputed
liability on the ground of breach of warranty. The Supreme Court
of Texas held, following the decisions of Lord Mansfield, that, since
(/) Agricultural Savings v. Liverpool, (fe) See, however, Lord Alver-

stone, C.J., in Joel v. Law Union and
'
London, and Globe (1901), 3 Ont. L. R.

127 reversed (1902), 33 Can. S. C. 94.
; Crown, [1908] 2 K. B. 431, 437.
{g) Lothian v. Henderson (1803), {i) Pawson v. Bamevelt (1779), 1
3 Bos. & Pul. 499, 509 ; Routledge v. Dougl. 12 m.
Burrell (1789), 1 Hen. Bl. 255 ; (Te) Bizev. Fletcher {1119), 1 Dougl.
Worsley v. Wood (1796), 6 T. R. 710 ; 12 n.
Sceales v. Scanlan (1843), 6 Ir. L. R. (l) Goddard v. East (1886), 67
367; Sillem v. Thornton (1854), 3 Tex. 69; 60 Am. R. 1.
E. & B. 868, 880.
WARRANTIES 327
the clause was not part of the policy nor referred to in it, it could
not contain a warranty, and that the mere physical adhesion by
gum or paste was not sufi&cient to make it part of the policy. It is
doubtful, however, whether the Court in this country would now

seriously entertain the argument that the gummed slip was not
part of the policy (m), and even if they thought they were bound
by the decisions of Lord Mansfield, they could exercise their
equitable jurisdiction of rectifying the policy if they thought that
both parties intended to contract subject to the warranty. In a
marine insurance case, Thames and Mersey (n), it was
Bensaude v.
suggested in argument that a slip pasted on was not part of the
policy, but the matter was not pressed, and apparently no cases
were cited. The House of Lords refused to accept the suggestion,
and gave effect to the clause as a warranty.
A warranty may be written on any part of the policy, either Warranty
at the top or bottom (o), or transversely on the margin (p), or
"^jttenou
even on the back. If written on the back, however, it should be any part of
P° y*
referred to on the face of the policy, since if the policy is apparently "^
'
complete on the face of it the assured's attention might never have

been directed to the back, and he would be entitled to accept what
appears on the face as the complete contract.
Prima facie the use of the word " warranted " in a policy of no technical
words
insurance imports a warranty in the strict sense, that the thing
° necessary. is
, ,
warranted is a condition precedent to the attachment or con-

tinuation of the risk (g) ; but no technical words are necessary to
create a warranty, and, except as evidence of intention, it is
immaterial whether the word warranted is used or not.
Barnard v. Faber, [1893] 1 Q. B. 340
A policy contained the clause " warranted to be on the same rate, Barnard
fire v.
terms, and identical interest as Union Insvu:ance Company £800, and Glasgow Fdber.
and London £700, and to follow their settlements." The Court of Appeal
held that there was a warranty, but Lindley, L.J., said, " I cannot myself
think that the term warranted is important, for I should construe this policy
'
'
in precisely the same way, whether the word was in it or not. I do not think
the policy is made clearer by the introduction of that word." And A. L. Smith,
(m) See Pearce v. Gardner, [1897] 1 Dougl. 11 ; Kenyonv. Berthon (1777),

Q. B. 688. 1 Dougl. 12 n.
(n) [1897]J
^ ' <-
A. 0. 609. ni^\^^T'^'*^'
(1815), 3 Dow, ôk^
255 \ Macmorran
Hamhrough v.
;
(o) Blackhurst v. CorlcM (1789), 3 ilfMjMaJ(1895), 72 L. T. 140; Ellinger

T. R. 360. V. Mutual Life, New York, [1905] 1
ip) Bean v. Stupart (1778), 1 K. B. 31.
— —
L.J., said, " The question is whether this clause contains a promise which
goes to the root of the transaction, or whether it is merely a collateral stipula-
tion, the non-performance of which did not avoid the defendant's obligation,
but only gave him a cause of action. We must look at the business of the
matter in construing the clause, and I quite agree with what has fallen from
Lindley, L. J., that it is immaterial whether the word warranted is in the clause '
'
or not. For the purpose of my judgment, I strike that word out. The question
is. What is the promise ? "
In Sceales v. Scanlan (r), Lefroy, B., says

" On this question, what is a warranty as contradistinguished from a repre-
sentation, I would observe that to make warranty it is not necessary the word
'
warrant warranty should be used. There was a time in the law when
' or ' '
it was otherwise (and the old precedents of declarations on a warranty upon a
sale show this), but it has been long well settled that words of affirmation affirm-
ing matter of fact on the faith of which the party contracts are as competent
to make a warranty as any strict technical term."
Whether or not there is a warranty is therefore a question of

intention to be ascertained by a reasonable construction of the
words which are used in the policy. In Thomson v. Weems (s)
Lord Blackburn said
" It depends on the construction of the whole instrument. It is competent

to the contracting parties if they both agree to it, and sufficiently express their
intention so to agree to make the actual existence of anything a condition
precedent to the inception of any contract, and if they do so the non-existence
of that thing is a good defence."
All printed -^ general statement in a policy that observance of all the

conditions printed conditions condition precedent to liability not
is a is
conditions Conclusive as to any particular condition. It may be obvious

prece ent.
^îg,^ some of the Conditions are not and cannot be warranties.
And where one part of a condition is clearly not a warranty the

tendency will be to construe the condition as a whole and treat
none of it as a warranty (i).
Statement of In marine insurance every statement of fact or promise relating

^^ *^® nature or extent of the risk which is introduced into the
TOomise in
the policy is policy or incorporated therein by reference is prima facie considered
warranty!*^ to be a warranty, and not merely a representation or collateral
promise (w). In Thomson v. Weems (x) Lord Blackburn expresses
(1843), 6 Ir. L. R. 367, 371.

(r) (u) Bean v. Stupart (1778), 1
(1884), 9A. C. 671.
(«) Dougl. 11; De Hahn v. Hartley
(t) Bradley v. Essex and Suffolk (1786), 1 T. R. 343.
Accident (1911), 27 T. R. 455. U (x) (1884), 9 A. C. 671, 683.
WARRANTIES 329
an opinion that this rule does not apply to the construction of

life policies, but in the Irish case of Sceales v. Scanlan (y) the
judges followed the marine insurance cases, and were of opinion
that the mere affirmation of a matter of fact which forms part
of the contract by actual insertion or by reference to another
instrument does make it matter of warranty. In Barnard v.
Fdber (z), Bowen, L.J., said, with reference to a fire policy, that
" a term as regards the risk must be a condition," that is a Avarranty
and in an Irish fire case, Quinv. National (a), Joy, C.B., expressed
the same view. It is submitted that whether or not the rule may
be carried as far as it is in marine insurance there is both in fire
and life, and probably all other, insurance contracts at least a

strong presumption that when the policy contains a representation
or promise, which is obviously material to the risk, the parties
intended that there should be a warranty as to the truth of the
representation or the fulfilment of the promise. Other provisions
in the policy may, of course, make it apparent that no warranty
was intended, but it is submitted that 'prima jade a bare affirma-
tion or promise obviously material to the risk amounts to a
warranty (p).
Statements and promises in the application may also be Statements

warranties if they are incorporated into the contract. The promlsosî
applicatioii becomes part of the policy when it is expressly stated t^*' appliea-
in the policy to be so, but a mere reference to the application -warranties.
for a further description of the risk (c), or a statement that

the appUcation was delivered and that the policy was issued
in consideration thereof, will not incorporate it as part of the
policy [3). If the application is incorporated all express
warranties and declarations therein will have the same force
as if they were contained in the body of the policy (e), and
it is conceived that the presumption that all obviously material
statements and promises are warrantiesâpplies equally to the
policy, and to the application if made part of the policy (/).
(y) (1843), 6 Ir. L. R. 367, 374. (d) Benham v. United Guarantee

(z) [1893] Q. B. 340, 344.
1 Exch. 744.
(1852), 7
(a) (1839), Jones & Carey, 316,338, (e) Hubbard v. Mutual (1900), 100
340. Fed, Rep. 719 Kelley v. Mutual
;
(6) Grant v. Aetna (1862), 15 (1896), 75 Fed. Rep. 637 American ;
Moore, P. C. 516 ; McBride v. Oore Credit v. Carrollton (1899), 95 Fed.

Dist. Mut. (1870), 30 U. C. Q. B. Rep. Ill ; Hunt v. Fidelity and
451. Casualty (1900), 99 Fed. Rep. 242;
(c) New York (1878), 72
Vilas V. Murdoch v. The Chenango Mutual
N. Y. 590; Cumberland Valley v. (1849), 2 N. Y. 210.
iVf«<cWZ(1864), 48Pa. 374. (f) Battles v. York Co. Mutual
If the policy has been issued and the application is not made
part of it, the nominal warranties in the application have only the
force of representations {g),and the warranty must be found if at all
in the poUcy itself (h). But if the poHcy has not been issued,
and the only record of the contract is an interim receipt or cover
note, the insurers may on warranties contained in the applica-

rely
tion, although not referred to in the cover note, and for this reason,
that the cover note does not purport to contain the complete
contract between the parties {i). The policy may contain an
effective warranty as to the truth of the statements in the appli-
cation, even although the application is not made part of the
policy, and the statements are not repeated in the policy ; and it
is conceived that the truth of all statements, oral or written, made

in or about the effecting of the policy, may be warranted if appro-
priate words are used ; but the expression must be clear if such
a wide warranty intended, and in an American case where the
is
policy provided that " if the statements made by or on behalf

of the assured as the basis of or in negotiation for this contract,
shall be found in any respect untrue," the policy should be void,
the Court held that this was merely a statement of the general
rule of law applicable to misrepresentation, and that it only
applied to material misrepresentation (fc). A declaration that
the answers in the application are part of the contract constitutes
them warranties (Z) ; but the mere recital that certain specified
statements were made in the application and that the insurers

thereupon undertook the proposed insurance does not give the
statements the force of warranties (m). There seems to be some
difference of opinion as to the effect of declaring the statements
in the apphcation to be the basis of the contract or that the policy
was issued upon the faith thereof. On the one hand, it is said
that such a declaration makes the statements warranties (n), but
(1856), 41 Me. 208; Cushman v. il^Mtoai (1867), 73 Pa. 381 ; 98 Mass.

V. S. Life (1875), 63 N. Y. 404 ; 381.
contra, Royal Arcanum v. Brashears (I) Cushman v. V. S. Life (1875),
(1899), 89 Md. 624; Columbian In- 63 N. Y. 404; Metropolitan Life v.
surancev. Cooper (1865), 50 Pa. 331. McTague (1887), 49 N. J. Law 587;
(g) Missouri v. German (1896), 77 60 Am. R. 661.
Fed. Rep. 117; Daniels v. Hudson («) Wheelton v. Hardisty (1857),
Biver (1853), 66 Mass. 416. 8 E. & B. 232.
(h)
MutualiUei)
Campbell v.
98 Mo== 381.
TiA,ii,^7na(i'7\ OB Mb,ss. qai
New England n^ '"i "^ff
^- B. 431;
(1853), iH.
',
"'
J..
f T '^"*°"'
Anderson J Sw
v. Fitzgerald
C. iSi; Hambrougk v.
(«) Stott V. London and Lancashire Mutual(1895), 72 L. T. 140 ; Dough-
Fire (1891), 21 Ont. 312. ^rty v. London Guarantee (1880), 6
[k) Campbell v. New England Vict. L. R. 376 ; Hunt v. Fidelity
WARRANTIES 331
perhaps the better opinion is that the declaration merely estops

the assured from denying their materiality (o). If the declaration
means no more, then substantial compliance with the statements
is sufficient, whereas if it is a warranty there must be strict and
literal compliance.
When it is said that there must be
and literal compliance Wananty
strict
with the terms of a warranty, what meant is that the actual ^riotly^com
is
thing stipulated for must be provided or done, and it is not open plied with,
to the assured to say that what in fact was provided or done was,
although not the same, a substantial equivalent, and that the
variation was immaterial (jp). If the assured warrants that the
stove pipe is two feet long whereas it is three feet, the insurer is
discharged, and it will not avail the assured to say that a three feet
stove pipe is no more dangerous than a two feet pipe (q). And
so where the answers made by an applicant for life insurance were
warranted true, the fact that he stated his age as 30, whereas he
was 85, was fatal and the question of materiality was not allowed
to go to the jury (r). And where the answers in an application
for a fire policy were warranted
and in answer to a question
true,
as to incumbrances the assured stated that the property was mort-

gaged for was mortgaged for £6684 it
£6600 whereas in fact it
was held that the insurer was discharged from liability (s).
But when it is said that a warranty must be strictly complied Warranties
with it is not meant that it must be strictly construed against gtriotly
The rule as to construction of warranties exactly against

the assured. is
insurer,
the opposite. Warranties are to be read liberally in favour of the
assured and against the insurance company. Thus, in the case
of an insurance on the machinery in certain cotton mills, there
was a warranty that the mills be worked by day only. The
defendants pleaded a breach of warranty, viz. that a certain steam
engine, being part of the said mills, was worked by night and not
(7o«Ma% (1900), 99 Fed. 242; Mac- {p) Want Blunt (1810), 12

v.
donald v. Law Union (1874), L. R. 9 Bast, Busteed v. West of
183 ;
Q. B. 328. England (1857), 5 Ir. Ch. R. 553 ;
(o) Phoenix Life v. Eaddin (1886), Pawson v. Watson (1778), Cowp. 785 ;
120 U. S. 183 ; Jeffries v. Life In- De Hahn v. Hartley (1786), 1 T. R.
surance (1874), 22 Wall. 47 Mutual ; 343.
Benefit v.Wise (1871), 34 Md. 582; (g) Newcastle Fire v. Macmorran
London Assurance v. Mansel (1879), (1815), 3 Dow, 255.
11 Ch. D. 363; Orogan v. London {r) Aetna Life v. France {1815), 91
(1885), 53 L. T. 761 Hutton v.
; U. S. 510.
Waterloo Life (1859), 1 F. & F. 735 ; («) Abbott v. Shawmut Mutual
Hammond v. Citizens (1886), 26 N. B. (1861), 85 Mass. 213.
371.
— — ;
by day only. The Court held that the plea was bad in that the
working of a single engine in the mill was not necessarily a working
of the mill (i). Where there is doubt due to contradictory pro-
visions or ambiguous expressions, the Court should lean against

the construction that imposes the obligation of a warranty (m).
If the insurers desire a warranty as to a particular matter,

they must take care to express it in clear terms without any
ambiguity (x). The policy is prepared by the insurers, and if,
therefore, there should be any ambiguity in it, it must be read

more strongly against the persons who prepared it (y).
In Baxendale v. Harvey (2), Pollock, C.B., said

" In cases of insurance the Courts ought to give every facility to the detec-
tion of fraud ; but where the transaction is bond fide it is the duty of the
insurers to establish their objection free from doubt."
In Anderson v. Fitzgerald {a), Lord St. Leonards said
" A policy ought to be so framed that he who runs can read. It ought to
be framed with such deliberate care that no form of expression by which, on
the one hand, the party assured can be caught, or by which, on the other, the
company can be cheated shall be found upon the face of it. Nothing ought to
be wanting in it, the absence of which may lead to such results."
According Although a warranty must be literally complied with that

to the
reasonable does not necessarily mean that it is to be construed according to
meaning of the absolutely Uteral meaning of the words. A warranty in a

the words
used. contract of insurance must, like a clause in any other commercial
contract, receive a reasonable interpretation and be read if necessary
with such Hmitations and qualifications as will render it reason-
able (fc). Thus, when the assured, in a case of life insurance is
asked, " Have you had any other illness, local disease or personal
injury ? " and answers, " No," the warranty will not be held to
cover sHght indispositions or trivial injuries which may have
(t) Mayall Mitford (1837), 6

v. London (1863), 3 B. & S. 917 ;
Not-
A. & Whitehead v. Price
E. 670 ; man v.Anchor (1858), 27 L. J. C. P.
(1835), 2 Crom. M. & R. 447. 275, 280 Thompson v. Phcena
;
(m) National Bank v. Insurance Co. (1890), 136 U. S. 287.

(1877), 95 U. S. 673 ; Moulor v. (z) (1859), 4 H. & N. 445, 451;
American Life (1884), 111 U. S. 335. Stokes V. Cox (1856), 1 H. & N. 320.
(a;) Joel v. Law Union and Crown, (a) (1853), 4 H. L. C. 484, 510.
(6) Bowen, L.J., in Barnard
v.
[1908] 2 K. B. 863 ; Life Association
V. Foster (1873), 11 M. 351. Faber, [1893] 1 Q. B. 340, at p. 344
(y) Anderson v. Fitzgerald (1853), Hart Standard Marine (1889), 22
V.
4 H. L. C. 484, 593, 507, 514 ; Thom- Q. D. 499; Bankhead v. Des
B.
son V. Weems (1884), 9 A. C. 671, 682, Moines (1886), 70 Iowa, 387.
687 ; Fowkes v. Manchester and
—
WARRANTIES 333
occurred years before. The company could not reasonably expect

a man of mature age to recollect and disclose every illness, however
slight, or every personal injury, consisting of a contusion, or a cut

or a blow, which he might have suffered in the course of his life.
It is manifest that this question must bo read with some limitation
and quahfication to render it reasonable and that personal
;
injury must be interpreted as one of a somewhat serious or severe

character (c). In Anderson v. Fitzgerald (d) the condition was
that the policy should be void ifany false statement was made in
the proposal for insurance. Baron Parke said that it must be
understood not to include a false statement of matters to the dis-
paragement and tending

of the applicant to render his life less
insurable : such a construction would be clearly absurd and in

no way reconcilable with the manifest object of the proviso. So
in a case of fire insurance (e) there was a proviso that " no claim
shall be recoverable if the property insured be previously or
subsequently insured elsewhere, unless the particulars of such
insurance be notified to the company in writing." The goods
were insured for land transit, and a marine policy, which was not
notified, was taken out for sea transit. It was maintained that
the two policies overlapped as regards the risk at the port of
shipment and that therefore there was a breach of the warranty.
The Court held that the warranty was intended to prevent double
insurance and that there was no double insurance in the proper
sense of the word. Blackburn, J., said
" I cannot think it would be a reasonable construction of the words to

hold that the particulars of this marine insurance ought to have been notified
to the company merely becauseit might happen that during the transit some
loss by might occur which the marine policy might cover. The mere
fire
possibility of an accidental overlapping of the two policies in such a way was

not, as it seems to me, what was aimed at " (/).
And even when would be more in favour

a literal construction
of the assured, the Courts will nevertheless place what they
consider to be a fair and reasonable meaning on the words used (g).

Thus, in an accident insurance policy (h), there was a proviso that
Connecticut Mutual Life v.

(c) v. Saunders (1875), L. R. 10 C. P.
Moore (1881), 6 A. C. 644, 648 ; and 668.
see Knickerbocker Life V. Trefy {1881), (/) L. R. 10 C. P. 675.
104 U. S. 197. (g) Hartv. Standard Marine {188Q),
22 Q. B. D. 499.
(d) (1853), 4H. L. C. 484, 497.
(h) Mair v. Railway Passengers'
(e) The Australian Agricultural Co. Assurance (1877), 37 L. T. 356.
the assurance should not extend " to any death or injury happening
while the assured is under the influence of intoxicating liquor
or while in a state of insanity or generally occasioned by his
wilfully exposing himself to any unnecessary danger or peril."

Lord Coleridge, C.J., said, " I assent to the view that '
death
or injury happening while the assured is under the influence of
intoxicating liquor,' must in reason be read '

death or injury
causing death happening while the assured is under the influence
of intoxicating liquor.' The consequence would, I think, be pre-

posterous if we held that if the death happened while he was under
the influence of intoxicating liquor the company would not be
liable, whereas if the injury which caused the death happened
under the same circumstances but the man happened to be sober
when he died under those circumstances, they would be liable
under the proviso ; and therefore I think the good sense of the
thing is clearly with the construction which was put forward on

the company's behalf" (i).
And the In construing conditions of a policy they must aU be read

whole con-
tract must
together. Sometimes the policy contains a condition which, if it
be read stood alone, would be an absolute warranty, but other conditions

together.
referring to the same
some cognate matter show that an absolute
or
warranty cannot have been intended. Where there are con-
flicting provisions relating to the same matter, the more onerous
conditions must be modified so as to correspond with the less

onerous, for otherwise the policy is a mere trap for the assured (fe).
Thus, where the policy contained a condition that the insurance
should be void if any of the answers in the proposal form were
" untrue," this was held to be' modified by the declaration in the
proposal form which was incorporated into the policy whereby

the assured agreed that if there was any " designedly untrue"
statement in the proposal the policy should be void (1). And
where the conditions in a policy contained numerous stipulations,
to some of which the penalty of forfeiture was expressly attached,
the presumption which might otherwise have given all the con-
ditions the force of conditions precedent was rebutted, and the
conditions to which the penalty of forfeiture was not attached

were treated as ordinary terms which, if broken, gave rise only
(i) 37 L. T. at p. 375. (I) Fowhes v. MancheBter (1863),

\h) Thomson v. Weema (1884), 9 3 B. & S. 917.
A. C. 671 683.
WARRANTIES 335
to an action for damages (m). A general warranty may be

modified by some specific condition as to the particular matter in
question. Thus, in a Canadian fire case (n) there was a general
proviso that the policy should be void if the assured should have
made any inaccurate statement whether intentional or not. The
poUcy also contained a condition that if the property should be
over-valued in the application, the company would only be liable
for such proportion of the actual value as the sum assured might
bear to the application value. The Court held that over-valuation
did not avoid the policy. But, on the other hand, it has been held
that an express warranty is not to be modified or annulled by
mere inference from statements or omissions in other parts of the
policy. Thus, where the answers to questions in the proposal
were declared to be the basis of the policy and to be true, and
certain items were selected from the proposal form and made
matter of specific warranty in the policy, it was held that the other
items which were not so specifically warranted were nevertheless
warranted under the general declaration that the answers were
the basis of the policy and were true (o). The absence of any
statement in the proposal form that the answers are the basis of
the contract or are warranted accurate does not necessarily detract
from the force of the warranty to that effect in the policy (p).
Where was ambiguous, but the policy

a declaration in the proposal
recited without ambiguity that a certain declaration had been
made, it was held that the construction of the declaration adopted
by the policy must be accepted, unless the assured could explain
the acceptance of the policy and the acquiescence in its terms (q).
Sometimes there is no doubt that there is a warranty, but it is Quesstion
not so clear what it is that is warranted, whether it is the existence assured^

^^
of a present fact or merely the assured's opinion or belief that warrants
such a fact does exist, or whether it is the existence of a future fact merely the
^^^
or merely the assured's expectation or intention that such fact \°'i!^*g„/
will exist. In each case it is entirely a question of construction.
What did the parties intend the extent of the warranty to be '?
If the Court is of opinion that the assured only warranted that his
belief or opinion, expectation or intention, was honestly expressed
(m) Stoneham v. Ocean Railway 4 H. L. C. 484 ; Sceales v. Scanlan

(1887), 19 Q. B. D. 237. (1843), 6 Jr. L. R. 376.
,.-„.„. „ .
, ( p) Macdonald v. Law Union
in) mihamson v. Oornmercâl
(jgf^j ^ R. 9 Q. B. 328.
Vmon (1876), 26 Can. 0. P. 591.
^^^ '^^^^^^ ^_ ^^^^^^ ^-j^ (1854), 3
(o) Anderson v. Fitzgerald (1853), El. & B. 48.
there can be no breach oi warranty unless the assured has made a

dishonest statement (r). Here the only value of the warranty is
that it gets rid of any possible question as to whether or not the

matter was material to the risk or induced the contract. And
the warranty may be even further limited by expressly confining
it to facts material to the risk, and if so confined the statements
warranted have no greater force than representations (s), except
that the insurers do not have to prove that the contract was
induced by the statement alleged to be inaccurate (i).
Statements as In the case of statements as to present facts much may be

to present
facts. inferred from the nature of the facts. Where the facts are such
as are definitely ascertainable, for instance, facts relating to the
construction or user of premises insured, there must be a strong
presumption that a statement made with regard to such facts is
intended to be an absolute warranty as to their existence. On

the other hand, there are factswhich do not admit of being definitely
ascertained, but are necessarily more or less matters of opinion,

such as statements as to value (m),and statements as to the health
of the life (a;). In these cases the tendency is to consider the
statement rather as a statement of opinion than a statement

of absolute fact, and, if there is a warranty, that it goes no further
than to warrant that the opinion or belief of the assured has been
honestly expressed.
Statements With respect to statements as to the future the presumption
as to the
future.
that the warranty is absolute is probably not so strong as in
the case of statements as to present facts. The future cannot be
definitely ascertained, and therefore statements with regard to

it are readily susceptible of the construction that they are only
statements of expectation or intention (y).
Benham v. United Guarantee (1852), 7 Exch. 744
Senham v. An application was made to the defendants for a policy guaranteeing the
United' integrity of the plaintiff's servant. The application form contained several
Guarantee.
Jones v. Provincial (1857), 3

(r) (u) Connecticut Mutual Life v.
C. B. (N. S. ) 65 ; National Bank v. Luchs (1883), 108 U. S. 498 Riach v. ;
Insurance Co. (1877), 95 U. S. 673. Niagara District (1871), 21 U. C. C. P.

(») Kerr v. Hastings Mutual {187T), 464 ; Chaplin v. Provincial (1873),
41 U. C. Q. B. 217 ; Garcelon v. 23 U. C. C. P. 278.
Hampden Fire (1862), 50 Me. 580; (a;) Joel v. Law Union and Grown,
Wilhins v. Germania Fire (1881), 67 [1908] 2 K. B. 863 Life Association'/.

;
Iowa, 529. .Fosiey (1873), 11 M. 351.

(t) Russell V. Canada Life (1882), (y) Herrick v. Union Mutual Fire
32 U. C. C. P. 256. (1860), 48 Me. 558.
WAREANTIES 337
questions which were answered by the plaintiff as follows : Question, " Is the
applicant at present in your employment, and if so, in what capacity ? and
has he hitherto performed the duties of his situation faithfully and to your
satisfaction ? " Answer, " He is Secretary to the Marylebone Literary Insti-
tution." Question, " In what capacity do you intend to employ the applicant ?
And with reference to this question will you state as far as circumstances will
permit, (A) the nature of his intended duties and responsibilities ; (C) the checks
which will be used to secure accuracy in his accounts, and whep and how often
they will be balanced and closed ?
" Answer, " (A) Mr. Weir is Secretary of the
Marylebone Literary Institute, of wMoh I am the treasurer. (C) Examined
'
by Finance Committee every fortnight. The plaintiff signed a declaration that

'
the above answers were true, and the policy recited that the proposal and decla-
ration had been lodged at the office of the company as the basis of the contract,
and the rules of the company, which were incorporated, provided that " any
fraudulent misstatement or suppression in any declaration renders the , . .
poUcy void from the beginning." The accounts were not in fact examined
every fortnight, and the Court held that there was no warranty that they should
be. Pollock, C.B., said " The manner in which this question is put, the other
:
questions with which it is associated, and the decisions upon policies of in-
surance lead me to the conclusion that the answer was not expected to be upon
the part of the office or meant to be upon the part of the plaintiff anytliing
more than a declaration of the course intended to be pursued ; and if that
answer was made bond fide and honestly it does not prevent the plaintiff from
maintaining this action."
Tovfle V. National Guardian Assurance (1861), 10 W. R. 49
On an was asked to state in Towle V.

application for a fidelity insurance the assured
the proposal form, " First, the duties and responsibilities which will devolve National
Guardian
upon the applicant ; secondly, the largest sum at any time to be held in his Assurance.
hands and for how long a time thirdly, whether any stock-in-trade will be
;
intrusted to his custody for sale, if so, its probable value and description, and
how often stock will be taken by the employer fourthly, the check used to ;
secure accuracy in his accounts, and at what periods the employer will balance
and close his cash account fifthly, whether the balance agreed at any such
;
period will be then paid over, or if the employment necessarily requires a

balance to be carried from account to account." The assured made the follow-
ing statement:
—"First, to and account for the sums collected secondly
collect ;
from £100 to £200, not longer than a week thirdly [no answer] fourthly,
; ;
checked weekly by the surveyor of taxes fifthly, yes." A declaration of the

;
truth of the answers was appended, and the declaration and answers were
poUcy as the basis thereof. On the evidence the Court found
referred to in the
that the answers given were untrue as regards the past course of business, and
were not adhered to as regards the future, and they accordingly declared the
policy void.
In the above case the Court was no doubt satisfied that the
answers were not honest, and the case cannot be cited as one
I.L. 22
where the condition was definitely construed as an absolute

warranty as to the future course of business. The case of Benham
V. United Guarantee (z) has been followed in very similar cases in
the colonies (a), and it is only where the poUcy has contained an
express condition that the course of business and supervision
would be in accordance with the statements in the proposal that
such statements have been held to be absolute warranties as to
the future (b). In America, however, there is a greater tendency
to treat the answers as promissory warranties as to the course
of business which should be adopted, although not as absolute
warranties that there would never be any lapse from such course
of business on the part of the assured's employees (c). In an
Australian case (d) the employer stated in the appHcation the
system of checks which would be adopted, and signed a
declaration that the answers were true and were to be taken
as the basis of the contract. The policy provided that it was
" granted on condition that the business of the assured should
remain in every particular in accordance with the said state-

ments, and each of them and the said declaration." The Court
held that there was a warranty as to the course of business
to be employed during the risk, but not against the negligence
of servants in not carrying it out.
Grant v. Aetna (1862), 15 Moore, P. C. 516
Grant v. A fire policy was effected in July, 1858, for twelve months on a steamship,
Aetna. which was described as " now lying in Tate's Dock, Montreal, and intended to
navigate the St. Lawrence and lakes from Hamilton to Quebec, principally as
a freight boat, and to be laid up for the winter in a place approved by the com-
pany." The ship never left Tate's dock, and was destroyed there by fire in
June, 1869. The Privy Council thought that the words in the policy should
be construed as meaning " my ship is now lying in Tate's dock I mean to re- ;
move her for the purpose of navigation in the manner described, and if I do
the policy shall still be in force but in that case I engage to lay her up for the
;
winter in a place to be approved by the company." There was no warranty
(z)(1852), 7 Exch. 744. harty v. London Guarantee (1880),

(a)Begina v. National Insurance 6 Vict. L. R. 376.
(1887), 13 Vict. L. R. 914 ; A.-G. v. (c) Phcenix Insurance v. Guarantee
Adelaide Life (1888), 22 S. Aust. Co. (1902), 115 Fed. Rep. 964; Eice
L. R. 5. v. Fidelity and Deposit Co. (1900), 103
(6) Haworth tSs Co. v. Sickness and Fed. Rep. 427; Hunt v. Fidelity and
Accident (1891), 18 R. 563; Ha/rbour Casualty (1900), 99 Fed. Rep. 242.
Commissioners v. The Guarantee Go. (d) Dougharty v. London Guarantee
(1893), 22 Can. S. C. 542; Doug- (1880), 6 Vict. L. R. 376.
V
sms.
WAREANTIES 339
that the boat should navigate, but merely an expression of intention to do so,
and incidentally a licence to do so with a provisional warranty that if the
assured availed himself of the licence to navigate he would lay her up for the
winter in a place approved by the company.
The steamer referred to in the above case was also insured

in another company in somewhat different terms, being described
as " The steamer MaZa/coj^ (now in Tate's Dock, Montreal), navi-

gating the river St. Lawrence between Quebec and Hamilton,
stopping at intermediate ports, including outfitting in the spring."
This was held to be an express warranty that the steamer would
navigate, and as she was burned while laid up in dock there was
a breach of warranty (e). A licence to the assured to do certain
things which would otherwise avoid the policy must not be con-
strued as a warranty that such things will be done (/).
Wotman v. Anchor (1858), 27 L. J. C. P. 275
A life was endorsed with the following memorandum

policy " The life Notman :
— v.
assured under the policy being about to proceed to and reside at Belize in the Anchor.
state of Honduras, and an extra premium of twenty guineas having been paid
for the extra risk for such residence for one year, permission is hereby granted
to the hfe assured to proceed to and reside at Belize aforesaid, and for the time
aforesaid, and premium shall from time to
for so long thereafter as the extra
time be paid." The assured did not leave the United Kingdom until three
years after the date of the policy, when he went to Belize and died there within
a year of his going. One extra premium of twenty guineas was paid as recited
in the memorandum, but no further extra premiums had been paid. The
Court held that although there was an expression of intention on the part of
the assured to go to Belize shortly after the date when the policy was taken out,
there was no stipulation to that effect, and the one extra premium of twenty
guineas gave him a licence to reside at Belize for one year, commencing at any
time during the currency of the policy.
Doubts frequently arise as to whether a warranty applies only Question
to the present or to the future as well as the present. It may be warranty

clear that the warranty only applies to the commencement of apphes to the
„ future or only
.
the risk, as m all

. .
warranties as to health
,
m life insurance. Any to the present,
warranty as to the assured's habits, such as a warranty that he is
sober and temperate, would primd facie apply to the past and
present, and not to the future. But, in fire and burglary insurance,
(e) Grant v. Equitable (1864), U (/) Frisbie v. Fayette (1856), 27

Low. Can. B. 493. Pa. 325.
warranties as to the nature of the premises and precautions taken

against loss will prima facie be presumed to apply to the whole
duration of the policy. It would obviously be of little value to
have a warranty that a building contained no artificial heating
apparatus, or that a night watchman was kept on the premises,

unless such warranties were effective to insure the subsistence of
these conditions throughout the duration of the risk. Thus, the
description of the premises in a fire risk imports a warranty that
they shall not be altered so as to increase the risk at any time
during the currency of the policy {h). But a warranty as to the
construction or use of the premises may be limited to their con-
dition at the commencement of the risk (i). In Pim v. Beid (k),
there was a condition that if the assured should cause the

premises to be described " otherwise than they really are to the
prejudice of the company, or shall misrepresent or omit to com-
municate any circumstance which is material to be made known
to the company in order to enable them to judge of the risk they
have undertaken, or are required to undertake," the insurance
should be void. It was held that the subsequent introduction of a
more hazardous trade without notice to the company would not
avoid the policy, since the condition only applied to the circum-
stances existing at the commencement of the risk, and not to
alterations made during the currency, and by some of the other

conditions certain specified alterations were prohibited, but a
change of trade was not prohibited.
No implied In life and fire insurance contracts there is no implied warranty
warranty of
fitness in
analogous to the implied warranty of seaworthiness in marine
fire or life
insurance. There is no implied warranty that the " life " is in
insurances.
good health or free from disease or that a house which is insured
against fire is built with all proper precautions. If the assured
does not know of defects in the house or that the " life " is in
bad health, these facts will not affect the validity of the insurance,
unless the assured has expressly warranted that the " Hfe " is
sound or the house is free from defect.
Question It is sometimes said that there is an implied warranty in
whether the
contracts of life insurance that the " life " is in being at the time
continued
existence of the contract is made.
the life is
warranted in
life insurance.
(h) Sillem v. Thornton (1854), 3 32 N. Y. 397 ; Gould v. York County
E. & B. 868. (1859), 47 Me. 403.
(«) Smith V. Mechanics' Fire (1865), (k) (1843), 6 So. N. R. 982.
'
WARRANTIES 341
Pritchard v. Merchant Life (1858), 3 C. B. N. S, 622

The policy contained a condition that it should be void " if the premiums Pritchard v.
were not paid within thirty days after they should respectively become due ; Jêrchant
"
but that the policy might be revived within three calendar months on satis- •'
factory proof of the health of the party on whose life the insurance was made.'
The premium was in arrear, and the " life " died on the thirtieth day after it
had become due. Two days afterwards the assured sent the premium to the
"
company, and it was accepted, both parties being ignorant that the " life
was dead. It was held that the assured could not recover since the policy had
been revived on the mutual understanding that the party insured was alive.
" Both parties," said Williams, J., " were labouring under a mistake, and
consequently the transaction was altogether void. The whole transac-
. . .
— —
tion ^the payment and receipt of the money was founded upon a mistake."
And Crowder, J., "It is manifest that it was of the essence of the contract that
the party should be alive and in good health at the time of such revival." And
Byles, J., "It may be observed that, whatever might have been the con-
struction if the policy had been utterly silent in this respect, here it is in terms
a contract or undertaking against the happening of a future event. Dead '
or aUve,' which would be equivalent to lost or not lost in a marine policy,

'
'
seems to be excluded by the terms of the policy."
The ratio decidendi of the above case was that, inasmuch as

the whole circumstances showed that it was of the essence of the
agreement to renew that the Hfe was still in being, there was a
mutual mistake in essentialibus which avoided the agreement (fc/r).
The judges do not base their decision on any rule of implied
warranty that the life is in being. It is really a question to be
determined in each particular case, whether or not the contract of
insurance was made on the assumption that the life was in being (Z).
There is no doubt that the vast majority of Hfe insurance contracts
are so made. Although legally possible, original contracts of life
insurance upon a " dead or aUve " basis are in practice unknown,
it is only in the case of agreements to reinstate a lapsed or
suspended contract that a company would contemplate the
acceptance of a risk upon this basis.
All conditions in the policy may be waived by the company Breach of
or by such of its agents as have authority. This may be done by beîved™^^

leave and licence given to the assured before there has been any
breach of the conditions (m). But there may also be waiver
after breach, since although the insurer is discharged from liabihty
the contract is still in existence (n). When the insurer becomes
{kk) Vide supra, p. 270. (w) Armstrong v. Turquand (1858),

[1) Clifford, J., in Insurance Co. v. 9 Ir. C. L. R. 32 Wing v. Harvey ;
Folsom (1873), 18 Wall. 237, 251. (1854), 5 De G. M. Q. 265 Barrett & ;
(m) Reisv. Scottish Equitahle(\%5'l),- v. Jermy (1849), 3 Exch. 535;

2 H. & N. 19. Canada Landed Credit Co. v, Canada
—
aware of the breach he may elect to af&rm or avoid, but once

he has made his choice in favour of affirming he can no longer
disaffirm except in respect of other matters which may come to
his knowledge subsequently. In order to estabHsh a waiver
after breach of warranty, it is necessary for the assured to prove
(i) that the insurer had full knowledge of the breach ; and
either
(ii) that the insurer expressly waived the forfeiture ; or
(iii) (a) that the insurer made use of words or conduct jus-
tifying an inference by the assured that forfeiture

would not be insisted in and :
(b) that the insured acted upon such inference and incurred
trouble or expenditure on the faith thereof.
The general principles upon which the law of waiver is based
are well stated in an American case (o), as follows :
" A waiver involves the idea of assent, and assent is primarily an act of the
understanding. It presupposes that the person to be affected has knowledge
but does not wish to enforce them. It is an intentional relinquish-
of his rights,
ment of a known
right, and is a question of fact whenever it is to be inferred
from evidence adduced or is to be established from the weight of evidence.
Again, it may happen that a waiver of a breach of the condition was not
actually intended but if the conduct and declaration of the insurer are of
;
such a character as to justify the belief that a waiver was intended, and acting
upon the belief the insured is induced to incur trouble and expense, and is
subjected to delay to his injury and prejudice, the insurer may be prohibited
from claiming a forfeiture for such a breach upon the principles of equitable
estoppel" {p).
ifthe insurer There can be no waiver without knowledge, and therefore it is

has complete
knowledge of
necessary to prove that the insurer had full knowledge of the
the breach. breach If the insurer knows there has been a breach and
(q).
waives further inquiry as to the extent of it, that will be sufficient
but otherwise imperfect knowledge is not sufficient.
Scottish Equitable v. Buist (1877), 4 R. 1076
Scottish The insurers sought to set aside the policy in the hands of an assignee on
Equitahh v.
the ground that the assured had made false statements as to his health and
Buist.
Agricultural (1870), 17 Grant, 418; (q) Russell v. Canada Life (1883), 8

New York Life v. Baker (1897), 83 Ont. A. R. 716 Northern Assurance
;
Fed. Rep. 647. v. Orand View Building Co. (1902),

(o) Hanscom v. Insurance Co. 183 U. S. 308 ; Georgia Some In-
(1897), 90 Me. 333, 339. surance V. Bosenfeld (1899), 95 Fed.
( p)
Insurance Go. v. Eggleston Bep. 358; Home Lifev. Myers (1901),
(1877), 96 U. S. 572. 112 Fed. Rep. 847 ; Cable v. U. S.
WARRANTIES 343
habits. The assignees alleged that the insurers were, during the assured's life,
aware of the and nevertheless continued to receive the premiums from

facts,
the assignees. On the evidence, it was held that the information of the in-
surers amoiuted to nothing more than rumour and suspicion, and that they
were not bound to act upon it and Lord President Inglis said, " If after a
;
policy has been assigned the insurance company become aware of objections
to its validity so clear and conclusive that the mere statement of them is
enough, I do not say that there may not then be a duty of communication to
those whom the company know to be interested in the policy. It would not
be consistent with good faith that they should in such circumstances go on
receiving the premiums on a policy that they intended to challenge in the end.
But there is nothing approaching such a case here, and therefore we need not
consider the question."
In a Canadian fire case the premises were described as a " steam

bending factory." On inquiry the insurers discovered that the
assured intended to use it as a sash factory, but issued the policy
without protest. It was held that there was no waiver of the
warranty in the policy that the premises should not be used or

occupied otherwise than as described, and that on being used as a
sash factory the policy was voidable (r). The knowledge of the
breach must be brought home to some servant or agent of the
company who has authority and does in fact waive the breach,
or to some agent whose duty it is to report the matter to the
company (s). In an American fire case there was a condition
against non-occupancy, and a proviso that in case of loss the assured
should give immediate notice, stating, among other things, the
occupancy of the building at the time of the loss. Oral notice
of a loss and also of the fact of non-occupancy was given to an officer
of the company, and the company demanded proofs of loss without

taking objection. was held that the assured could not claim a
It
waiver. The company were entitled to formal notice of the facts

relating to occupancy, and they were not bound to act upon
informal oral notice to one of their officers (i).
The act of an agent cannot be relied on as evidence of waiver Authority of

°
unless such agent has actual or apparent authority to waive the ^^^^
Life (1901), 111 Fed. Rep. 19. A De G. M. & G. 265. Knowledge of

waiver of a breach after loss does not a medical examiner that a statement
operate as a waiver if the insurers made to him was false was held not
were ignorant of the loss. Bennecke to be the knowledge of the company,
v. Connecticut Mutual (1881), 105 John Hancock Mutualv.Houpt (1901),
U. S. 355. 113 Fed. Kep. 572.
(r) Howes V. Dominion Fire (1882), (t) Fitchpatrick v. Hawkeye In-
8 Ont. A. R. 644. surance (1880), 53 Iowa, 335.
(«) Wing V. Harvey (1854), 5
.
;U4 VOIDABLE POLICIES
breach («}. A local agent with power to receive preuuums tuid
issue policies, but without power to make in-contracts has not,

dependently of evidence to the conti-ai-y, anv apparent authority
to waive conditions Mhioh the msurers have thought so important

as to incorporate tJiem into their pohcy (.r). Some additional
evidence must be given, ivs that he had been held out by the
company as possessing such authority, or that the eoiupiuiy had
so ratified similar acts, or had so conducted itself with regard to
its other transactions, that the assured was justitied in believing
that the agent had such authority (y). In one American case
the agent had " power to issue policies, receive premiums, consent
to assignments, and attend to all other duties and business of the
agency." There was a condition that the policy should be void
if. without the written consent of the company tirst obtained, the
house should become vacant was held that the agent
(.r">. It
had apptuent authority to indoi"se the pohoy with permission to

leave the premises unoccupied, and that if the premises had been
left unoccupied Mithout previotis indoi'sement. he had authority
to waive the breach, and did so by subseqtient indoi'sement (s)

The scope of the agent's apparent authority to waive forfeitures
may be limited by notice in the application form, tuid in a Canadiaii
case where the agent's authority was therem specilied as being
limited " to receiving proposals collecting premiums and giving
the consent of the compiuw to assignments of policies." it was
held that he had no appai-ent authority to waive the condition
of occupancy The agent's authority to waive forfeitures may
(a).
also be restricted by conditions in the policy. A common con-

dition is that "no condition can be waived except in writiiig
signed by the secretary." This is notice to the !\ssured that
even a general agent has no authority to waive such con-
ditions as that of occupancy by informing the assured that it is
all right (b). And even where the officer or other agent of the
company has authority it can only be exercised in the prescribed
manner. A company which has seen fit to prescribe that the
(ii) Xoiilifrn Assiirance v. Orand (y) Ki/tf v. Oomtiiei-cial I'nion

ri,ii'Bii!Ui!ugCo.[19til).183V.S.S0S. (1887). 144 Mass. 43.
[.<) Kyte V. Comnherdal I'nion (:) ivheeJerv. }yatt'iion Fin- (\S^l).
(1SS7K 144 llass. 43: OarreUon v. 131 Moss. 1.
Miiclnmts (1890). SI Iowa. T21 ; {a) PkI- v. A„nni}hira1 {lSf\0), \^
Weal Snd Hotel v. American Fire Ont. 494.
(1896), 74 Fed. Rop. 114: Lnckrtt [b) O'Brien v. Preseott Innnranee
Wale Co. V. Globe Fiir (IIHKS). 171 (ISSli), 134 X. Y. 2S.
Fed. Kep. 147.
WARRANTIES 345
terms and conditions of its policy shall only be waived by its
written or printed assent has prescribed only a reasonable rule

to guard against the uncertainties of oral evidence, and by this the
assured has assented to be bound (c) . And thus, where the condition
poKcy was that if the premises should remain unoccupied
in a fire
''
for more than fifteen days without notice to the company, and
consent indorsed hereon," and oral notice was given to the agent,
who noted it in his book and said it was not necessary to indorse
it on the policy, the Court held that the agent had no authoritj'-
to waive the condition orally, or otherwise than in the prescribed

manner (d). But where the poHcy contained a similar condition,
and the agent promised to indorse the policy with a permit to
remain unoccupied, and afterwards forgot to do so, it was held
that the condition was waived (e).
If the insurers issue the policy with knowledge of the l)ieach Issuing the
that may
be construed as a waiver of the warranty (/), as Avhere knoviledge of
premises were described as " used as a storage icehouse," but were ^ breach.
in fact uncompleted and unoccupied, but were intended to be used
" no fireworks
as described (g), or where the poUcy warranted
kept," and the agent issued the policy with knowledge that
fireworks were kept Qi). But the knowledge must be definite,
and not merely a suspicion, as where the condition was that the
policy should be void if more than 56 lbs. of gunpowder was kept,
and the assured had a greater quantity, the pohcy was declared
void,notwithstanding the contention of the assured that the
company knew that the particular business could not be carried
on without a much larger stock of gunpowder (i). Issue of the
policy by an agent who has knowledge of the breach can only be
construed as a waiver if the agent had authority to waive the
breach and therefore where a hfe pohcy warranted that the
(k) ;
assured was of temperate habits the knowledge of the local agent
(c) Kyte V. Commercial Union Agricultural Insurance v. Ansley

(1887), 144 Mass. 43. (1888), 15 Queb. L. R. 256.
id) Walsh V. Hartford Fire (1878), (g) McNallyv. The Phoenix (1893),
73 N. Y. 5. 137 N. Y. 389.
(e) Dupuy v. Delaware (1894), 63 (h) Phoenix v. Flemming (1898),
Fed. Rep. 680. 65 Ark. 54 ; 67 Am. S. R. 900.
(/) Reddich v. Saugeen (1888), 15 (i) McEwan v. Guthridge (1860),
Ont. App. 363 ; London & Lanca- 13 Moore, P. C. 304.
shirev. Honey (1876), 2 Vict, h.^.l ;
(k) West End Hotel v. American
Louck V. Orient (1896), 176 Pa. 638 ; Fire (1896), 74 Fed. Rep. 114 ;
Potts-
Woodruff V. Imperial (1880), 83 ville Mutual v. Fromm (1882), 100
X. Y. 133 Haight v. Continental
;
Pa. 347 ; Abbott v. Shawmut Mutual
(1883), 92 X. Y. 51; McKay v. (1861), 85 Mass. 213.
Norwich Union (1895), 27 Ont. 251 ;
;
to the contrary was held to be immaterial (Q. And so in a

Canadian fire case, the insurers' policies contained a condition
and indorsed on the policy.
against double insurance unless notified
The agentjbeing informed that the applicant held another insurance;
told him that he would obtain particulars and insert them in the
application form. He then issued an interim protection note,
and forwarded the application to the head office without entering
the particulars of other insurance. The application was accepted,
and a policy issued, and it was held that the protection note was
valid as the agent who had authority to make the contract had
notice of the double insurance, but that the policy was void
because the head office where the application was accepted had
no knowledge of the double insurance (m).
Waiver by Similarly, if the insuAr accepts a renewal premium after know-
aooeptanoe
of renewal ledge of a breach of warranty, the breach is waived if the premium
premium. fell due after the breach (n) but if the premium fell due or was
;
earned before the breach the acceptance is not necessarily a waiver,

because it is not inconsistent with the forfeiture of the poUoy as
at the date of the breach (o). In one American case it was held
that if the condition was that the policy should be absolutely void
upon a breach of warranty it could not be revived by a mere act
of waiver (p) ; but such a condition does not in law operate so as
to make the whole contract void ab initio upon a breach of warranty,

the insurer is merely discharged from liabihty in respect of the
future, and may undoubtedly waive the provision in his favour.

By furnishing Furnishing blank proofs of loss with knowledge of a breach
blank proofs.
of warranty, but without notice to the assured that a forfeiture
would be claimed, has repeatedly been held to be a waiver (q) ;
but if the insurer declares that there has been a forfeiture,
subsequent demand for strict proof of the loss is not necessarily

a waiver (r). And if the information of the facts from which
(I) Wing
V. Harvey (1854), 5 De British Industry v. Ward (1856), 17
G. M. &
G. 265 ; Thomson v. Weems C. B. 644.
(1884), 9 A. C. 671; 11 B. 667. (o) Farmers' Mutual V. Hull {IS9Z),
(m) Billington v. Provincial Ins. 77 Md. 498.
(1877), 2 0nt. A. R. 158(1879), 3 Can. {p) Gardiner v. Piscataquis Mutual
S. C. 182; Shannons. OoreDist. Mut. (1853), 38 Me. 439.
(1878), 2 Ont. A. R. 396. (q) McNally v. Phcenix (1893), 137
(n) Supple V. Gann (1858), 9 Ir. C. N. Y. 389 ; Hanscom v. Insurance Go,
L. R. 1 ; Phcenix Life v. Raddin (1897), 90 Me. 333 ; Canada Landed
(1887), 120 U. S. 183 ; Law v. Hand Credit v. Canada (1870), 17Grant,418.
in Hand (1878), 29 U. C. C. P. 1 ; (r) Phoenix v. Flemming (1898),
Fourdrinier v. Hartford Fire (1865), 65 Ark. 54; 67 Am. S. R. 900; Eoth
15 U. C. C. P. 403; Bleakley v. V. Mutvâl Reserve (1908), 162 Fed.
Niagara (1869), 16 Grant, 202 Rep. 282.
MISREPRESENTATION, ETC., BY THIRD PARTIES 347
a breach of warranty is inferred is informal or indefinite, the

insurers are entitled to ask for proofs in order to have a
definite statement of the assured upon which they can act
with greater certainty, and the demand of proofs for this pur-
pose does not constitute a waiver (s). The insurers are not
bound to disclose each separate reason for refusing payment,
and if they deny Habihty in general terms, and invite proofs
without prejudice to any defence which they may be advised to
raise, there can be no waiver of a breach of warranty but if they ;
specify one particular reason for refusing payment and lead the
assured to believe that that alone is the issue between them they
may be held to have waived other defences then open to them,
and if the insurers or their authorised agents state definitely that
they will not rely on a particular defence they will undoubtedly
be estopped from doing so (i). In an American case where the
action was tried a second time the company was held to be estopped
from setting up technical breaches of warranty as to which they
had knowledge, but did not set up the defence at the first trial (m).
If the conditions of the policy require any particular informa-
tion to be given to the insurers it is only fair to the assured that
that information should be asked for in the application form, for
if it is not the condition in the policy may be overlooked ; and in
an American case where the condition in the policy required that
if the estate was incumbered, or if the assured was not owner
in fee of his estate, it should be so stated, but no questions as

to title were put in the application form, it was held that the
omission was not fatal (w).
The doctrine of warranty as applied to contracts of insurance
is the same in Scotland (x) and Ireland as in England.
Section V. —Fraud, Misrepresentation, and Non-disclosure hy

Third Parties
As a general rule in the law of contract, fraud, misrepresentation. Generally do

^
or non- disclosure by persons who are not parties to a contract contract.*
*
cannot affect the validity of such contract (y) ; although it
(a) Fitchpatrick v. Hawheye (1880), (u) Cleaver v. Traders' Insurance

53 Iowa, 335; Abrahams v. Agri- (1889), 40 Fed. Rep. 711.
cultural (1876), 40 U. C. Q. B. 175 ;
(w) Dohn v. Farmers' Joint Stock
Ronald v. Mutual Reserve (1892), (1871), 5 Lans. 275.
132 N. Y. 378. (x) Thomson v. Weem,s (1884), 9
A. C. 671, 687.
(t) McCormiekv. The Royal {19:^4:), (y) Connecticut Mutual Life v.
163 Pa. 184. iMchs (1882), 108 U. S. 498.
may be ground for proceeding against such persons for damages

for deceit (0). This rule applies to contracts of insurance as well
as to other contracts, and therefore generally it is no defence for
the insurers to say that some person other than the assured or his
agent made false or inaccurate statements to them or did not

disclose material facts within his knowledge (a).
Pearl Life Assurance v. Johnson, [1909] 2 K. E. 288

Pearl Life In pursuance of a proposal form purporting to be signed by S. A. J., the
Assurance v. company issued a policy under seal covenanting to pay S. A. J. a named sum
Johnson.
upon the death of W. J. The policy recited that S. A. J. had signed a proposal
form, and that such proposal was agreed to be the basis of the contract, and
that if there was any untrue averment contained therein the policy should be
null and void. The proposal form contained an untrue statement but the ;
proposal form was not in fact signed by S. A. J. nor had she any knowledge of
the contents, or given any authority to make the statements. It was held
that S. A. J. could recover on the policy because no proposal was made which
could be said to be the basis of the contract, and the company having issued
the policy and received the premiums were estopped from saying that there
was no policy unless they could show that an untrue proposal was made by or
with the authority of the proposer.
Misrepresentation or non-disclosure by an agent for the

assured will invalidate the policy if he was (i) the general agent
of the assured to effect the insurance ; or (ii) the agent of the
assured for some particular purpose in connexion with the effecting
of the insurance ;
(iii) the agent of the assured in charge of the
property insured.
Misrepresentation or non- disclosure by any third person will
invalidate the policy where the assured has warranted that the
statements of such third person are accurate or true, or that he has
not concealed any material fact.
By agent to If the assured employs some one as an agent to effect an
procure the
insurance. insurance for him the fraud or misrepresentation of that person
in or about effecting the insurance is sufficient to vitiate the
policy (&), even although he has made statements without the

assured's authority, or even contrary to his express instructions.
Such an agent must also disclose to the insurers anything material
(z) Pasley v. Freeman (1789), 3 p. 270) ; Hambrough v. Mutual Life

T. R. 51. (1895), 72 L. T. 140 ; Cole v. Ger-
(a) Connecticut Mutual v. Luchs mania Fire (1885), 99 N. Y. 36;
(1882), 108 U. S. 498. Carpenter v. American {18Z9), 1 Story,
(6) Wheelton v. Hardisty (1857), 8 57.
E. & B. 232 (Lord Campbell, C.J., at
—
MISREPEESENTATION, ETC., BY THIRD PARTIES 349
which he knows about the risk, no matter how he has obtained

that knowledge, and if he does not do so the policy is voidable,
even although the assured himself was ignorant of the facts which
were known to the agent (c). The policy will equally be voidable
even if the assured has instructed his agent to disclose certain
material facts to the insurers, but the agent has neglected to
do so.
The assured in the case of insurance on property will probably By agents of

be presumed to have not only his own personal knowledge with ;„ charge of
regard to that property, but the knowledge also of those whom Fop^^tj
he has placed in charge of it as his agents. Thus, a merchant
with a large number of warehouses in different parts of the country
might have Uttle personal knowledge of the conditions affecting
each one, but he would nevertheless be under an absolute duty
to disclose all material facts which were known to his servant or
agent in charge of the warehouse to be insured. There is, perhaps,

no authority in fire insurance cases for this proposition, but it
is a well-recognised principle in marine insurance (d),and the reason

for it seems to apply equally to all insurances upon property,
and perhaps to all other classes of insurance, such as guarantee
or insurance on profits, where an agent in charge of the subject
matter of the insurance has more intimate knowledge of material

facts than the assured himself, and it is part of such agent's duty
to disclose to the assured the particular facts alleged to have been
concealed. The principle is laid down by Cockburn, O.J., in
Proudfoot V. Montefiore (e), where he says
" The insurer is entitled to assume, as the basis of the contract between
him and the assured, that the latter will communicate to him every material
fact ofwhich the assured has, or, in the ordinary course of business ought to
have knowledge, and that the latter will take the necessary measures by the
employment of competent and honest agents to obtain through the ordinary
channels of intelligence in use in the mercantile world all due information as
to the subject matter of the insurance. The condition is not complied with
where by the fraud or negligence of the agent the party proposing the insurance
is kept in ignorance of a material fact and through such ignorance fails to
disclose it '
(/).
{c) Lynch Dunsford (1811), 14

v. (1867), L. R. 2 Q. B. 511 Blackburn
;
East, Blackburn v. Hadam

494; v. Ftgrora (1887), 12 A. 0. 531.
(1888), 21 Q. B. D. 144. (e) (1867), L. R. 2 Q. B. 511, 521.
(d) Fitzherbert v. Mather
(1785), 1 (/) Approved by Lord Halsbury,
T. R. 12 ; Gladstone v. King (1813), 1 L.C., in Blackburn v. Vigors (1887), 12
M. & S. 35 ; Proudfoot v. Montefiore A. C. 531, 537.
Fraudulent In an American case fidelity policies were issued indemnifying

agents.
a bank in respeet of the defalcations of its employees. It was
said that in an ordinary case such policies might be set aside on
the ground that the manager of the bank had failed to disclose
previous instances of infidelity on the part of his subordinates,
but where the manager himself had been impHcated in previous
defalcations it was held that, having acted in a manner entirely
opposed to the bank's interests, the bank was not responsible for
his misrepresentations and concealment of the true state of
affairs (g).
Whether It has been held in two marine cases Qi) that where an agent
innocent non-
disclosure by in charge of property, acting without fraud, fails to disclose a
agent of a
loss avoids
partial loss, and the policy is effected in ignorance of that loss that
the policy or the effect of the non-disclosure is not to make the contract voidable,
creates an
exception. but to create an implied exception from the risk in respect of the
loss which has occurred. The soundness of these decisions has,
however, been doubted (i), and the principle is not hkely to be
extended to other branches of insurance.
By "life" or It cannot be stated as a general rule of law that the mis-
referees.
representation, fraud, or non- disclosure of a life (not being the
assured) or referee avoids a life policy. It may do so, but
on one of two grounds only ; either (i) because the life or
referee is acting as agent of the assured; or (ii) because there

is some condition in the contract by which the truth of the
statements made by the life or referee are warranted or made
the basis of the contract (k). Some of the earlier cases seem
at first sight to support the theory that in the case of an
insurance upon the life of another the " life " is necessarily the
agent of the assured for the purpose of answering such questions

as the insurers may think proper to ask, and that the pohcy is
therefore voidable if the " life " answers any of these questions in-
accurately. In some of these cases there is a distinct expression
of judicial opinion that the "life" the agent of the assured for is
this purpose. In Everett v. Deshorough (l) the " Hfe " made a
false statement as to his " usual medical attendant," and the
Court in setting aside the policy proceeded partly on the ground
(g) American Surety v. Pauly [i] Arnould, 7th ed., sec. 585.
(1896), 72 Fed. Rep. 470. (k) Venner v. Sun Life (1890), 17
Gladstone v. King (1813), 1
{h) Can. S. C.394.
JI. & S. 35 Stribley v. Imperial
; (I) (1829), 5 Bing. 503.
Marine (1876), 1 Q. B. D. 507.
MISEEPRESENTATION, ETC., BY THIRD PARTIES 351
that the " life " must be considered to be the agent of the assured :
but partly also on the ground that there was a condition precedent
in the poUcy that the usual medical attendant of the life insured
must be truly declared. Also in Maynard v. Rhodes (m), Morrison
V. Musjpratt (n), Huckman v. Fernie (o), Swete v. Fairlie (p), and
Bawlins v. Deshorough (q), the opinion of some of the judges at

least appears to have been that the assured must be held responsible
for any false made by the " life " although not for
statements
mere non- disclosure by him of material facts. In a Scottish case,
Forbes v. Edinburgh Life (r), Lord President Hope thought that
even non-disclosure by the " life " would be fatal to the policy,
and in Bawlins v. Deshorough (q), Denman, C.J., thought that
wilful concealment by the " life " would be fatal. If, however, all
the cases are carefully examined, it will be found that either
(i) therewas an express condition in the policy that the state-
ments made by the life should be accurate (s) or (ii) the facts ;
were probably known to the assured as well as the "life," and

therefore there was non- disclosure by the assured himself (t) or ;
(iii) the questions were put to the assured and by him handed on
to the "life " to answer on his behalf (u). There is, therefore, no
authority for saying that the " life " is necessarily the agent of
the assured for any purpose. In the case of statements made by
referees, that is by medical men or friends, whom the assured is
asked to name so that the insurers may make what inquiries they
thiak proper as to the health and habits of the " life," there has
been a tendency to consider them as necessarily agents of the
assured (x). In Lindenau v. Deshorough (y) the policy was set
aside apparently on the ground that the former medical attendants
of the " life " had made false statements or failed to disclose
material facts in answer to questions put to them. The report,
however, of this case does not show whether there was any express
condition in the policy, or whether the assured himself was aware
(m) (1824), 5 Dow. & R, 266. (t) Morrison v. Muspratt (1827), 4
(n) (1827),4 Bing. 60. Bing. 60 ; Huckman v. Fernie (1838),
(o) (1838), 3 M. &
W. 505. 3 M. & W. 505.
(p) (1833), 6 0. & P. 1. (u) Huckman v. Fernie (1838), 3
iq) (1840), 2 Mood. & Ry. 328. m. & W. 505, where the insurance
(r) (1832), 10 S. 451. was effected by the husband on the
(«) Maynard v. Rhodes (1824), 5 life of his wife.
Dow. & R. 266 Des-
f.™™.„i, /iooo\ 5
6oroMg'ft(1829), KT3;
;
cfiQ
Bing. 503
Everett v.
;
m^^-h,,^-,,
J'orOes v. M Rawls
,
,,Ar,>
d
97 m
v 7
9S9
v.
v
a
American T\t ,
Mutuali
Edinburgh Ufe (1832), 10 S. 451. (^^'°^)' ^^ ^- ^- ^»^-

In practice statements made by the (y) (1828), 8 B. & 0. 586 ; 3
life are usually warranted or made Man. & Ry. 45.
the basis of the contract.
—
of the facts alleged to have been misrepresented or concealed,

and from the fact that Brougham, in moving for a new trial on
behalf of the assured, did not apparently take the objection that
the misrepresentation or non-disclosure, if any, was not that
of the assured, but of the referee, and from the fact that the judg-
ments lay stress on the duty of the assured to make full disclosure,
it may be inferred that the Court thought that the assured himself
knew or ought to have known of the state of facts which were not
disclosed. In Bawlins v. Desborough («) the plea of the defendants,
and the direction of Denman, C.J., to the jury, proceed apparently
on the assumption that at least a wilfully false statement by the
referee would vitiate the policy, but there is no discussion or actual
decision upon the point.
Prima facie Neither as to the " life " nor referee, therefore, is there any
avSdThe Conclusive authority to the effect that the policy is necessarily

policy. affected by their false statements or non-disclosure. On general
principle there is no foundation for such a rule, and what is sub-
mitted to be an accurate statement of the law is contained in the
judgment Lord Campbell, C.J., in Wheelton v. Hardisty (a).
of
In that case the insurance was upon the hfe of another, and the
insurers alleged that the Ufe and medical and other referees had
been guilty of fraudulent misrepresentations. The assured, in
his application, had made a declaration that he beUeved the
answers given by the life and medical referees to be true. It w as
argued that the life and referees were the agents of the assured
at least for the purpose of answering the questions put to them.
The Court held that the life and referees were not necessarily the
agents of the assured, and in particular that they could not be
held to be so when the assured was only asked to state his behef
as to the truth of their answers. Lord Campbell, C.J., said, in
reference to the previous authorities
" On behalf of the defendants it has been very powerfully argued, before us,
that the person whose life is to be insured (as he is usually called the '
life ')
and the referees are always to be considered,

not the agents of the assured to
if
effect the policy, at least the agents of the assured in giving answers to all
material questions which may be put to them respecting the matters to
which they may properly be interrogated. Although this doctrine has some
sanction from language which has been used by judges, it seems to me to be
contrary to principle ; and the decisions cited in support of it admit of an
(z) (1840), 2 Mood. & By. 328. {a} (1858), 8 E. & B. 232.
MISREPRESENTATION, ETC., BY THIRD PARTIES 353
explanation which leaves me at liberty to condemn it. A policy may, no

doubt, be framed which shall make the assured liable for any material mis-
representation or concealment by the life or the referees but what we have ;
to consider is whether when the policy contains no express condition for

this purpose, and is made on a declaration by the assured that they believe the
statements of the life and the
be true, the life and referees are still
referees to
the agents of the assured in the manner contended for. In the first place, it
seems rather strange if they are employed, not in any respect to negotiate or
effect the insurance, but only to give information as to facts exclusively known
to themselves, they should be denominated agents. It often happens that
the assured have never seen the and are wholly unacquainted with the state
life
of his health, and with his habits. But an agent is supposed to do what could
be done by the principal were the principal present. A more serious objection
arises from the consideration that this doctrine would entirely prevent a life
policy from being a security upon which a man could safely rely as a provision
for his family, however honestly and however prudently he may have acted
when the policy was effected. But the assurer and assured being equally
ignorant of material facts to influence their contract, if the assurer asks for
information and the assured does his best to put the assurer in a situation to
obtain the information and to form hisown opinion as to whether the informa-
tion is sincere, be permitted where the assurer, without any blame being
can it
imputable to the assured, has allowed himself to be deceived, that he shall be

able to say to the assured, You warranted all the information I received to be
'
true ; and having received your premiums for many years now the life drops
and I tell you I was incautious, and the policy I gave you is a nullity ? '
The uberrima fides is to be observed with respect to life insurances as well as

marine insurances. The assured is always bound not only to make a true
answer to the questions put to him, but spontaneously to disclose any fact
exclusively within his knowledge which it is material for the assurer to know ;
and any fraud by an agent employed to effect the insurance is the fraud of the
principal but there is no analogy between the statements of the life or the
;
referees in the negotiation of a hf e insurance and the statements of an insurance

broker to underwriters, by which he induces them to subscribe the policy."
Where an insurance company issue a guarantee or fidelity wheie debtor
policy they may be approached, not by the creditor or employer pe°on®pro.

whom they are going to insure, but by the debtor or employee, cures a policy
m, T i"^his own
. 1
The latter has to procure a policy
p
favour or the tormer as a m
• I. , 1 !•
interest
condition of the credit or employment. In such cases the debtor 1^1^^}^^^°

or employee is not necessarily the agent of the creditor or employer,
for thepurpose of effecting the insurance, and therefore his fraud
does not avoid the policy as against the creditor employer.
Comptoire Nationals v. Law Car and General (b)
The plaintiffs, as bankers, had made advances to certain merchants, 0. Comptoire

v. Nationale
them to fulfil a contract for the delivery of coal to the
Brothers, to enable
Law Car and
Danish Government. As a condition precedent to further advances the bank Q^!^^âi
(6) Bray, J., October 21st, 1908 ; Court of Appeal, June 10th, 1909.
I.L. 23
required security, and 0., a member of the merchants' firm, said he would pro-
cure a poUoy. He procured a policy from the defendants, indemnifying the
bank against loss consequent upon O. Brothers failing to fulfil their contract
with the Danish Government, and in the course of the negotiations made a
false statement to the defendant's manager as to his financial position. Mr,
Justice Bray held that the fraud of O.did not affect the bank as 0. was not
their agent for the purpose of making representations. He said, " It was O.'s
affair to get this policy. He wanted it in order that the advances might be
continued. He could go to what insurance company he liked, provided
; it was quite immaterial to the
the policy eventually turned out satisfactorily
what premium he gave or agreed to give, quite immaterial what the
plaintiffs
conditions were, provided the poUoy, when it was produced, was a satisfactory
one, and therefore it seems to me that it would be entirely wrong to conclude
from this that the plaintiffs constituted 0. their agent. No authority was cited
for that proposition except the case of Whedton v. Hardisty, which really did
not decide anything of the kind, but hinted that, under certain circum-
stances, a person who negotiated might be the agent of the person in whose
favour the policy was eventually given, but it did not say under what circum-
stances, and no opinion was expressed at all and no authority, except that one
was cited, and I know of none for that proposition. But there is a very fami-
liar case that arises every day A man is asked to lend money, and the pro-
:
posed lender says, I must have a guarantee or security.'

'
Very well,' '
says the intending borrower, I will try and get one,' and thereupon he may
'
bring either the surety himself, or he may bring a document signed by the
surety. Is the debtor or intending borrower the agent of the lender to make
representations ? Surely not." This judgment was affirmed in the Court of
Appeal. Vaughan WilUams, J., said, " It is said that 0. was acting as agent
for the bank. In my opinion there is nothing to justify such a finding of fact.
The proper conclusion is that 0., wanting to persuade the bank to render him
financial assistance, and finding that he could not get it without security, he
went on his own account to get such security as would be acceptable to the
bank." Fletcher Moulton, L. J., said, " It all turns on one point : was 0. agent
or principal in negotiating the contract he had been agent he would have
? If
had authority to make the bank liable to pay the consideration, but it is
clear that he had no such authority ; he, as debtor, was bound to pay the
premiums on the policy which he obtained." And Buckley, L. J., said, " I do
not think he was agent any more than a lessee is who covenants to obtain an
insurance in the name of the lessor."
Fraud of Prima facie, therefore, it would seem that when a debtor,

debtor, lessee, or employee procures an insurance company to issue a
lessee,
or emplovee ,. . . , . ,. , , ... j j.
prima facie poucy msunng his creditor, lessor, or employer, it is no aeience

no defence. j^j. ^.j^g insurance companyagainst the assured to say that the policy
was procured by the fraudulent mis-statements of the pefson
who procured it, but the express conditions of the policy may
make it voidable on the ground of any fraud or misrepresentation
on the part of the applicant (c).
(c) Venner v. Sun Life (1890), 17 ought to be inserted for the proper
Can. S. C. 394. Such a condition protection of the office.
MISEBPRBSENTATION, ETC., BY THIRD PARTIES 355
Very difficult questions arise where the misrepresentation or Fraud or

concealment is the fault not of the appUoant or his general agent,
êntsouL
but of the person who acts as the company's agent for the purpose company.
of receiving proposals. The information given to the agent by
the apphcant may be full and accurate, but the agent may, in filling
up the proposal which is to be forwarded to the head office, make
omissions or mistakes. If the agent was the company's agent
for all purposes, the company would clearly be responsible, but
for the safety of the company the agent's authority is necessarily
limited, and these questions depend (1) on the extent of the agent's
actual or apparent authority from the company (2) on the extent ;
to which the knowledge of an agent is to be imputed to the

principal. As to the authority of the agent the ordinary local
or canvassing agent of an insurance company with authority to
receiveand forward proposals, but not to make contracts, has
apparent authority to negotiate and settle the terms of a pro-
posal (d). His authority is not limited merely to receiving the
written proposal completed by the assured, but includes the duty of
explaining the questions to an intending applicant, and perhaps
putting the answers when received into proper shape(e). This is the
normal authority of the agent, but it may be extended or restricted
by special circumstances in the case. As to the rule which imputes
the knowledge of an agent to his principal (/) this does not apply
(i) where there is no duty to communicate the matter ; (ii) where
the knowledge is acquired by the agent otherwise than in the

course of his agency ;
(iii) where the agent is acting in fraud of his
principal for his own private ends.
Applying these principles to the case of a mistake or wilful ruling up the
Proposal.
misrepresentation made by the company's agent, it is clear that.
primd facie, when such agent fills up the proposal form in the
presence of, and from statements then made by, the applicant,
and obtains the applicant's signature to the declaration, he is
acting as the agent of the company. Prom this the following
general rules may be deduced :
(i) If the agent, in explaining the meaning of the questions. Explaining

*^^® questions.
puts a wrong construction upon them, the question is whether the
(d) Bawden v. London, Edinburgh, and Glasgow, [1892] 2 Q. B. 534 ;
and Glasgow, [1892] 2 Q. B. 534. Holdaworth v. Lancashire and York-

(e) Biggar v. Bock Life, [1902] 1 shire Insurance (1907), 23 T. R. 521 ;
K. B. 516. May v. Buckeye Mutual (1870), 25

(/) Bawden v. London, Edinburgh, Wis. 291 3 Am. R. 76.
;
answer is true in relation to the question as explained. This

particularly applies to the case of questions put by a medical
examiner, where such examiner is directed to explain the ques-
tions (g) : but it would seem to apply
also to questions put by an
agent receiving the proposal. such agent has authority to If
negotiate and settle the terms of the proposal he must,
by
implication, have some authority to explain the matter to the
applicant (h).
Misunder- (ii) If the agent, having extracted the necessary information,

standing the
assured.
puts down what he thinks represents the answer, but in the
process of translating the colloquial language of the applicant
into official form misrepresents what the appHcant did in fact
say, the question is what in fact was the answer given by the
applicant (i).
Obvious (iii) agent makes an obvious error such as putting down

If the
mistakes.
" no " when the applicant said " yes," or " 50 " when the appHcant
said "60," then the appHcant cannot be excused, because although
the mistake was the mistake of the agent, yet the appHcant having
signed the proposal must be taken to have read the answers
written down, and to have adopted and as he was them (fc), not
in any way misled by the agent, there can be no equity in his
favour. If it is said in such a case that the knowledge of the

agent is the knowledge of the principal and that therefore the
company must be taken have known what the actual statement
to
was, the answer is that the agent had no duty to communicate
this matter otherwise than by forwarding the applicant's proposal.
Fraudulent (iv) If the agent, in fraud of the company for the purpose of
misstate-
obtaining his commission, wilfully inserts an erroneous answer,
ments.
there is a misrepresentation for which the assured must be deemed
responsible if he has signed the proposal or warranted the truth
(g) Joel V. Law Union and Crown, (i) Brewster v. National Life (1872),
[1908] 2 K. B. 863 Connecticut General
; 8 T. L. R. 648 ; Insurance Co. v.
McMurdy (1879), 89 Pa. 363 ; Mutual Mahone (1874), 21 Wall. 152; New
UJev. Selby (1896), 72Fed. Rep. 980 ; Jersey Mutual v. Baker (1876), 94
New York Life v. Russell (1896), 77 U. S. 610 ; Eames v. Home Insurcmce
Fed. Rep. 94. (1876), 94 U. S. 621 ; Mutual Benefit
{h) Newcastle Fire v. Macmorran V. Bobison (1893), 58 Fed. Rep. 723;
(1815), 3 Dow. 255, 262 ; Wheelton-v. Columbia Insurance v. Cooper (1865),
Hardisty (1858), 8 E. & B. 232, 276 ; 50 Pa. 331 May v. Buckeye Mutual
;
Insurance Co. v. Wilkinson (1871), 13 (1870), 25 Wis. 291 3 Am. R. 76.

;
Wall. 222 ; Phoenix Insurance v. (k) Biggar v. Bock Life, [1902) 1

Warttemherg (1897), 79 Fed. Rep. K. B. 516 New York Life v. Fletcher
;
245 ; Standard Life and Accident v. (1885), 117 U. S. 519 Macmillan ;
i?'ro«er (1896), 76Fed.Rep. 705; Oaj-oZZ- V. Accident Insurance, [1907] S. C.

ton Manufacturing Co. v. American 484.
Indemnity {190i), 124 Fed. Rep. 25.
;
MISREPEESBNTATION, ETC., BY THIRD PARTIES 357
of the statements (Z). He cannot escape on the ground that he

was misled, because, if the agent did mislead him, the agent was not
acting as the company's agent, but for his own private ends, and
there is, therefore, no equity against the company. But where the
agent, after signature of the application form by the applicant,
fraudulently inserted a false statement without the knowledge
or authority of the applicant, the company was held to be liable (m).
(v) Another class of case is where the applicant gives the agent Proposal
the necessary information, and at the agent's request signs the blank.
proposal in blank and leaves it to the agent to complete. Here
the agent is exceeding the ordinary ostensible authority of the
company, and if he fills in the proposal form in this irregular
way he must probably be deemed to be acting as the agent of the
assured, so as to render the assured responsible for all mistakes (n).
There are, however, some American cases where the agent, under
such circumstances, has been held to have been acting for the
company so as to make the company responsible for his mistakes (o).
(vi) Where the agent fills in the particulars from his own know- Proposal filled
ledge, or from his own inquiries and investigations, and then from his own
procures the applicant's signature, he is not acting in the regular knowledge.
manner permitted by his authority, and if the applicant chooses
to adopt without question what the agent has inserted he must
be responsible But if the information is obtained by the agent
(p).
for the purpose of making a separate report to the company as

where the applicant on a fire risk says to the agent, " Come and
look at the premises and judge the risk for yourself," knowledge
must be imputed to the company, even although he has failed to
make the report or has reported the matter inaccurately, and, if
knowledge is so imputed, the company cannot avail themselves of
the defence of misrepresentation (q).
(I) New
York lAfev. Fletcher {18S5), Metropolitan Life (1880), 80 N. Y.
117 U. S. 519 U. S. Life v. Smith
;
281.
(1899),92Fed.Rep.503; iJeidofcOo.v. {p) Biggar v. Rock Life, [1902] 1
Employers' Accident {1899), 1 F. 1031 K. B. 516 Life and Health v. Yule
;
Maier v. Fidelity Mutiial (1897), 78 (1904), 6 F. 437 ; Pottsville Mutual

Fed. Rep. 566. Fire v. Fromm (1882), 100 Pa. 347.
(m) Sawyer v. Equitable Accident But see Holdsworth v. Lancashire and
(1890), 42 Fed. Rep. 30. YorkshireAssurance{1901),23T.'L.'R.
(n) BilUngton v. Provincial Ineur- 521.
ance (ISIQ), 3 Ca^n.S.C. 182 Sowden ; (q) Insurance Oo. v. Wilkinson
V. Standard (1880), 5 Ont. A. R. 290; (1871), 13 Wall. 222 ; In re Universal
Shannon v. Oore Dist. Mut. (1878), 2 Non-Tariff Fire (1875), 19 Eq. 485 ;
Out. A. R. 396. Somers v. Athenceum (1858), 9 Lr.

(o) Brown v. Metropolitan Life Can. R. 61 ; Weber v. Metropolitan
(1887), 8 Am. S. R. 894 ; Orattan v. (1895), 172 Pa. 111.
When the Even where the answers on the proposal are warranted true
answers are
warranted. the assuredis not bound if he can show some equity against the
company, such as the fact that he was misled by the company's

agent acting within his authority (r). Also where knowledge
can be properly imputed to the company the fact that there is a
warranty may become immaterial because, if the company issued
the policy with knowledge that the facts were not as warranted,
the warranty would be deemed to be waived (s).
Condition In order to strengthen the company's position in cases where

that agent ia
agent of the
the assured alleges that the mistake has been made by the com-
applicant. pany's agent it is common to insert in the proposal form a notifica-
tion to the effect that the agent filUng up the proposal form is
the agent of the applicant, and not of the company. But this
does not necessarily mean that he is the agent of the apphcant

and thus ia Canada
for all purposes in connexion with the proposal,
itwas held that notwithstanding this clause the agent was still
the company's agent to explain the questions, and if he misled
the agent by an erroneous explanation the company was respon-
sible (f). And this clause, standing alone, does not prevent the
assured from saying that the agent had knowledge of the true
facts, and that the circumstances were such that the knowledge
should be imputed to the company (m).
Condition A fuller measure of protection is given to the company by the

that know-
ledge of agent
further condition that neither the knowledge of, nor statements
is not Icnow- made to, the agent shall be binding on the company unless embodied
ledge of
company. in writing on the proposal form. This condition printed on the
proposal form appears to be effective as an answer to the plea
that the agent's knowledge is the knowledge of the principal (a;).
Onus of If the assured has signed the proposal form or warranted the
proof.
accuracy of the statements therein the onus of proof is on him
to show that he did not, in fact, make the answer written
(y). down
The proposal form is prima facie evidence against the assured as
to what he did say. But where the questions are put by a medical
Insurance Co. v.Mahone (1814:),

(r) (x) Biggar v. Bock Life, [1902] 1
21 Wall. 152; McNally v. The K. B. 516 Macmillan v. Accident

;
Phoenix (1893), 137 N. Y. 389. Insurance, [1907] S. C. 484 Bleakley ;
(a) Naughter v. Ottawa Agricul- V. Niagara District (1869), 16 Grant,

tural (1878), 43 U. C. Q. B. 121 ; 198 Peek v. Agricultural Insurance
;
Bawden v. London, Edinburgh, and (1890), 19 Ont. R. 494 New York;
Glasgow, [1892] 2 Q. B. 534. Life V. Fletcher (1885), 117 U. S.

(t) Graham v. Ontario Mut. (1887), 519.
14 Ont. B. 358. (y) Parsons v. Bignold (1846), 15
(u) Naughter v. Ottawa Agricul- L. J. Ch. 379.
tural (1878), 43 U. C. Q. B. 121.
MISEEPEESENTATION, ETC, BY THIRD PARTIES 359
examiner who is instructed to explain them, the printed
form is
not evidence of the questions put, that is to say the printed
questions plus the explanation ; and therefore the printed form
with the written answers signed by the assured is not by itself
evidence that the assured has made an untrue answer (z).
Bawden v. London, Edinburgh, and Glasgow Life, [1892] 2 Q. B.

534
Application was made
to a local agent for accident insurance. The Bawden v.
applicant was illiterate
and almost unable to read or write, but he could writs London,
his name. He had lost the sight of one eye, and of this the agent was aware. ^<^^^^burgh,
The agent produced an accident proposal form and filled it up to the appUcant's "^t ^^"'^""
dictation, and the applicant then signed it. The proposal contained the
following declaration " I am in good health, free from disease, not
:
ruptured
and have no physical infirmity, nor are there any circumstances that render
me peculiarly liable to accidents and I agree that the statements con-
. . .
tained in the proposal shall form the basis of the contract." In the margin of
this clause was the following note: " If not strictly applicable particulars
of
any deviation must be given at back." No mention was made of the fact that
the applicant had only one eye and the agent did not communicate the informa-
tion to the company who accepted the proposal in ignorance. The policy
recited the fact that a proposal had been made and that it was agreed that
it should be the basis of the contract. It insured inter alia against irrecover-
able loss of sight in both eyes. During its currency the assured accidentally
lost the sight of his one remaining eye. The Court held that he was entitled
to recover in respect of a loss of sight in both eyes. The agent was the agent
of the company to negotiate and settle the terms of a proposal. He saw that
the applicant had only one eye, and therefore the proposal must be construed
as having been negotiated and settled by the agent with a one-eyed man. In
that sense the knowledge of the agent was the knowledge of the company.
If the agent had performed his duty to the company he would have written on
the back of the form the " deviation " in respect of the eye. The condition
in the policy that the statements in the proposal were to form the basis of the
contract was not applicable because knowledge was to be imputed to the
company that the applicant had only one eye.
Biggar v. Rock Life, [1902] 1 K. B. 516

A local agent solicited the applicant to insure. He was reluctant to do so, Biggar v.
but was ultimately persuaded during a game of billiards with the agent and jôcA Life.
the company's inspector of agents. On his consenting to make the application
the agent filled in the proposal form without further consulting the applicant,
and the applicant signed it without reading it or knowing its contents. Several
of the answers written down by the agent were untrue, and he acted either
with gross negligence or fraudulently, so as to secure his commission. The
form contained the usual declaration that the statements therein should form
(z) Joel V. Law Union and Crown, [1908] 2 K. B. 863.

the basis of the contract, and the policy was expressed to be granted " on the
express condition of the truthfulness of the statements contained in the
proposal." A
further condition was as follows : " Any of the circumstances
in relation to these conditions coming to the knowledge of any local agent
shallnot be notice to or be held to bind or prejudicially affect the company."
Wright, J., held that the assured was not entitled to recover. The policy was
prima facie avoided by the condition as to the truth of the answers. If a person
chooses to sign a proposal form without reading it he must be treated as having
adopted it. The agent may have been the company's agent to put the answers
into shape, but not to invent answers. The very basis of the policy was the
statements in the proposal, and these were false, therefore the policy could
not stand. The company never knew of the false statements and there was
no equity against them.
Although an agent has impUed authority to explain the pro-

posal and settle the arms in which the assured's answers should
be expressed, he has no authority to explain the terms of the
contract made by the company so as to bind the company to
a contract other than that expressed in the interim receipt or

policy (c).
Section VI. —Representations and Warranties in Fire Policies
Description of It is a little doubtful how much is to be inferred from the mere

premises.
description in a fire or burglary policy of the premises or goods
insured. It may be put in three ways : (i) that the description
is a representation of the state of the premises or goods ;
(ii) that
the description is a definition of risk ;

(iii) that the description
is a warranty that the premises or goods shall correspond thereto.
Representa- If the description is contained only in the application, and is
tion.
not incorporated into the policy either verbatim or by reference,
it is merely a representation, and, if true at the commencement

of the risk, subsequent alteration will not affect the vaUdity of
Definition of the poHcy (e). But if the description is embodied in the policy,
risk,
either actually or by reference, it has at least the force of a
limitation of the risk to be run. In this view the premises

or goods will be covered by the policy so long, but only so
long, as they comply with the description, and if the description
is considered merely as a limitation of the risk and not a warranty
the insurer will not be wholly discharged, but the policy will
(c) Levy v. Scottish Employers' Mitchell (1864), 48 Pa. 374 ; FrisUe

Insurance (1901), 17 T. L. R. 229 ; v. Fayette (1856), 27 Pa. 325 Daniels;
Union National v. German Insurance V. Hudson River Fire (1853), 66 Mass.

(1896), 71 Fed. Rep. 473. 416.
(e) Cumberland Valley Mutual v.
— —;
REPRESENTATIONS AND WARRANTIES IN FIRE POLICIES 361
merely cease to attach until the propertj- once more corresponds

to the description. Thus, where goods are insured a description
of their locality or situation constitutes a limitation of the risk
but is not usually to be construed as an absolute warranty, so

that if they are removed the policy will merely cease to attach
to these particular goods. In so far, however, as the construction
and user of premises is concerned, the tendency seems to be to or warranty.
construe the description as a warranty rather than as a mere

limitation of the risk. In this view once the warranty is broken
the insurer is discharged absolutely, and the risk will not sub-
sequently reattach by the property being brought into conformity
with the description (/).
It is not quite clear whether the warranty imported by the Nature of
description is an absolute warranty that the premises do not pitldTrom."^

and will not in any respect vary from the description, or whether
the warranty is merely that the premises do not and will not vary
from the description in such a manner as to increase the risk.
In marine insurance the Courts have construed the description
of the property insured as an absolute warranty which must be
literally fulfilled. In fire cases, however, the English decisions
incline rather to limit the warranty so as to prohibit only variations
increasing the risk. In Dohson v. Sotheby (g) Lord Tenterden
appears to have taken this view. In directing the jury, he says
" If the property insured has not been correctly described the defendants
certainly are not liable but I do not think in this case there is any misde-
:
scription which them. The word barn is not the most correct
will discharge ' '
description of the premises ; but it would give the company substantial

information of their nature ; there would be no difference in the risk, and the
insurance would have been at the same rate whether the word barn or a more ' '
correct phrase had been used. I think therefore they are substantially well
described."
In Sillem v. Thornton (h) the property insured, which was

situated in California, was described as a two-storied house. The
description was accurate when it was sent off from California,
but before the insurance was effected in London the assured had
added another storey. The Court held that there was a breach
of warranty. Lord Campbell, C.J., said
" We are now to consider the effect of the description of the premises
insured which has been introduced into the policy. And, in the first place, we
(/) Newcastle Fire v. Macmorran (g) (1827), Moo. & M. 90.

(1815), 3Dow. 255. {h) (1854), 3 B. & B. 868.
are of opinion thatit amounts to a warranty that the premises corresponded
with on the date when the policy was effected or at least that the premises
it
had not been altered by the assured in the intermediate time, so as to increase
the risk of the insurer. But we are further of opinion that the description
. . .
in the policy amounts to a warranty that the assured would not, during the
time specified in the policy, voluntarily do anything to make the condition of
the building vary from this description, so as thereby to increase the risk or
liability of the underwriter " (i).
Therefore, so far as the decision in Sillem v. Thornton (k) goes

it may be that the warranty imported by description is no more
than a warranty that the premises will not vary from the descrip-
tion in such a manner as to increase the risk. If this view is right
a house might be described as slate-roofed when in fact it was

thatched, and it would be a question for the jury to say whether
the thatched roof increased the risk. In Ireland, however, in
Quin V. National Q) the Court held that the warranty imported

by description is absolute and that increase of risk is imma-
terial. Following the EngUsh marine insurance cases, they held
that, " whatever appears on the face of the pohcy, whether on
the body of it or on the margin, descriptive of the premises is a
warranty, and must be literally true." In that case the premises

insured were described as " a dwelling house occupied by a care-
taker," and was held that if they were not so occupied the
it
policy must be void, and no question could be raised as to whether

the occupation was material to the risk or not. If there is an
express condition that any alterations increasing the risk shall
render the policy void, the description may operate as an
absolute warranty as to the condition of the premises at the

commencement of the risk, but as to the future the express con-
dition precludes any implied warranty (w).
Alterations Apart from special conditions in the policy it is doubtful

iukTut"not^^
whether an alteration in the premises which does not affect
affecting the their description, although it increases the risk, will aSect the
descnption.
Suppose, for instance, a house was described merely
^qj^^j-q^q^^
as " a dwelling house built of brick," and during the currency

of the policy the assured added two attic rooms to the top
storey.The risk is probably thereby increased, but the pre-
mium would be the same on the same amount of insurance.
3 E. &B. at pp. 881, 882.
(i) (I) (1839), Jones & Carey, 316;
(1854), 3 E.
(fc) &
B. 868 ; and see Joy, C.B., at p. 340.
Stokes V. Cox (1856), 1 H. & N. 320, (m) Stokes v. Cox (1856), 1 H. & N.
533. 320, 533.
—
REPRESENTATIONS AND WARRANTIES IN EIRE POLICIES 363
Does the slight increase of risk discharge the insurer ? It is
submitted that if the insurance was effected entirely according to

the description given by the assured it will remain valid so long
as the premises correspond to the description ; but if the insurer
made an examination of the premises before he took the risk,
then any alteration involving an increase of risk would avoid the

policy, whether or not it had the result of making the premises vary
from the description. In the one case the insurer has insured
what is described in the policy and he cannot complain so long as
it does not vary from that description. In the other case he has
insured what he or his agent saw, that is to say, a specific house,
and it would be unreasonable to hold him to the insurance when
the house was altered so as to increase the risk. In Thomson v.
Hopper (n), Willes, J., in a marine insurance case said
" In effect, there being no violation of the law and no fraud in the assured,
an increase of risk to the subject matter of insurance, its identity remaining the
same, though such increase of risk be caused by the assured, if it be not pro-
hibited by the poUcy, does not avoid the insurance. I may add that there is a
case of Sillem v. Thornton (o), which turned mainly on a question of identity
of the subject-matter intended to be insured at the time of the insurance, and
may be sustained on that groimd notwithstanding our present decision.
That part of the judgment in that case which discusses the above point was
not called for by the facts ; and if it was intended to negative the proposition
just stated we ought to overrule it."
In an American fire case it was held that, in the absence of

express conditions, the erection of contiguous buildings, although
increasing the risk, did not affect the validity of the policy (p).
In the case of an alteration in the user of the premises the Alteration iii
user of
general rule seems to be that if it does not differ from the user premises-
as described in the poHcy, and a change of user is not expressly
prohibited, such alteration does not affect the policy, even although
it may increase the danger (g).
Baxendale v. Harvey (1859), 4 H. & If. 445

The insurance was upon a warehouse. The assured, who were carriers, had Baxendale v.
a steam engine on the premises, which they ordinarily used for hoisting goods. I^^-^vey.
After the insurance was effected they began to use it also for grinding provender
for their horses, and it was held that, even although the danger of fire might
(n) (1858), E. B. & E. 1038. The Madison Mutual (1851), 5 N. Y.

(1854), 3 E.
(o) &
B. 868. 469.
(p) Young v. Washington Mutual (q) Shaw v. Robherds (1837), 6
(1853), 14 Barb. N. Y. 545 ; Gates v. A. & E. 75.
thereby be increased, the policy was not avoided (r). Pollock, C.B., said,
" This is a mere increase of danger. It is like the case of a person who has an
oven on his premises using it for some other purpose ... A person who
insures may light as many candles as he pleases in his house though each
additional candle increases the danger.''
So in a dwelling house, unless there is any express provision

to the contrary, there is nothing to prevent the assured inserting
and using additional stoves or fire grates in his house, although

each one increases the danger.
Pirn V. Raid (1843), 6 Scott, N. R. 1004
Pirn V. lieid. The insurance was on a paper machine, engines and machinery in a mill.
The premises were used at the time for a paper manufactory, but during the
currency of the policy the assured started the business of a cleaner and dyer
of cotton waste, which was of a more hazardous description, and a loss occurred.
It was held that in the absence of any express condition prohibiting such change
in user the policy was not thereby vitiated. Tindal, C.J., said, " It appears to
me upon general principles that a policy of insurance is not rendered void by
an alteration in the use to which the premises are put after the execution of
the policy." And Maule, J., said, " In the first place it has been contended that
independently of the express provisions, if at any time after the insurance is
effected a hazardous trade is carried on, or goods of a hazardous description

are deposited on the premises, the policy is void. But I do not conceive the
law to be Apart from fraud the insurance company must pay for any loss or
so.
damage to the goods insured notwithstanding any variation of circumstances,

unless in the conditions upon which they agree to insure they choose to provide
for it."
In America it has been held that apart from express condition

change of tenancy from a careful to a careless tenant does not
affect the validity of the policy (/).
Warranty as The effect of misdescription or subsequent alteration of the

to absolute
accuracy of
risk usually depends on the express conditions in the policy.
description. There may be a v?arranty that the description is accurate, and if
so, there can then be no doubt that any inaccuracy will avoid
the policy whether or not the variation from the description is
material to the risk. So, if there is a warranty that the risk comes
within a particular class defined in the policy and it does not
do so, the policy is vitiated, even although a jury may think
that the variation was immaterial.
(r) Baxendale v. Harvey (1859), 4 (t) Gates v. The Madison

H. & N. 445. (1851), 5 N. Y. 469.
EBPRESBNTATIONS AND WARRANTIES IN FIRE POLICIES 365
Newcastle Fire v. Macmorran (1815), 3 Dow. 255

The premises insured were warranted to be within class 1 of the risks defined Newcaslh
in the policy.Class 1 was defined as including buildings which had inter alia „ ^ ^'
JSiucmoTTwn
" not more than two feet of stove pipe." The building contained a stove
which had more than two feet of metal pipe, and the judges of the Court of
Session in Scotland thought the difference was immaterial. The House of
Lords, however, held that whether material or not the breach of warranty
avoided the poUcy.
But the usual condition is against any material misdescription Warranty

or misstatement, and when the condition is so framed no variation material mis-
from the description or misrepresentation will affect the validity description.
of the policy unless material to the risk. And thus, in In re

Universal Non-Tariff (x), the buildings were described as roofed
with slate. In fact, a small part had a felt roofing, but the Court
held that the misdescription was not material, and the policy was
therefore held to be valid.
The material time at which all representations and warranties
de presenti must be satisfied is the time when the risk attaches
or the policy is issued. Conversely all conditions relating to
subsequent alterations and change of risk refer to a period after
the risk has attached or after the policy has been issued (y).
As regards subsequent alterations the usual condition is Condition
against any alteration increasing the risk, and it then becomes a tfteratjona
question of fact for a jury whether or not the alteration increased increasing
the risk, and no alteration which does not increase the risk will
affect the policy even although it may vary the property from
the description.
Stokes V. Cox (1856), 1 H. & K. 320

To the description of the premises there was added " no steam engine Stohes v. Gov.
employed on the premises," and by the seventh condition indorsed on the
policy it was provided that " if the risk is increased by any alteration of the
materials composing the building, or by the erection of any stove, coakel, kiln,
furnace, or the like, the introduction of any hazardous process, the deposit of
any hazardous goods, the making of any hazardous communication, or by
any other alteration of circumstances " the insurance should be void. The
Court held that whatever the meaning and effect of " no steam engine employed
on the premises " might have been had these words stood alone, when read in
the light of the conditions they could mean nothing more than that no steam
engine was employed on the premises at the time the policy was executed.
{x) (1875), L. E. 19 Eq. 485.

(!/) Poiirdrinierv. Hartford Fire (1865), 15 U. C. C. P. 403.
The seventh condition provided fully for future alterations, and the intro-
duction of a steam engine which did not increase the risk was not a breach of
that condition.
The above case shows that where there are express conditions
dealing fully with possible alterations to the premises these
conditions alone will be the test ofwhat may or may not be done,
and additional restrictions not contained therein cannot be implied
from the description of the property.
Meaning of When the condition prohibits " alterations by which risk of
alteration
increasing firemay be increased," the question to be considered in the case
risk. of an alteration in construction is whether the alteration is such
as to increase the risk during the normal and ordinary use and
occupation of the premises. An increase in the size of a building
must almost necessarily increase the risk, whether the building
is occupied or not, since the area throughout which it is possible
for a fire to arise is increased. But some alterations are such that
they cannot possibly increase the risk unless there is user. Thus
the mere insertion into the premises of an additional furnace or
steam engine does not in itself increase the risk. In such oases
the question is, not whether the alteration increases the risk, but
whether the user of it in the ordinary way increases the risk, and
if it is not used at all or on an extraordinary occasion only for some
temporary purpose, there is no breach of warranty {z). The
question as to whether or not there is an increase in the risk is
a question of fact to be decided by the jury (a) with the assistance

of expert evidence (&). If, however, the policy defines the risks
in classes, or as non-hazardous, hazardous, et cetera, facts which
take the risk out of one class and put it into a more hazardous
class must probably be deemed to increase the risk, whether the
jury are of that opinion or not (c). Sometimes, where there are
extensive alterations, the risk may be increased in one part and
decreased in another. If one alteration increases the risk, and
another distinct and separate alteration decreases the risk, the
increase of risk will discharge the insurer, and the assured

cannot set off against it the decrease of risk ui another part of the
(z) Barrett v. Jermy (1849), 3 Ex. (6) Warshawhey v. Anchor Fire

535. (1896), 98 Iowa, 221 ; Ruseell v. Cedar
(a) Todd V. Liverpool, London, and Rapids (1889), 78 Iowa, 216; First
Globe (1868), 18 U. C. C. P. 192; Congregational v. HoVyohe Fire (1893),
Reid V. Gore (1853), UQ.
B. U. C. 158 Mass. 475.
345 ; Martin v. Capital (1892). 86 (c) Merrick v. Provincial (1856), 14
Iowa, 643 ; Pech v. Phoenix Mutual U. C. Q. B. 439.
(1881), 45 U. C. Q. B. 620.
building (d) ; but if the alterations all form part of one connected
operation it may be left to the jury to say whether the effect of
the entire operation was to increase the risk or not (e).
A
condition prohibiting in general terms any "alteration" Condition
or " change " material to the risk, or increasing the risk, prohibits fncrease of
permanent alteration of user as well as permanent alteration risk.
of structure (/ Thus the change of user from that of an ordinary

).
private dwelling house to that of an hotel would be prohibited (g).

But ceasing to keep ready for use certain fire extinguishing appli-
ances where such were not required by the policy was held not
to be a change material to the risk or an increase of risk within the
meaning of the condition Qi). Leaving the premises unoccupied
has been held to be such a " change " (i), and it has been left to
the jury to say whether non-occupation increased the risk (/).
A change in the title to the premises is probably not such a change
as is contemplated by the condition (j) : but in one American
case it was left to the jury to say whether a mortgage was an
" increase of hazard " (fe). Such a condition does not apply to
any act of ordinary user consistent with the nature of the premises,
and the description in the policy. Thus, the taking of boarders in
a dwelling was held not to be an increase of risk within the meaning
of the condition (l).
" Change " of risk has been held" to connote
" increase " of risk and therefore not to be applicable to any case
where the actual hazard was not increased (11).
If the assured has not the possession or control of the premises when assured
insured, alterations increasing the risk may be made without his '^"f*iJl„
consent. If there is an absolute warranty or condition in the

poUcy against increase of risk, the insurer is discharged, and the
assured cannot plead that the act of his tenant was beyond his
(d) Pottsville Mutiial Firev. Horan 232; Albion Works -v. Williamsburg
(1879), 89 Pa. 438; Heneker v. (1880), 2 Fed. Rep. 479.
British America {IH6S), 13 JJ. C. C.F. (i) McKay v. Norwich Union
99. (1892), 27 Ont. R. 251 Foy v. Aelma ;
(e) DateY. Gore District {{1865), 15 (1854), 3 Allen (N. Br.) 29; Luce v.
U. C. C. P. 175
; Jones' Manufaotur- Dorchester Mutual (1872), 110 Mass.
ing Go. v. Manufacturers' Mutual Fire 361.
(1851), 62 Mass. 82. (j) McKay v. Norwich Union
{f)Herveyv.TheMuiual Fire {18Q1), (1895), 27 Ont. R. 251; Collins v.
11 U. C. C. P. 394; Davis v. Western London Assurance {1895), 165 Pa. 298.
Home Insurance (1890), 81 Iowa, 496. {k) Orittenden v. Springfield Fire
Guerin v. Manchester (1898),
{g) (1892), 85 Iowa, 652.
29 Can. S. C. 139 ; Martin v. Capital {I) Manley v. Insurance Co. (1869),
(1892), 85 Iowa, 643. 1 Lans. 20.

{h) Brighton Manufacturing Co. v. {II) GUI v. Canada Fire, die. (1882),
Reading Fire (1887), 33 Fed. Rep. 1 Ont. R. 341.
control (m). It is common therefore to provide against increase

of risk in " any manner within the control of the assured," thus
practically limiting the warranty to the acts of the assured and
his servants or agents (n). Alterations made by a tenant were
held not to be " within the control " of the landlord, although they
constituted breaches of the covenants in the lease, and the landlord
might have entered and determined the tenancy (o).
Conditiona Some American policies require the assured to give notice to

requiring
notice of
the company, " if the risk shall be increased from any cause
increase of whatever within the knowledge of the assured." This seems to
risk,
apply to increase of risk, whether arising on the premises or on
adjoining premises, and whether withni or without the control
of the assured. The condition only applies, however, to facts
which are known by the assured to increase the risk (p).
or of any Where the policy provided that " any alterations or additions
alterations or
additions. to the building insured," should vitiate the policy unless written
notice containing full particulars should be given to the secretary,
and the consent of the board obtained and indorsed on the policy,
and that if such alterations or additions increased the risk an
additional premium should be paid, it was held that any alteration
without notice avoided the policy, whether it increased the risk

or not (q).
Where the condition relates to changes of risk beyond

the control of the assured the indorsement of consent is not
usually a condition precedent, and the policy will not be vitiated
if notice is given within a reasonable time after the assured has
acquired knowledge of the alteration (gg).
A local agent has no apparent authority to waive a condition
of this nature (r), and notice given to him is not notice given
to the company (s), unless by previous conduct the agent has
(to) Abrahams v. Agricultural (p) Franklin v. Gruver (1883), 100

Mutual (1876), 40 U. C. Q. B. 175 ; Pa. 266.
Diehl V. The Adams County (1868), 58 {q) Peck V. Phoenix Mutual (1881),
Pa. 443 ; Californian Insurance v. 45 U. C. Q B. 620 ; Lindsay v. Nia-
Union Conypress (1889), 133 U. S. 387; gara District {1S&9), 28 U. C. Q. B. 326;
Long V. Beeber (1884), 106 Pa. 466 ; Diehl V. Adams' Co. Mutual (1868),
Liverpool, London, and Olobev.Ounther 58 Pa. 443.
(1885), 116 U. S. 113; Kuntz v. {qq) Canada Agricultural v. Canada
Niagara District (1866), 16 U. C. C. Mutual (1870), 17Grant, 418; Pimv.
P. 573 ; McClure v. Watertown Fire Reid (1843), 6 Man. & Gr. 1 Peck v. ;
(1879), 90 Pa. 277. PhcenixMutual(1881),45U.C.Q.B.m.

(n) Murdoch v. Chenango County (r) Lindsay v. Niagara District
(1849), 2 N. Y. 210. (1869), 28 U. G. Q. B. 326 Williamsv.;
(o) II enelcer V.British and American GanadaFarmers(l9,'16),2'TU. C.CV.m.

(1864), 14 U. C. C. P. 57. (s) Sykes v. Perry (1859), 34 Pa. 79,
REPRESENTATIONS AND WARRANTIES IN PIRE POLICIES 369
been held out as having authority to waive the condition or

receive notice (i). Consent in general terms to make alterations
and repairs has been held to authorise only such alterations and
repairs as do not eventually increase the risk (ss), and not to
authorise the erection of an entirely new building (tt).
A
warranty against alteration in the construction or user of Temporary
""^
the premises or generally against change of risk or increase of fncrets^'of
hazard does not prima facie extend to temporary variation either 'î^'^'
of structure or user, but only to alterations of a more or less

permanent character (w).
Dobson V. Sotheby (1827), 1 Moo. & M. 60

The premises were described as a barn " where no fire is kept and no Dobson v.
liazardous goods deposited." The premises required tarring, and a fire was '^"^^'^^ll-
consequently lighted in the inside, and a tar barrel was brought into the building
for the purpose of performing the necessary operations. By the negligence of
the assured's servant the tar boiled over, and set fire to the premises. Lord
Tenterden, C. J., in directing the jury, said he thought there was no breach of
warranty. " If the company intended to stipulate not merely that no fire
should habitually be kept on the premises, but that none should ever be intro-
duced upon them they might have expressed themselves to that efieot and ;
the same remark appUes to that of hazardous goods

In the absence of also.
any such stipulation I think that the condition must be understood as forbid-
ding only the habitual use of fire or the ordinary deposit of hazardous goods,
not their occasional introduction, as in this case, for a temporary purpose
connected with the occupation of the premises. The common repairs of a
building necessarily require the introduction of fireupon the premises, and
one of the great objects in insuring is security against the negligence of servants
and workmen."
Shaw V. Robberds (1837), 6 A. & E. 75 (x)

The premises were described as " a kiln for drying corn in use," and by the Sluiw v.
conditions the policy was declared to be forfeited if the buildings were not Hohberds.
accurately described, and the trades carried on therein specified, and further
that " it any alteration or addition be made in or to the building ... or the
risk of fire to which such building is exposed be by any means increased,"
(t) Williams v. Canada Farmers 32 Fed. Bep. 47 ; First Congrega-

(1876), 27 U. C. C. P. 119. tional v. Holyoke Fire (1893), 158
(ss) Crane V. City Insurance (1880), Mass. 475; Krug v. German Fire
3 Fed. Rep. 558. (1892), 147 Pa. 272; Townsend v.
(tt) Preoria Sugar Co. v. People's Northwestern (1858), 18 N. Y. 168 ;
.Pir-e, 24 Fed. Rep. 773. Commonwealth v. Hide (1873), 112

[u] Gates v. The Madison Mutual Mass. 136 ; Johnson v. Dominion
(1851), 5 N. Y. 469; De Moines Ins. Grange (1896), 23 Ont. A. R. 729;
Co. v. Insurance Co. (1896), 99 Iowa, Martin v. Mutual Fire (1876), 45 Md.
193 ; Brighton Manufacturing Co. -v. 51.
Reading (1887), 33 Fed. Rep. 232; (x) And aee Barrett v. Jermy {18i9),
Bentley v. Insurance (1899), 191 Pa. 3 Bxch. 535, 545.
276 Plinaky v. Germania Fire (1887),
;
I.L. 24
such alteration, etc., must be immediately notified or the policy would be void.
On one some bark which had been
occasion the assured permitted the owner of
shipwrecked near the kiln to dry it in the kiln. No charge was made. The
bark caught fire, and the Mln was destroyed. The jury found that the
process of drying bark was more hazardous than that of drying com, and
that the fire was occasioned by the drjdng of the bark. It was held that there
was no breach of warranty. " The condition," said Lord Denman, C.J.,
"points at an alteration of business, at something permanent and habitual;
and if the plaintiff had either dropped his business of com drying, and taken
up that of bark drying, or added the latter to the former, no doubt the case
would have been within the condition. Perhaps if he had made any charge
for drying this bark, it might have been a question for the jury whether he
had done so as a matter of business, and whether he had not thereby made
an alteration in his business within the meaning of the condition. ... No
clause in this policy amounts to an express warranty that nothing but corn
should ever be dried in the kiln, and there are no facts or rule of legal con-
struction from which an implied warranty can be raised."
Warranties Similarly where the observance of any rules or regulations

relating to
precautionary
relating to the management of the premises is warranted the
regulations. warranty is not broken by a temporary breach of the rules on the
part of the assured's servants (y). As where a " constant watch"

was warranted and the premises were burned during the temporary
absence of the watchman (2). And even a temporary non-
observance of a rule by the assured himself may not be a breach
of warranty, as where the warranty was that no smoking should
be allowed on the premises, and it was held that if the rule was
laid down and generally observed the non-compliance on one
occasionby the assured himself would not discharge the insurer (a).
On the other hand, where the condition was that business books
should be kept locked in a fire-proof safe at night, and it was
in fact the custom to lock up the books, but on the night of the
fire they were accidentally left out, and were burned, it was
held there was a breach of warranty (fe). In a case of fidelity
insurance in Australia a warranty that the dealings of the
employee would be checked in a particular way was held not to
be broken by a failure on the part of the assured's servants to

carry out his instructions (c).
Warranties But there is nothing to prevent the condition being so

absolutely
(j/) Daniels v. Hiidaon River Fire (6) Western Assurance v.
(1853), 66 Mass. 416. (1895), 68 Fed. 708.
(2) King v. Phoenix (1895), 164
Mass. 291. (c) Dougharty v. London Ouaraviee
(a) Hosford-v.OermaniaFire{1888), (1880), 6 Vict. L. R. (Law) 376.
127 U. S. 399.
framed as to prohibit even temporary variation from the prohibiting

certain
description.
-J^tous
dangerous
elements.
Glen V. Lewis (1853), 8 Ex. 607
The policy contained thecondition, " no steam engine shall be introduced Oku v. Lewis.
into the premises." These words were held to amount to a warranty that no
steam engine would ever be used even temporarily on the premises, and the
policy was held to have been avoided by the introduction and use of a steam
engine experimentally for two days only.
If, therefore, the insurers desire to prohibit even the occasional

and temporary introduction of fire, heat, or hazardous goods,
etc., into a building they may do so by expressly providing that
such things shall not be introduced.
If movable property insured against fire or burglary is described Description
as being in a particular place the locality of the property is of the "f
movaMe
essence of the contract. If the insurer insures property in house property.
A the insurance does not cover the same property when removed
to house B, unless the policy expressly provides for removal.
Pearson \r. Commercial tTnion (1876), 1 A. C. 498

The insurance was against loss by fire on a ship " lying in the Victoria Docks, Pearson v.
London, with liberty to go into dry dock and light the boiler fires once or Commercial
The went into dry dock '^'"°"-
twice during the currency of this policy." vessel
two miles up the river, and when the repairs were completed, instead of returning
directly to the Victoria Docks, she was moored in the river so that her paddle
wheels might be more conveniently replaced. The paddle wheels could have
been replaced in dock, but it would have been more expensive to do so.
While lying in the river the vessel was destroyed by fire, and the House of
Lords held that the loss was not covered by the policy. The vessel, by remain-
ing in the river longer than was necessary for the purpose of transit from dock
to dock, had gone outside the defined limits of the risk.
The description in respect of the locality of goods insured

probably does not amount to a warranty that the goods will
never be taken outside the defined locality, but is to be treated
rather as a definition of the risk so that the poHcy ceases to attach
if the goods are removed, but reattaches when they are returned
to the specified place.
Gorman v. Hand-in-Hand (1877), I. K. 11 C. L. 224
Certain agricultural instruments were described as being " in coach-house, Oorman v.

stable, and cowhouse." It was held that they were not covered by the policy ^^™^_'*""
when lying in the adjoining yard, but the opinion of the Court was that the
policy would reattach on their return to the coach-house, stable, or cowhouse-
'
Articles such as carriages, horses, farm implements, and the

like, which in the course of ordinary use are removed from the
place where they are kept, may possibly be covered in all such
places as they may be taken to in the ordinary course of daily
use. American case the policy purported to insure
Thus, in an
certain specified property including a phaeton described as " con-
tained in the barn." It was burned while absent at a shop for
repairs, and was heldThe Court thought the
covered (/).
warranty implied by the description was that it would be kept
in the barn when not absent therefrom for temporary purposes.
This is, however, a very doubtful case, and probably the better
opinion would be that the description was not a warranty, but
defined the risk, and that the phaeton was only covered while in
the barn.
Description Unless the conditions of the policy require that the assured's
of ownership
interest in property insured shall be accurately stated it is un-
or interest.
necessary to specify what the assured's interest is {g), and a
general description of premises as " belonging to the assured,"

or " the property of the assured " must not be construed into a
strict warranty that he is the absolute proprietor Qi). So in the
case of goods which were described as "in the assured's dwelling
house," whereas they were in a house in which he lived as a lodger,
the Court held that there was no breach of warranty even although
there was a proviso that " the premises in which the goods are
kept shall be accurately described " {%).
The description of premises as a " dwelling house " is a
Descriptions
of use or
occupancy
warranty that they are not habitually used for any other purpose
such as a carpenter's shop or a dry store ; and similarly with any
other description which implies a particular user, the premises

must not be habitually used for something quite distinct (/c).
But the mere description of premises as a dwelling house does not
import a warranty of actual occupation throughout the risk (Q.
Where a house is described as " occupied as a dwelling " oi
(/) McClure v. Girard Fire (1876), (k) Shaw

V. Eobberda (1837), 6
43 Iowa, 349. A. & 75 ; Sillem v. Thornton
E.
(g) Kerr v. Hastings Mutual (1877), (1854), 3 E. &B. 868; Wall v. East
41 U. C. Q. B. 217. River Mutual (l%52), 7 N. Y. 370.
(h) Gill V. Canada Fire (1882), 1 (I) Quin V. National (1839), Jones
Ont. R. 341 ; Back v. Phoenix (1885), & Carey, 316 ; Woodruff v. Imperial
76 Me. 586; Rohrba^hv. GermaniaFire Fire (1880), 83 N. Y. 133 ; Browning
(1875), 62 N. Y. 47 ; Dohn v. Farmers' V. Home Insu/rance (1877), 71 N. Y.
Joint Stock (1871), 5 Lans. 275. 508 ; Cumberland Valley Mutual v.
(i) Friedlander v. London Associa- Douglas (1868), 58 Pa. 419.
tion (1832), 1 M. & Rob. 171.
EEPEESENTATIONS AND WAEEANTIES IN FIRE POLICIES 373
"occupied by the assured" there may be a warranty that the

premises are so occupied at the commencement of the risk (m) ;
but such words are frequently construed as words merely of

identification not containing any warranty or promise that the
premises shall continue to be occupied throughout the risk (n).
Thedescriptionrelatingtotheuserof the premises must generally arepn»!4

be construed as a warranty that the user shall not be substantially warranties
/«*«''0'
altered during the risk ; but in one or two cases the description '^^
has been construed as a warranty as to the user at the commence-

ment of the risk only (o). And when questions are asked in the
application as to use or occupation of the premises, or as to pre-
cautions taken against fire and the questions and answers relate
to the present time only it has been held that a warranty that the
answers are true, or a declaration that they are the basis of the
insurance does not necessarily import a warranty as to the future
use or occupation of the premises (p), or observance of the pre-
cautions (q). But in a Canadian case where the question was
asked on the application form, " Is there a watchman kept on the
premises at night ? " and the answer was, " Yes," and the declara-
tion was that the statements in the proposal should form the
basis of the liability of the company and should form a part and
be a condition of the insurance contract the Court held that there
was a warranty that a night watchman should be kept throughout
the risk(r). This certainly seems the most reasonable construction
and it is submitted that although the questions and answers may
in form relate to the present only, if the object is to get a description
of the nature of the risk to be undertaken the statement ought

as a rule to be construed as appUcable to the entire currency of
the risk (s). A different construction, however, may be permitted
when the assured making the statement has not the control of
the premises as in another Canadian case where a mortgagee

insured his interest in a mill, and, in answer to a question on the
application form, stated that there was always a watchman on
(m) Alexandra v. Germania Fire 32 N. Y. 397 ; Stout v. City Fire
(1876), 66 N.- Y. 464; O'Niel v. (1861), 12 Iowa, 371; V. S. Fire v.
Buffalo Fire (1849), 3 N. Y. 122; ffimbeHej/ (1870), 34 Md. 224.
Parmeleev. Hoffman (1873), 54 N. Y. (p) Gould v. York County (1859),
193. 47 Me. 403.
(q) Daniels v. Hudson
(n) Joyce v. Maine Insurance River Fire
{im%),i5M.e.\&%; O'Nielv. Buffalo (1853), 66 Mass. 416.
Fire (1849), 3 N. Y. 122 Somerset ; (r) Whitelaw v. Phoenix (1877), 28
Mutual Fire v. Usaw (1886), 112 Pa. U. C. C. P. 53.

(«) First National Bank
• v. Insur-
go
(o) Smiths. Mechanics' Fire {nQ5), ance Co. (1872), 50 N. Y. 45.
the premises. The apphcation was referred to in the poHey as the

assured's warranty, and a part of the contract, but the Court held
there was no continuing warranty, although a similar statement
made by the owner or occupier might have been so construed (f).
Clerical eirorg If the assured makes a mistake in describing the risk on the
in description.
apphcation form or to the agent of the insurers, he must as a rule
suffer for the mistake, since he cannot hold the company to a risk
other than that which they have accepted (u). In certain cases,
however, where there is no doubt as to the identity of the premises
insured a misnomer will not affect the validity of the pohcy (m).
If the description is not sufficiently specific, and there is conse-

quently doubt as to the identity of the premises, the assured may
prove by parol evidence which property he intended to insure, and
unless it appears that the insurers thought they were insuring other
property, the property which the assured intended to insure will be
taken to be' the property insured (u). Where the premises were
described as Nos. 754 and 756, George Street, Sydney, it appeared
that the numbers had been changed, and parol evidence was admitted
to show what premises were in fact covered {x). When there is
no doubt as to the general identity of the premises parol evidence
is not admissible to explain patent ambiguities as to the scope of
the insurance. Thus, where it was doubtful whether the policy

was intended to cover the machinery in all the insured buildings,
or only in some of them, it was held inadmissible to show by the
proposal and other evidence that the intention was to insure all
the machinery (y).
Misi-epresen- Apart from special circumstances or conditions, misrepre-

tation as to
part of the
sentation or concealment as to any part of the property insured
property. will avoid the whole policy, for prima facie the contract is
Divisibility one and indivisible (z). But if the insurance contained in one
of contiaot.
policy is severable into distinct parts with several risks, to each of
which the premium is separately apportioned, a misrepresentation
or concealment affecting one risk only will not, apart from spe-
cial conditions, avoid the contract as to those risks which are
not affected (a). And even if the premium is a single sum
Worswickv. Canada Fire {18T 8),
{t) (z) Gore District Miiiiial v. Samo
3 Ont. A. R. 487. (1878), 2 Can. S. C. 411 ; Hopkins v.
(m) lonidea v. Pacific (1871), L. R. Preacott (1847), 4 C. B. 578.
6 Q. B. 674, 686. (a) Pickering v. Ilfracomhe Bly.
(a;) Hordern v. Commercial Union (1868), L. R. 3 C. P. 235, 250;
(1887), 56 L. J. P. C. 78. Kearney v. Whitehaven, [1893] 1
•
(y) Hare v. Barstow (1843), 8 Jur. Q. B. 700.
928.
REPRESENTATIONS AND WARRANTIES IN LIFE POLICIES 375
unapportioned it would seem that if the risks are clearly severable,

those only should be held void which are affected by the mis-
representation or concealment (&).
If, however, a matter warranted in the pohcy, breach of the Breach of

is
^^
warranty will probably, apart from special conditions, affect the
to'^par"*^
whole contract, however severable the risks may be. The
materiahty of the warranty to any part of the risk is unimportant,
and therefore the smallest breach discharges the insurer absolutely.

The only ground on which the policy might be severed so that
a breach of warranty would affect one part only would be that the
policy contained two entirely separate contracts, each standing
by itself, and having nothing in common except that they were
written on the same paper.
The common condition in a fire policy is that misdescription, Conditions
misstatement, or makes the policy void as to the
omission, dlllsibUity.
property affected by such misdescription, misstatement, or
omission. Whether any circumstance directly affecting part of
the property does or does not indirectly affect the whole property
is a question of fact, and in a Canadian case where three out of
seven tenement dwellings insured as one risk were left vacant it
was held that the whole property was affected (c). Where the
condition is that the policy shall be void in case of any misdescrip-
tion, change of risk, or any other like matter, the policy becomes
void as to the whole insurance, even although the contravention
of the condition has been in respect of and affects only a small
portion of the risk (d).
Section VII. —Bepresentations and Warranties in Life Policies
An applicant for life insurance is sometimes called upon to Warranty of
warrant the absolute accuracy of every statement made by him in

^gp°J,'^*^
the proposal form. He may be called upon to warrant the fact that
he has no disease or symptom of disease, and if it afterwards turns
out that he had some latent disease or some symptoms of disease
which he did not understand, the policy will be invalidated, however
fully and honestly he may have stated the facts within his know-
ledge (e). In a Scottish case, Hutchison v. National Loan(f),
(6) Greenwood -v. Bishop of London Caahman v. Liverpool Fire (1862), 5
(1814), 5Taunt. 727. Allen, N. Br. 246.
Ic) McKay V.Norwich Union (1895), (e) Thomson v. Weems (1884), 9
27'Ont. R. 251. A. C. 671 Joel v. Law Union, [1908]
;
{d) Gore District Mutual v. Samo 2 K. B. 863.

(1878), 2 Can. S. C. 411; Buss. v. (/) (1845), 7 D. 467.
Muttial (1869), 29 U. C. Q. B. 7.3 ;
— — ;
the judges in the Court of Session thought that it would be illegal,
or at least absurd, for an assured to warrant matters which could

only be tested by a post mortem examination, and they expressed
the view that the Court ought not to give effect to such a
warranty. The House of Lords, however, in Thomson v. Weems (g),
disapproved of any such rule, and Lord Blackburn said
iaa valid " It seems to me

a very reasonable stipulation on the part of the insurer,
warranty, and that it is absurd or improper on the part of the assured to assent
not at all
to such being a term in the contract. It is seldom that a derangement of

one important function can have gone so far as to amount to disease without
some s3rmptoms having developed themselves, but the insurers have a right,
if they please, to take a warranty against such disease, whether latent or not
and it has very long been the coui;se of business to insert a warranty to that
effect."
but not Such a stringent warranty, however, is not looked upon with
favoured by
the Court, favour by judges or juries. In Joel v. Law Union and Crown (h),
Fletcher Moulton, L.J.; said
" I wish I could adequately warn the public against such practices on the
part of insurance offices. I am satisfied that few of those who insure have any
idea how completely they leave themselves in the hands of the insurers should
the latter wish to dispute the policy when it falls in. . . . If the company
choose to dispute the policy and establish a single inaccuracy in those state-
ments which are thus made conditions the poUcy is void, and usually all that
has been paid thereon is forfeit."
and must It is therefore incumbent on the insurers to make the matter

therefore be
clearly ex- clear to the assured if they require a warranty of absolute
pressed. accuracy (i).
"It is plainly the duty of the Court to require the insurers to establish
clearly that the assured consented to the accuracy and not the truthfulness
of his statements being made a condition of the validity of his policy. No

ambiguous language suffices for this purpose " (k).
In order to determine the extent of the warranty, if any, which

the assured has given it is necessary to examine firstly the general
Assured may declaration or condition in the proposal form or poHcy. In many
only warrant
cases clear that the assured is only required to warrant the
it is
the honesty
of his honesty of his statements, as where he declares that he is " not
statements.
awareof any disorder tending to shorten life " (T), or that " he
ig) (1884), 9 A. C. 671, 682. V. Law Union and Crown, [1908] 2

[h)[1908] 2 K. B. 863. K. B. 863.
(i) Wheelton v. Bardisty (1857), 8 (I) Jones V. Provincial (1857), 3
E. & Bl. 232, 300. C. B. (N. S.)65.
(h) Fletcher Moulton, L.J., in Joel
believes the statements to be true " (m), or that " the answers are
true to the best of his knowledge and belief " (n), or where the con-
dition in the poHcy states that " the
pohcy will be void in case of
any and fraudulent averments " (o). On the other hand,
false
words may be used which show a clear intention to demand an

absolute warranty of accuracy but frequently the language is
;
open to either construction, and this is so when the warranty is

that the statements are " true." " True " may, according to the A warranty
context, mean either " true " in the moral sense or " true " in statements
the absolute sense of accurate. Through a long series of decisions ^^^ ^^^
it has been laid down that primd facie the words "false" and
" untrue " are to be read in their primary meaning of inaccurate,
and therefore where there is nothing more than a bare warranty
that a statement made is true, the absolute accuracy of the is prima facie
statement is warranted (p). In Joel v. Law Union and Grown (s)
of Absolute
Fletcher Moulton, L.J., appears to question this rule. He accuracy,
"
To make the accuracy of these answers a condition of the contract is a
contractual act, and if there is the slightest doubt that the insurers have failed
to make clear to the man on whom they have exercised their right of requiring
full information that he is consenting thus to contract, we ought to refuse to
regard the answers given as being conditions. In other words, the insurers
must prove, by clear and express language, the animus contrahendi ; it will
not be inferred from the fact that questions were answered, and that the party
interrogated declared that his answers were true."
If this is intended to apply, not only to the case in question
where the answers were made to the medical officer, but to the
case of answers and statements made in the proposal form, and
declared to be true in a declaration or condition which forms
part of the contract, it seems to be contrary to established authority.
A simple warranty that the statements in the proposal are true must.
(to) WheeUon
v. Hardiaty (1857), Q. B. 328; Hambrough v. Mutual
8 BI. & El.
232. Life (1895), 72 L. T. 140 ; Fowlcea v.
{n) Confederation v. Miller (1887), Manchester (1863), 3 B. & S. 917, 929 ;
14 Can. S. C. 330. Qrogan v. London (1885), 53 L. T.

(o) Scottish Provident v. Boddam 761 ; Johnson v. Maine Insurance
(1893), 9 T. L. R. 385. (1891), 83 Me. 182; Gummings v.
(p) Duckett v. Williams (1834), 2 Kennebeck Mutual (1896), 89 Me. 37 ;
C. & M. 348 ; Anderson v. Fitzgerald Campbell v. New England Mutual

(1853), 4 H. L. C. 484 ; Cazenove v. (1867), 98 Mass. 381 Edington v.
;
Equitable (1859), 6 C. B. (N. S.) 437 ; Aetna Life (1879), 77 N. Y. 564.

(1860), 29 L. J. C. P. 160 ; Mac- (s) [1908] 2 K. B. 863.
donald v. Law Union (1874), L. R. 9
be accepted as free from ambiguity,

in the light of that authority,
and must be construed as an absolute warranty of accuracy.
But ambiguity may be readily imported by the use of many
but may be redundant phrases intended to strengthen, but in reality weakening
only a
warranty of the force of the warranty, and the context may justify the Court
moral truth. in construing the words "
and " untrue " in the narrower
false "
sense of morally false (i). Thus, where the declaration signed by

the assured was to the effect that the poUcy should be void in case
" any designedly untrue statement " had been made but the ;
condition in the policy was that it should be void in case " any
'
false had been made the condition was construed in
averment ' ;
the light of the declaration, and " false averment " was held to
mean " wilfully false averment " (u).
Statements Even if there is an absolute warranty that the statements
warranted
accurate may made are true, some of the statements warranted may be only
be only
statements of opinion or belief, and so in the case of the particular
statements
of belief. statement which may be in question the warranty may be no
more than a warranty of the assured's honesty in making the
statement. Thus, if the statement is that the assured is in " good
health " or " enjoys good health," that means no more than that
he is conscious of ordinary vitality and freedom from distressing
symptoms (a;). It is not untrue or inaccurate unless he was con-
scious of pain or weakness. It is very different from a statement
that the assured has no disease or symptoms of disease. In
Thomson v. Weems (y) the claimant argued that a statement
that the apphcant was temperate in his habits was a statement
of something which was necessarily a matter of opinion, and
that therefore, if the applicant stated his opinion honestly, the
statement was not untrue. The House of Lords, however, held
that the statement was one of fact, and that its truth or untruth
was a question for the jury, and did not depend upon the opinion
of the person making the statement.
Question put The questions put to the apphcant may elicit only his
may elicit "
the assured's opinion, as, " Do you consider yourself of sound constitution ?
opinion only That is a query which relates, not to the soundness of the appli-
cant's constitution, but to his opinion on the subject. The
answer can only be untrue if it was dishonest (z). Or the question
(*) Moulor V. American Life (1884:), (a;) Hutchison v. National Loam
111 U. 335 Phoenix Life V. Raddin
S. ; (1845), 7 D. 467.
(1887), 120 U. S. 183. {y) (1884), 9 A. C. 671.
(u) Fowkea v. Manchester (1863), (z) Thomson v. Weems (1884), 9
3B. &S. 917. A. C. 671, 690.
may be put to elicit facts within the knowledge of the assured,

and without any intention of getting a warranty as to the existence or the dia-
or non-existence of matters as to which he was ignorant. Thus, faots^within

where the query is, " Have you had" certain diseases? it relates hia know-
only to matters of which the assured must have been previously

conscious, and does not
refer to antecedent latent disease of which
the assured was unconscious (a). Here, however, the question

elicits more than mere honesty of statement. If the assured had
had a certain disease and forgotten, a denial would be untrue,

notwithstanding its honesty. And probably if the disease was
an affliction of a marked character of which the assured was
conscious, a denial would be untrue notwithstanding that the
assured was ignorant of the nature of the disease ; but if the
disease was only apparent to the assured by some slight or in-
significant symptom, which an ordinary layman would disregard
as ofno importance, the denial would be true, since the question
was directed only to cases where the assured was conscious of
definite sickness.
A broad distinction must also be drawn between the questions Questions put
put in the proposal form and those put by the medical man who ^y ^^^^
is appointed to examine the applicant on behalf of the insurance examiner,
company (b). The former are put for the purpose of obtaining
statements upon which the contract is to be based, and the answers
are therefore readily construed as absolute warranties of the
facts stated. But the questions put by the medical man are put
for his guidance in making his report, and all that can be reasonably
demanded of the assured for that purpose is that he shall answer
to the best of his knowledge and recollection, and a declaration
that he has made true answers must be interpreted in this
sense (c).
A drawn between questions put to

distinction has also been Questions put
the assured concerning his own health and habits, and questions the healtlf
put concerning the health and habits of another when the insurance °^ ^ ^^^^^
,
person.
is on the hfe of a third party. The former are readily susceptible
of the construction that they are only put to elicit facts within
the knowledge of the declarant, whereas the latter necessarily
elicit facts which are not within his knowledge, and may be more
(a) Life Association of Scotland v. of Scotland v. Foster (1873), 11 M. 351 ;
Foster (1873), 11 M. 351 ; Thomson v. Delahaye v. British Empire (1897), 13
Weems (1884), 9 A. C. 671, 693. T. L. R. 245.
(6) Joel V. Law Union and-Crovm, (c) Joel v. Law Union and Crown,
[1908] 2 K. B. 863 ; Life Association [1908] 2 K. B. 863.
—
readily construed as eliciting an absolute warranty as to the

facts (<?).
Duckett V. "Williains (1834), 2 C. & M. 348

Duchett Vi The policy was effected by an insurance company by way of reinsurance.
Williams. The declaration in the proposal form was as follows " We, M. & D., the
:
trustees of the Provident life, do hereby declare and set forth that the herein
named J. S. is now in good health, and has not laboured under gout, dropsy,
fits, palsy, insanity, affection of the lungs or other viscera, or any other disease
which tends to shorten life, and that his age does not exceed 41 years . . .
and we agree that the declaration or statement hereby made shall be the
basis of the agreement between ourselves and the H. A. Company, and that
if any untrue averment be contained therein, or if the facts required to be set
forth in the above proposal be not truly stated "... the premium shall be
forfeited, and the insurance become void. In a previous action the policy had
been held to be void on the ground that the life was not in good health, and
this was an action brought to recover the premiums. It was held that "un-
true " did not mean untrue to the knowledge of the party, but simply inaccurate
without reference to his knowledge ; and Lord Lyndhurst said, " The point is
whether the facts stated were not truly stated within the meaning of the
declaration and agreement. It was contended on behalf of the plaintiff that
the words must mean trvily or untruly within the knowledge of the
' ' '
'
party making the statement, and that if the party insuring ignorantly and
innocently makes a misstatement he is not to forfeit the premiums under
the clause in question. We are of opinion, however, that this is not the real
meaning of this clause. A statement is not the less untrue because the party
making it is not apprised of its untruth, and, looking at the context, we think it
clear that the parties did not mean to restrict the words in the manner con-
tended for."
Hutchison v. National Loan (1845), 7 D. 467
Hutchison v. A proposal for insurance on the applicant's own life contained the following
National question and answer " Q. Has the party an habitual cough, or any disease, or
:
Loan.
s3Tnptom of disease ? A. No." The following declaration was signed by
the applicant " I do hereby declare that the age of me does not now exceed
:
43 years, that I am now in good health, and do ordinarily enjoy good health,
and that in the above proposal I have not withheld any material circumstance
or information touching the past or present state of health or habits of life of
me the said A. A. with which the directors of the Society ought to be made
acquainted. And I do hereby agree that this declaration and the above pro-
posal shall be the basis of the contract between me and the said Society ;
and
if any fraudulent or untrue allegation be contained herein or in the proposal
all moneys which shall have been paid on account of such assmance shall be
forfeited to the said Society, and the policy be void." The policy contained
the following proviso " Provided always that in case any fraudulent or untrue
:
allegation be contained in the said recited declaration or in the proposal
{d] Idfe Association of Scotland v. Foster (1873), 11 M. 351.

KEPRESENTATIONS AND WARRANTIES IN LIFE POLICIES 381
therein referred to, or in any of the testimonials or documents addressed to or

deposited with the said Society in relation to the said assurance, then this
policy shall be void and all moneys paid thereunder shall be forfeited to the
Society." On the debate on issues it was held that " good health " did not
mean absolute freedom from all latent disease, but merely that the party never
had any consciousness of ailment, and never exhibited any symptoms of

ailment, and Lord Fullerton said, " It may be quite correct to lay it down
as was done by Lord Lyndhurst, that a statement is not the less untrue
'
because the party making it is not apprised of its untruth. But, in my opinion,
'
the statement in the declaration here was in its sound construction true if
the party making the declaration never had any consciousness of ailment and
never exhibited any symptoms of ailment. According to the ordinary and
only intelligible sense of the term in the circumstances in which it was used
she was in good health if she neither was conscious of nor exhibited the
'
'
slightest symptoms of disease." The other members of the Court went further
than Lord Fullerton, and refusing to be bound by DucheU v. Williams (f),
held that the words " fraudulent or untrue " meant " knowingly and blameably
false," and that if there was no negligence by the party acquiring knowledge
of his own condition there would be no breach of warranty (g).
Anderson v. Fitzgerald (1853), 4 H. L. C. 484
A proposal for insurance on his own life contained the Anderson v.

made by a party
following questions and answers " Q. Did any of the party's near relations Fitzgerald,
:
die of consumption or any other pulmonary complaint ? A. No. Q. Has

the party's life been refused or accepted at any office ? 4. No." Then followed
this declaration signed by the applicant " I hereby agree that the particulars
:
mentioned in the above proposal shall form the basis of the contract between
the assured and the company, and if there be any fraudulent concealment,
or untrue allegation contained therein, or any circumstance material to this
insurance shall not have been fully communicated to the said company, or
there shall be any fraud or misstatement the policy shall be void."
. . .
The policy contained certain specific warranties and 14 out of 27 answers in

the proposal form were repeated in the policy and expressly warranted. The
two answers stated above were not so warranted, but the poUoy contained
this general proviso, " If anj^thing so warranted as aforesaid shall not be true,
or any circumstance material to the insurance shall not have been truly
if
stated, or shall have been misrepresented or concealed, or shall not have been
fully and fairly disclosed and communicated to the said company, or if any
fraud shall have been practised on the said company, or any false statements
made to them in or about the obtaining or effecting of this insurance, this
policy shall be nulland void." Evidence was adduced on behalf of the in-
surance company tending to show that two of the assured's sisters had died of
consumption at the ages of 65 and 67, and that the assured had already been
accepted at six and refused at six other offices. The trial judge directed the
jury that the plaintiffs were entitled to recover unless the statements made in
effecting the policy were material and false. The jury found a verdict for the
(/) (1834), 2 0. & M. 348. General Provident (1861), 23 D. 559,

This opinion was followed in
(?) but ultimately disapproved in Thorn-
McLaws v. U. K. Temperance and son v. Tfeems (1884), 9 A. C. 671, 694.
and on a motion for a new trial the case went to the House of Lords
plaintiff,
where a new trial was allowed. The House held that the only question for
the jury was whether or not the statements were false, their materiality was
not in question. The majority of the House and of the consulted judges were
also of opinion that " false statements " meant inaccurate statements,
and
that the meaning was not confined to wilfully false statements. Lord St.
Leonards, who dissented, was of opinion that the words " true " and " truly "
in the first part of the proviso was used in the wider sense of inaccurate, but
that in the latter part of the proviso the word " false " was so closely associated
with the word " fraud " that it ought to be construed in the narrower sense as
meaning wilfully or morally false, and he thought that the materiality of the
questions and answers ought to be considered by the jury in coming to their
decision as to whether the statement was wilfully untrue.
Wheelton v. Hardisty (1857), 8E. & B. 232

WheelUm v. Insurance was effected by an investment company to secure advances
arais y.
made to the Ufe insured. The proposal referred to the statements made by
the and his referees on an application to another company which had been
fife
refused, and concluded with the declaration signed on behalf of the assured
company, " We believe that the above particulars and statements are true.''
The poUcy recited that a proposal had been made (but did not declare it to be
the basis of the contract), " whereby it was declared that the life in question
did not exceed 35 years, and that he had not certain specified complaints
or any other disease or disorder tending to shorten life," and that the insurance
company "thereupon undertook " the proposed assurance subject to the terms
and conditions " herein and hereunder expressed." The statements made by
the life and his referees as to the habits and health of the life were found to have
been intentionally untrue, but the Court held that the policy was not thereby
avoided. The recital in the policy of the statements in the proposal form did
not operate to constitute a warranty of the truth of these facts. The word
" thereupon " was merely an adverb of time, and the facts stated were not
thereby constituted the basis of the policy. They were not expressly made
the basis of the policy, and the declaration of the assured was only as to their
belief. Apart from warranty, the fraud of the life did not affect the vahdity
of the poKcy unless the life made the statements as agent for the assured, and in
this particular case there could be no suggestion of agency.
Jones V. Provincial Life (1857), 3 C. B. (N. S.) 65
JonEs v. The assured in applying for insurance on his own Ufe signed the foUomng
Provincial declaration in the application form :
" I the above-named ... do hereby
Life.
declare that my age does not exceed 29 years, that I have had the small pox
or cow pox ; thatmy habits are temperate ; that I have not had gout (and
other specified diseases) that no proposal to insure my life has been declined
;
at any of&ce that I am now in good health, and do ordinarily enjoy good
;
health ; and that I am not aware of any disorder or circumstance tending to

shorten life, or to render an assurance on my life more than usually hazardous,
unless anything stated above may be so considered." Within a year of the
making of the application the assured had had two severe bilious attacks,
which were not disclosed, and the medical evidence differed as to whether
EEPBESENTATIONS AND WARRANTIES IN LIFE POLICIES 383
these illnesses did or did not tend to shorten life. The trial judge directed
the jury that " if the assured honestly believed at the time he made the declara-
tion that the bilious attackshad no effect upon his health, and did not tend to
shorten his life, any assurance upon it more than usually hazardous,
or to render
the fact that he was aware that he had had those attacks even although
(without his knowledge) they had such a tendency would not defeat the policy."
This direction was held to be correct. The words " I am not aware " referred
not merely to the knowledge of the assured of the disorder or circumstances,
but also to his knowledge that it tended to shorten life, and there was no
evidence to show that he did know, and therefore no breach of the warranty.
Cazenove v. British Equitable (1859), 6 C. B. K". S. 437;

(1860), 29 L. J. C. P. 160
Upon application for insurance on his own lite the applicant filled up a Cazenove v.
" personal statement." Inter alia the statement contained the following
questions and answers :
—" (4) Whether had since infancy any and what
?,^''^lf\j
other disease (than those enumerated before) requiring confinement ? No.

(8) How often has medical attendance been required ? Two years ago.
(9) How long did such attendance continue ? About one week. (10) For
what disease or diseases? Disordered stomach. (11) For what period con-
fined to the house or bed ? A week. (12) How long is it since these circum-
stances occurred ? One year. (13) Name and address of the medical attendant
or attendants employed on occasion of such disease ? Dr. Roper, Rock Ferry."
The assured also signed a declaration " I declare all the above answers to be
:
correct and true." In the policy there was this proviso " In case any fraudu- :
lent or untrue statement is contained in any of the documents addressed to or

deposited with the company in relation to the within assurance, whether by
the payee, the assured, or any referee, or other person, then the policy shall
be void." The policy was issued in March, 1857, and evidence was adduced
to show that in December, 1855, the assured was attended by Dr. Roper for
a violent bilious attack, and in January, 1856, Dr. Roper and subsequently
Dr. Craigie attended him for another similar attack. In February, 1856, he
had another violent attack in Birmingham, and was there attended by three
medical men. The attendance at Birmingham was not disclosed. The jury
found that no material information was withheld, and judgment was entered
for the plaintiff. On appeal judgment was reversed, and entered for the
defendant company. Taking all the answers in the personal statement
together there was a statement that the assured had not had any disease since
December, 1855, when Dr. Roper attended him. That was untrue in view of
the fact that he was attended by three medical men in February, 1856. The
condition demanded the absolute truth of the statements made. The bilious
attack was a disease within the meaning of the question.
Hutton V. Waterloo Life (1859), 1 F. & F. 735
On application for a policy on his own life the assured stated, in answer to Hutton v.
questions on the proposal form, that he was temperate, had no disorder Waterloo Lije.
tending to shorten life, and that the name and address of his ordinary medical
attendant was Dr. C. He also signed the following declaration on the pro-
posal form " I agree that the above shall be taken as part of the declaration
:
which shall be the basis of the contract, and that any misrepresentation shall
render the policy void."
The evidence tended to show drinking habits before and after the policy
was taken out, and delirium tremens, that Dr. C. had been the family doctor,
but about a year before Dr. L. had been called in, and had attended the assured
for intemperate habits. The jury found (1) that the man was not temperate
at the time of the proposal, (2) that he had delirium tremens, and that it tended
to shorten hfe, (3) that the representation as to the medical attendant was not
true, but (4) that it was bona fide. The judge entered judgment for the
defendant company on findings (1) and (2).
The report but apparently the judge thought that
of the case is meagre,
innocent misrepresentation would not avoid the policy, but that on (1) and (2)
the misrepresentation it at all must have been wilful, and that it was unnecessary
to leave the question of bona fides to the jury.
Fowkes V. London and Manchester (1862), 3 F. & P. 440; (1863),

3 B. & S. 917
Upon by the assured own life the proposal
Fowkes V.
London and
application
contained the following questions and answers
for insurance
:
—on" Q.
his
Have you ever been
Manchester. with gout A. No. Has the
afflicted ? Q. life been offered at any other office,
and, if so, has it been accepted, at what rates ? A. It has been offered and ac-
cepted at the ordinary rate." The following declaration was signed by the
assured " I do hereby declare that the above written particulars are correct
:
and true throughout and I do hereby agree that this proposal and declaration
shallbe the basis of the contract between me and the company, and if it shall
hereafter appear that any fraudulent concealment or designedly untrue state-
ment be contained therein then all the money which shall have been paid . . .
shall be forfeited, and the policy shall be void." The poUcy contained this
proviso "If any statement in the declaration (which declaration shall be
:
considered as much a part of the policy as if the same were actually set forth
herein) is untrue, or it the assurance by the policy has been effected through
any wilful misrepresentation, concealment, or false averment whatsoever . . .
the policy shall be void." There was evidence tending to show that assured
was attended for a " very slight attack of suppressed gout " showing itself
in redness and tenderness in the great toe, but there was no evidence to show
that the assured had been informed or knew that the malady was gout. There
was also evidence to show that the assured had previously proposed at one
office and been declined, and at another where the medical officer had pro"
nounced his life insurable, but the assured had not carried the matter further.
The jury found that the assured was not " afSicted with gout " and that the
answer to the second question was untrue, but not designedly so. Judgment
was entered for the plaintiff, and on appeal the Court of Queen's Bench held
that the declaration and the policy were to be read together,' and so read the
policy was only avoided in the event of a designedly untrue statement having
been made in the proposal form.
In the course of the argument before the Court of Queen's Bench, Cockbum,
C.J., said thatalthough the materiality of the questions and answers was not
directly in issue, the materiality of the matter inquired into might affect the
question of the truth of the answer as if the assured was asked the age of his
father, and he answered that he was 40 years old, whereas he was 40 years and
—
REPEESBNTATIONS AND WARRANTIES IN LIFE POLICIES 385
4 months, and Blackburn, J., said, " an answer substantially though not accu-
rately correct would be true."
Life Association of Scotland v. Foster (1873), 11 M. 351
The assured was examined by the company's medical officer. Among Li,fe Associa.
the questions and answers were the following :
—
" Q. Are you, in your opinion, '""* "/
"'
in perfect health ? A. Yes. Q. Have you had rheumatism, gout, rupture, ^^'^g"'"^
fits, asthma, spitting of blood, diseases of the chest, or of the brain, or liver,
or affection of the kidneys or urinary organs ?

any A. No." The medical
put the questions from the usual printed form, and wrote down the answers
officer
made by the assured, and the assured then signed a declaration at the foot of
the form that " the above statements are faithful and true." The proposal
form contained a declaration by the assured that " if any untrue averment be
made in the answers to questions by the Society's medical officer " the policy
should be void, and in the policy there was a proviso " that if anything averred
in the declaration forming the basis of the assurance or in the relative docu-
ments be untrue and assurance shall be void." The assured had
this policy
at the time the policy was issued a small swelling on the groin, which she
thought of no importance, but which was, in fact, a rupture. The Court
held that the object of the question was merely to elicit facts within the know-
ledge of the assured, and that it was never intended that the answer to it
should be construed as a warranty that the assured was free from all the speci-
fied diseases even in an incipient and latent form. Lord President Inglis
pointed out the possible distinction in the interpretation of a question when
put to a person regarding his own health, and the interpretation of the same
question when put to a person regarding the health of another. For instance,
the question put to the insured, " Are you free from rupture ? " might well be
interpreted as intended to elicit only facts within his knowledge, whereas if
the insurance was on the life of another, and the question was put to the assured,
" Is the life free from rupture ? " and an unqualified answer, " Yes," is given
the assured obviously undertakes the assertion of something more than what
is within his actual knowledge, and may well be held to have warranted the
fact that there is no rupture.
Maedonald v. Law Union (1874), L. R. 9 Q. B. 328

Insurance was effected by M. on the life of T. The proposal contained the Maedonald v.
following question and answer " Q. Has the Ufe been proposed for insurance •^''"' ^"'o"-
:
at this or any other office or offices ? if so, at what offices was she accepted or
declined ? A. No." The answer was filled in by M., who signed the declara-
tion, " I declare that the above particulars are truly set forth." The policy
contained this proviso "If the declaration under the hand of the assured
:
delivered at the defendant's office, as the basis of the insurance is not in every
respect true, or if there has been any misrepresentation, concealment or
untrue averment in treating for the insurance . . . then the insurance shall
be void and the premiums forfeited." Evidence was adduced to show that
T. had previously been proposed for insurance, and declined by two offices.
The jury found that the answer was untrue to the knowledge of T., but not to
the knowledge of M.
Judgment was entered for the defendants, and affirmed in the Court of
i.L. 25
Queen's Bench, on the ground that both the declaration in the proposal form
and the proviso in the policy were as to the absolute truth of the statements
irrespective of knowledge.
Scottish Equitable Life v. Buist (1876), 3 E. 1078 ; (1877), 4 E. 1076
Scottish On the apphcation by the assured for insurance on his own life the proposal
Eqintahle Life fojm contained the following questions and answers " 5. Are your habits
:
—
sober and temperate ? Yes. Have they always been so ? Yes. 9. Have
you ever been affected vrith insanity, apoplexy, palsy, dropsy, asthma, liver
complaint, rupture, consumption, or spitting of blood, epileptic or other fits
or any disorder tending to impair the constitution or shorten life ! No.
15. Has your life ever been proposed for insurance ? If so name the ofBoe
and state the date and result ? No." Appended to the proposal form was
the following declaration signed by the assured :
" I do hereby declare that the
above particulars are correct and true throughout, and that I have not con-
cealed or withheld any circumstance tending to render an assurance on my
life more than usually hazardous ; and I do hereby agree that the foregoing
proposal, together with what is therein contained and this declaration, shall be
the basis of the contract between me and the Society, and that if any untrue
averment is contained in this declaration or in the answers above given, or
if it shall hereafter appear that any of the matters above set forth have not
been truly and fairly stated, then all moneys which shall have been paid on
account of the insurance to be made in consequence hereof shall be forfeited
and belong to the Society and the policy shall be null and void." The
. . .
polipy contained this condition, " In case it shall hereafter appear that any
untrue averment is contained in the declaration before recited as to the age,
state of health, or description of the assured . . . then this certificate shall
be void." On the death of the assured the Society alleged that the assured
had made wilfully false statements in the proposal, and they brought this action
of reduction against the assured's assignees for cancellation and delivery up

of the poUoy, on the ground of breach of warranty and fraud. The assignees
denied the allegations, and pleaded that, at any rate, the policy was not void
against onerous assignees, and that the company could have found out the
truth for themselves from the medical man to whom the assured referred
them. The Court held that an assignee for value and in good faith of a pohcy
of insurance was subject to all the exceptions and pleas pleadable against
the original assured, and therefore, whether the defence was breach of warranty
or fraud, it was equally pleadable against the assignee, and, on the question of
the medical referee, they held that an insurance company obtained such
reference for their own benefit, and if they chose to depend on the assured's
statement or warranty, instead of resorting to the medical man, they were
entitled to do so. The case was sent to trial before a judge without a jury,
and on the evidence the Court found that the assured had made wilfully false
statements in respect that he was intemperate, that he was suffering from
even tertiary stage, and that he had made proposals
syphilis in its secondary or
to other companies,some of which had been declined. On this evidence the
Court held that the company were entitled to judgment (»). The Lord
{n) In the House of Lords counsel could not distinguish the case from
or the claimant admitted that he Anderson v. Fitzgerald (1853), 4
Ordinary {Lord Young), was of opinion that although the company were not
bound to prove that the statements of the assured were gross and wilful
falsehoods, yet the onus was on them to show that the assertions were blame-
ably reckless or careless on a matter which was or reasonably might be material
to the risk (o).
London Assurance v. Mansel (1879), 11 Ch. D. 363

Upon application by the assured the proposal London
for insurance on his own life
form signed by him contained the following question and answer " Q. Has ^^rance. :
— v.
a proposal ever been made on your life at any other office or offices ? If so,
when ? Was it accepted at the ordinary premium or at an increased pre-
mium, or declined ? A. Insured now in two offices at £16,000 at ordinary
rates. Policies effected last year." The declaration signed by the applicant
was, " I declare that the above written particulars are true, and I agree that
this proposal and declaration shall be the basis of the contract between me and
the London Assurance." The company accepted the proposal in writing, a
cheque was sent for the first premium, and the company sent a certificate of
insurance. Afterwards the company discovered that one of the offices with
which the applicant was insured had refused to increase the amount, and that
the applicant had been declined by several other companies. The company
thereupon returned the premium, and brought this action to set aside the agree-
ment. The defendants contended that the company, by accepting an in-
complete answer to the question, had waived further information, and that
the matter not disclosed was not material. The Court held that the answer
was " untrue," that it was not so obviously incomplete as to constitute a
waiver of further information, and, even although no question had been asked,
a previous refusal was a material fact which ought to have been disclosed. The
contract was rescinded accordingly.
Thomson v. Weems (1884), 9 A. C. 671
The insurance was upon the life of the assured. Among the questions Thomson v.
upon the proposal form were these —

•" (i) Are you temperate in your habits !
:
Weems.
(ii) And have you always been strictly so ? " and the assured answered,
" (i) Temperate, (ii) Yes." The following declaration was signed by the
assured "I the said W. do hereby declare that I am at present in good
:
health . that the foregoing statements of my age, health, and other

. .
particulars are true, that I have answered truly the above questions as to any
prospect or intention I may have of proceeding or residing beyond the limits
of Europe and I do hereby agree that this declaration shall be the
. . .
basis of the contract and if any untrue averment has been made, or
. . .
any information necessary to be made known to the company withheld, all

sums which shall have been paid shall be forfeited and the assurance . . .
H. L. C. 484, and the appeal was that neither the materiaKty of the
dismissed without argument ; 5 statements nor the honesty of the
R. (H. L.) 64. assured in making them was the
(o) This question was not necessary issue. The dicta of Lord Young in
for the decision of the case, and as this case are expressly disapproved by
there seems to have been a clear war- Lord Watson in Thomson v. Weems
ranty as to the absolute truth of the (1884), 9 A. C. 671, 689.
statements the later decisions show
be absolutely null and void." The policy recited that " the assured had sub-
scribed a declaration which is hereby declared to be the basis of this insurance,"
and contained this proviso, " that

anything averred in the declaration here-
if
inbefore referred to shall be untrue this policy shall be void, and all moneys
received by the said company in respect thereof shall belong to the said company
for their own benefit." Evidence was adduced tending to show that the
assured was a very free drinker, that four months after the policy was issued
he was suffering from chronic hepatitis (a disease of the liver generally pro-
duced by excessive drinking over a considerable period), resultiag in congestion
of the brain, of which he died eight months after the policy. The case went
to the House of Lords, where it was held that the evidence showed that the
assured was intemperate at the time the policy was issued, and therefore tliat
the answer was not true and that the policy was void. The absolute accuracy
of the statement was warranted. Although temperance is to a certain extent
a matter of degree and opinion, the assured who warrants that he is temperate
warrants the fact, and not merely his opinion. The materiality of the matter
warranted was not in issue. Lord Watson said, " In its plain and ordinary
sense, the statement that the applicant is temperate is an averment of fact,
and not a mere assertion of the opinion or belief entertained by the assured
with regard to that fact. It then appears to me that whatever may be the
import of the word 'temperate' (which is a separate matter) the assured
must be held to have warranted not that the assertion was true according to
his sincere conviction, but that it was true in point of fact. There are. . .
facts innumerable which can only be ascertained by the test of opinion, but
they are not the less facts in a legal, whatever they may be in a metaphysical,
sense. It appears to me to be vain to contend that the character of a man's
habits, temperate or intemperate, is a matter of opinion, and not of fact."
Grogan v. London & Manchester (1885), 53 L. T. 761
Qrogan v. The insurance was effected by T. G. on the of life his father. He filled in
London and the proposal as follows :

— " Name of insured, P. G.
life to he Residerice in full,
Manchester.
191, G. Ancot Street, Manchester. Born at Bally hannis in the county o/Mayo
on and signed the following declaration " I do hereby declare
the Sep. 10, 1835," :
that the foregoing particulars are true in every respect, and I agree that the
questions and answers taken together shall be the basis of the contract between
the company and myself." Evidence was adduced to show that the life had
a house in Ireland, that he sometimes resided there, and sometimes in England,
when he came over to work, and when the policy was effected was staying with
his son at the address given and returned to Ireland after three months. It
was held that the statement as to residence was true, and that the residence
asked for was the place where the life was residing at the time of insurance,
so that if the company desired to find liim they could do so. The Court expressed
an opinion that if the residence had been inaccurately stated the policy would
have been void.
The Scottish Provident v. Boddam (1893), 9 T. L. E. 385
The Scottish B. applied for insurance on his own life, In the proposal he was asked
President v. whether a proposal had been made on the same life in any other office, and he
Boddam.
answered, " Yes, in the Edinburgh Life, in April." The declaration signed by
the applicant was as follows: " I do hereby agree that this proposal and
declaration shall be the basis of the contract, and that in case it shall hereafter
appear that this contains an untrue statement as to the age, or that evidence
furnished in connexion with this application contains any false and fraudulent
averment in other respects, then all moneys which shall have been paid on
account of the said insurance shall be forfeited and belong to the institution
and the assurance itself shall be absolutely null and void."
The application was accepted and a memorandum of acceptance was sent
to the apphcant. Next day the applicant was found dead in a railway tunnel
and the company brought this action to cancel the acceptance on the ground
The facts were that the appli-
of misrepresentation as to previous proposals.
cant had been accepted by the " Edinburgh Life," and " Royal Exchange,"
and had applied to the " Colonial and Mutual," and " Equitable." In the
case of these two last-mentioned companies he had been medically examined
but had not carried the matter further. Day, J., held that an untrue declara-
tion as to material matters had been made, but the company had by their
declaration made the contract voidable on the ground of fraud only, and as
no fraud had been alleged or proved the contract must stand and the company
were not entitled to have it set aside.
Hambrougli v. Mutual Life (1895), 72 L. T. 140

The insurance was on the life of the assured. The proposal contained Hambrougli
v. ilfitteaf
the usual questions as to health and previous applications, and the following
declaration was signed by the assured " I agree that all the foregoing
:
statements and answers, as well as those that I make to the company's examiner
are warranted to be true, and are offered to the company as a consideration
of the contract which I hereby agree to accept as issued by the company in
conformity with this apphcation." A provisional policy was issued for 60 days
in these terms " In consideration of the application for this policy, which is
:
hereby made a part of this contract, and of £97 Is. 8d. the company does insure
the life of H. for the sum of £10,000 in favour of himself for the term of 60
days from date." The policy was obtained by one Monson, purporting to act
as the agent of the assiired, and the jury found that certain of the answers on
the proposal form were inaccurate and that Monson was aware of the in-
accuracies, but that the assured was not, and had acted in good faith. Judg-
ment was entered for the defendants, and on a motion for a new trial it was
argued (1) that mere untruth did not avoid the policy, but in the absence of
fraud would merely give rise to a cross-claim for damages (2) that if the
;
intention was that the validity of the policy should depend on the absolute
truth of the answers, that should have been clearly stated. The Court held
(1) that the finding of fraud on the part of the assured's agent avoided the
policy, and that there was evidence to support such a finding (2) that there ;
was a warranty that the statements were in fact true, and as there was a
breach of that warranty the policy was void.
Delahaye v. British Empire Mutual Life (1897), 13 T. L. E. 245
The policy was on the life of the assured. In the proposal he stated, in Delahaye v.
answer to a question, that he had never suffered from any serious illness or ^^^^f^
disease tending to shorten life. The declaration signed by the assured was j^^^^; nf^.
in these terms :
" I do hereby declare that I am at present in good health,
that I am now and have always been and temperate habits, and that
of sober
I am not, to the best of my knowledge, the subject of any disease tending to
make assurance more than usually hazardous, and I hereby agree that this
declaration shall be the basis of the contract between me and the British
Empire Mutual Life Assurance Company, and that if any untrue statement be
made therein, or in the answers to the questions put by the company's medical
examiner in reference to this proposal, all sums paid to the company on account
of the assurance shall be forfeited, and any policy granted hereon shall be to
all intents and purposes null and void." The policy recited that the assured
had delivered a proposal and declaration, and that the assured " did thereby
agree that such proposal and declaration should be the basis of the contract."
When the assured was examined by the company's medical officer the latter
put the following question to the assured :
—
" Have you ever suffered from
indigestion, or jaundice, or from any disease of the stomach or bowels, Uver
or kidneys ? " The assured answered, " No," and the officer wrote down the
answer on the company's printed form, which was afterwards signed by the
assured. At the trial uncontradicted evidence was adduced to show that
the assured had suffered from jaundice some two years before the proposal was
made, but the jury found that no answer in the proposal was untrue and that
no answer made to the medical officer was untrue, and that, if any answer was
untrue, it was not untrue to the knowledge of the assured. On a motion for a
new trial the Court held (1) that the accuracy of the answers in the proposal
might be warranted, but (2) that there was no warranty with reference to the
answers to be made to the medical officer except that he would answer them
to the best of his knowledge. The assured did not know at the time he signed
the declaration what questions might be put to him. There was a great
difference between the answers on the proposal, and those to be given to the
medical officer, and the declaration must be construed so as to give effect to
that difference. The only point which the company reUed on was that an
untrue answer had been made to the medical officer in respect of the jaundice.
The jury had found that the assured had answered all the questions honestly,
and that was sufficient.
Hemmings v. Seeptre Life Association, Ltd., [1905] 1 Ch. 365
Hemmings v. In 1887 a lady signed a proposal for insurance upon her own lite and
Sceptre Life The proposal concluded
stated therein that her age was 41 next birthday.
Association,
with the following declaration " I do hereby declare that the preceding
:
Ltd.
answers and statements are to the best of my knowledge and belief correct
and true and that I have not withheld or concealed any fact or circumstance
which the directors ought to know in accepting my proposal. And I do
hereby agree that this proposal and declaration shall be the basis of the con-
tract between myself and the association, and if it shall hereafter appear that
I have made any untrue statement herein then the policy to be issued shall
be void, and the premiums paid shall be forfeited." The policy issued upon
the proposal recited that the assured had signed a declaration in writing
declaring that her age on the next birthday would not exceed 41 years (evidence
of which age must be produced) which declaration she had agreed should be
the basis of the contract between herself and the company, and it was witnessed
:
EEPRESBNTATIONS AND WARRANTIES IN LIFE POLICIES 391
that upon payment of an annual premium of £112 16«. 8d., until the assured
reached the age of 60 or until her death under that age, the stock and funds
of the company should upon such event be liable to pay the sum of £2000, and
itwas further declared that in case the assurances thereby made should be
proved to have been obtained by wilful misrepresentation, concealment, or
other fraud, in regard to any matters contained or referred to in the before-
mentioned declaration or otherwise, then the policy should be void, and all
payments which should have been made to the company on account thereof
should be forfeited to the company. Subsequently, in 1897, during the life
of the assured it was discovered that the statement of age in the proposal was
inaccurate, and that the then age of tlie assured was 44 next birthday, and
not 41. The company were immediately informed of the mistake, but not-
\vithstanding the information, they accepted two further premiums on the
policy, that is to say, the premiums falling due in 1898 and 1899. In August,
1899, the company demanded payment of the balance of premiums with
interest at 5 per cent., on the basis that the assured should have paid a pre-
mium of £22 10s. more than the premium actually paid. The holder of the
policy refused to pay any additional premium, and the amount of the original
premium was tendered, but not accepted each year until, in 1904, the assured
attained the age of 60 years. This action was then brought upon the policy.
The company contended that they were not liable to pay until the assured
attained the age of 63, as the policy was on the basis that she was 41 when
insured, and would pay 20 premiums before she was 60 years old. It was held
that the company were liable to pay the full sum insured with accrued
bonuses. Reading the declaration with the policy there was no forfeiture of
the policy and premiums unless the misrepresentation was wilful, and it was
admitted to be innocent. As, however, the contract was made on the basis
that the assured was 41 the company might have cancelled the policy and
returned the premiums on discovering that the assured was three years older.
They, however, by accepting further premiums, elected to affirm the contract
after full knowledge of the fact, and by that election they were bound,
Joel V. Law Union & Crown, [1908] 2 K. B. 863

The policy was on the life of the assured, who answered the usual questions Joel \. Law
on the proposal form, and signed the following declaration: "I do declare that Union and
to the best of my knowledge and belief the above particulars are true, and
I agree that this proposal and declaration shall be the basis of the contract
between me and the company." The company sent a printed form to a
doctor with instructions to examine the applicant on their behalf. The
printed form contained the usual questions under the heading, " Questions
to be put to the applicant (with any necessary explanation) by the medical
officer, who will fill in the applicant's answers." Among the questions were
these :
—
" (7) What medical men have you consulted ? When ? And what
for ? . .(9) Have you at any time had, and if so, when, any of the following
.
ailments .(5). . mental derangement, brain fever, or other disease of

. . .
the brain ? " The doctor interviewed the assured, and recorded the following
answers, " (7) Dr. S., rarely, colds ; Dr. H., last spring, measles . . . (9) . . .
(6) No." The assured thereupon signed the declaration at the foot of the form
" I do hereby declare with reference to the proposal for assurance on my life
and my declaration dated October 30, 1902, that the answers to the foregoing
questions are true.'' The policy contained no reference to the proposal, or
to either of the declarations. It appeared on the evidence that some eight years
before the assured had had a severe attack of influenza followed by nervous
depression, and that she had, on the advice of Dr. S., consulted Dr. K.
The
depression ultimately developed into acute mania, and for six months was in
Dr. L.'s private asylum. The plaintiff alleged that the assured was always
ignorant of the fact that she had suffered from mental derangement. Some
three years after the policy was issued she committed suicide. The jury found
that the assured was ignorant that she had suffered from mental derangement,
that she foolishly, but not fraudulently, concealed the fact that she had con-
sulted Dr. K. for nervous depression, and that the fact was material for the
company to know. On these findings the Lord Chief Justice entered judg-
ment for the defendants. He held that, although there was no warranty that
the answers were true, yet there was a concealment of material fact, and that
that was sufficient to avoid the contract. The Court of Appeal affirmed
the Lord Chief Justice in his opinion that there was no warranty as to the
absolute truth of the statements made to the doctor. The object of the
questions put by the doctor was to obtain the doctor's report, and all that was
required was a full and honest answer by the assured. These questions were
not prepared for the purpose of getting a warranty from the assured as to their
absolute accuracy. The declaration that the answers were true meant no more
than that they were full and honest, and they were not intended to be the basis
of the contract. They were also of opinion that, if there was a concealment of
material fact, that would be sufficient to avoid the contract, but they were not
satisfied that the assured had concealed anything from the doctor, or that the
doctor did not know from his brother. Dr. S., of the fact that the assured had
consulted him for nervous breakdown. The onus to prove concealment was on
the and they had not called the doctor although he was in Court during
office,
the trial. The questions were to be put to the applicant " with any necessary
explanation." The question clearly called for some explanation, but there
was no evidence as to what the question plus the explanation was. In the
light of the explanation the answer may have been quite true, and the doctor
may have had full information about the nervous breakdown. The Court
was not satisfied that the jury had appreciated this aspect of the ease. The
written answers and the assured's declaration were allowed to go to the jury
as, and taken by the judge to be, a concealment of the fact which made her
liable for non-disclosure, whereas the document by itself was not evidence of
non-disclosure. The Court ordered a new trial although Lord Justice Buckley
was inclined to the opinion that judgment might have been entered for the
plaintiff since thedefendant had not adduced any real evidence of non-
disclosure.
CHAPTER VI
Life Insueance ; Claims and Title to Policy
Section I. —Proof of Death and Age
The insurance money on an ordinary life policy is usually made Proof satis-
^
payable when proof satisfactory to the directors shall have been j^jectors.°
made of the death of the assured, and of the title of the party or
parties claiming under the policy. Formerly the policy money
was made payable after the lapse of a specified period, such as three
months after such proof shall have been made but the tendency of :
modem practice is to make claims payable immediately on proof

of death and title. Proof satisfactory to the directors means
proof which ought to be satisfactory to them (a). Death must
be proved by such evidence as the directors may reasonably
require, but the directors are not justified in refusing payment
merely because their unreasonable or capricious demands
have not been satisfied (h). Reasonable persons may reasonably
take different views, and therefore it does not follow that, because
a judge or jury subsequently finds the death proved, it was
therefore the duty of the have paid when the claim
company to
was first made, even although practically the same evidence was
placed before them at that time as was afterwards placed before
the Court (c). Where the evidence is not clear the company
under such a clause is entitled to the protection of an order of
the Court, and, if it acts reasonably in decUning to pay in a
doubtful case, it will be entitled to deduct from the sum insured

the costs incurred by it The question,
in defending the action (c).
however, of reasonableness is a question of fact, and a judge or

jury having found the death proved on the evidence before them
may also find as a fact that the company was unreasonable in
not accepting that evidence as sufficient, and upon such a finding
the company will have to pay the costs of the action (d).
(a) London Quarantee v. Fearnley (c) Doyle v. City of Glasgow Life
(1880), 5 A. C. 911, 916. (1884), 53 L. J. Ch. 527.

(6) Braunstein v. Accidental Death {d) Ballantine v. Employers^ In-
(1861), 1 B. & S. 782. surance (1893), 21 R. 305.
394 LIFE INSURANCE CLAIMS
Evidence of Death may be proved (1) by direct evidence, that is to say,

death.
by the oath of some person present at the death or (2) by death ;
certificate, that is to say, by production of a certified copy entry
in the Eegister of Deaths, or in some other pubUo record which

is admissible in evidence or (3) by evidence of prolonged absence
;
or other facts from which the fact of death may properly be

inferred.
Evidence of The age of the deceased may be proved (1) by direct evidence
as to the date of birth ; (2) by birth certificate, that is to say, by
production of a certified copy entry in the Eegister of Births, or
in some other public record of the birth which is admissible in
evidence (3) by baptismal certificate, that is to say, by pro-
;
duction of a certified copy entry in a baptismal register, together

with direct evidence that the child was a very young infant when
baptised ; (4) by production from the proper custody of a family
Bible or Testament, wherein the births of members of the family

have been regularly recorded.
Evidence of A birth or death certificate ought to be accompanied by evidence
identity.
of identity if there is any room for doubt as to whether the person
named in the certificate, and the person whose life is insured are
one and the same (e).
Register of A compulsory system of registration of births, deaths, and

births,
deaths, and marriages, was first introduced in England in 1836, when the
marriages. Births and Deaths Eegistration Act of that year was passed (/).
That Act, and the amending Act of 1874 {g), contain the present
statutory provisions with regard to the compulsory registration of
births and deaths, and the subsequent proof of the birth or death
recorded by production of a certified copy of the entry.
Compulsory Correct information respecting every birth or death happening
registration.
within the jurisdiction is required to be given by the proper in-
formant as defined in the Act, and the person required to give
information is liable to penalties if he fails to do so Qi). Information

concerning any birth is to be given within forty-two days, and
information concerning any death is to be given within five days.
In the case of death the medical practitioner attending the deceased
during his last illness must sign a certificate stating the cause of
(e) Parhinaon v. Francis (1846), 15 is now deemed to be sufficient evi-

Sim. 160. At one time it was the dence in Courts {Traill v. Kibble-
all
practice of the Court of Chancery to white (1847), 10 Jur. 107 Valtera
;
require a burial certificate to be pro- Trust, In re (1887), W. N. 128).

duced as well as the death certificate (/) 6 & 7 Will. 4, c. 86.
{Riseley v. Shepherd (1873), 21 W. B. [g) 37 & 38 Vict. c. 88.
782) ; but the death certificate alone (h) 37 & 38 Vict. o. 88, ss. 1-16.
PEOOP OP DEATH AND AGE 395
death. The medical certificate must be delivered to the Eegistrar

or,where there has been an inquest, the coroner's certificate of the
finding of the jury must be so delivered. Quarterly returns are
made by each Eegistrar to the Superintendent Eegistrar of his
district who makes a return to the Eegistrar-General at the
General Eegister Office {i).
Births and deaths occurring at sea on board any vessel of the Births and
Eoyal Navy, or any other British ship, or on board any foreign rbg*at°sea!'^'
vessel carrying passengers to and from any port in the United
Kingdom, must be entered in the log book of the vessel (k). In
the case of a merchant vessel it is the duty of the master upon
arrival in any port of the United Kingdom to give information
to the Eegistrar-General of Shipping and Seamen, who makes a
return of such information to the Eegistrar-General of Births,
Deaths, and Marriages (1). In the case of a vessel of the Eoyal
Navy, it is the duty of the commander to make a return to the
Eegistrar-General of Births, Deaths, and Marriages (l) at such times
and in such manner as may be required by the Naval regulations.
The Eegistrar-General makes an entry in the Marine Eegister of
all returns in respect of births, deaths, and marriages occurring
at sea.
Upon payment of the prescribed fee or fees, the register books Certified copy
of the district Eegistrar or at the General Eegister Office may be facte recorded
searched, and a certified any entry may be obtained (m).
copy of in the register.
A certified copy issued by the Eegistrar-General and stamped or

sealed with the seal of the General Eegister Office is admissible
as evidence of the facts properly recorded in the register book {n).
An entry or a certified copy thereof is, however, not admissible as

evidence unless the entry is in conformity with the following
requirements (n) :
(1) The entry must purport

to be signed by the person required
by law to give the required information as to the birth or death,
or to be made on a coroner's certificate, or in pursuance of the
provisions for the registration of births and deaths at sea.
(2) Where in the case of a death more than twelve months
have intervened between the day of death or the finding of a dead
(i) 6 & 7 Will. 4, c. 86, s. 32. Registrar-General for Scotland or

(k) 37 &
38 Vict. c. 88, s. 37 ; Ireland as the case may be. In all
Merchant Shipping Act, 1894, 57 & other cases the return is made to the
58 Vict. c. 60, ss. 254, 339, and Sch. Registrar-General for England.
VIII. (m) 6 & 7 Will. 4, c. 86, ss. 35-37.
(Z) In the case of Scottish or Irish (n) Sec. 38.
subjects the return is made to the
body and the date of registration, the entry must purport to be

made with the authority of the Eegistrar-General.
(3) Where in the case of a birth more than three months have
intervened between the day of birth and the date of registration,
there must be a marginal note on the register to the effect that the
informant has made a statutory declaration as to the truth of
the information given.
(4) Where in the case of a birth more than twelve months have
intervened between the day of birth and the date of registration,

the entry must purport to be made with the authority of the
Eegistrar-General.
A certified copy of an entry is evidence not merely of the
fact of birth or death, as the case may be, but of the date thereof,
and of all other facts of which the Acts require information to be
given and recorded (o). Thus, a death certificate is evidence of
the cause of death as recorded in the information given in the
medical certificate or coroner's inquest.
Certified copy By the Official Documents Evidence Act, 1845, official docu-
ments or certified copies thereof are to be received in evidence if
they purport to be sealed or impressed, or sealed and signed, or
signed as directed by the respective Acts under which they are

admissible (jp). A certified copy of an entry in the Eegister of
Births, Deaths, and Marriages, accordingly proves itself, and no
evidence need be given of the authenticity of the certificate, or of
the official capacity of the person by whom it purports to be signed.

Registers of Before the general system of compulsory registration was
*°
buria™^ introduced, the parish registers of baptisms and burials were the
most and deaths. These,
reliable sources of information as to births
however, were often kept with great irregularity until 1812, when
the Baptismal and Burial Eegisters Act of that year provided
for the keeping of proper parochial registers in separate books,
and for the transmission of verified copies to the Eegistrars of each
diocese once every year (q). There were also many non-parochial
registers, such as those kept by Nonconformists. In 1836 a royal
commission was appointed to inquire into the state of such non-
parochial registers, and to take measures for collecting, arranging,

and depositing such records. Under the Non-Parochial Eegisters
Act 1840 (r), which was passed in pursuance of the report of the
(o) Goodrich, In the estate of, [1904] (q) 52 Geo. 3, c. 146.

P. 138. (») 3 & 4 Vict. 0. 92.
{p) 8 & 9 Vict. 0. 113.
PROOF OF DEATH AND AGE 397
commissioners, the non-parochial records collected by them were

deposited with the Registrar-General of Births, Deaths, and
Marriages, and the records so deposited are deemed to be in legal
custody. Extracts certified by the Registrar-General under the
seal of the General-Register Office are admissible as evidence (s).
All public records regularly kept and produced from proper All public
custody are admissible as evidence of the facts properly recorded admissible as

therein. Thus the parish register recording a burial in the work- evidence
house cemetery (i), the muster book of a vessel of the Royal Navy properly
recording the death of a seaman (u), an Army form kept under
''"=°'^<^^'^':^-
the R.A.M.C. rules recording the admission of a soldier to hospital

and the fact that he was suffering from a specified disease (x), and
an Army marriage register kept pursuant to the Army Marriage
Act and recording a marriage, have been held to be admissible as
evidence of the facts recorded therein (y). Upon the same
principle an entry in a family Bible recording the birth of a member
of the family and produced from the custody of a member of the
family is admissible as evidence of the date of birth (z).
Public records, however, are only admissible as evidence of Superfluous

the facts which are recorded therein pursuant to the duty of the eTin mblic'
keeper of the record, and therefore a parochial register of baptisms record.
or burials is not byitself evidence of the date of birth, even although
the date of birth is stated therein (a). An entry of a baptism is
merely evidence of the fact and date of baptism, and of the fact
that the person baptised was born before that date (b). Combined
with parol evidence that the child was very young when baptised
it would be evidence of the proximate date of birth.
In cases of public or family records it is not necessary to prove Production

that the entry was made by the person whose duty it was to make fj-om proper
produced from proper custody.
the entry. It is sufficient if the record is
custody (c).
A copy of or extract from any public book or document is Certified
admissible as evidence of the contents thereof if proved to have p^y^^ record,

been examined or certified as a true copy by the officer to whose
custody the pubhc book or document is entrusted (d).
(«) Sec. 11. (a) Robinson v. Buccleugh (1886),

(t) Doe V. Andrews (1850), 15 Q. B. 3 T. L. B. 472.
756. (6) Bulley's Settlement, In re (188&),
(m) E. v. Rhodes (1742), Leach, 24. W. N. 80.
(x) (?ree?iv.0Zem(19OO),17T.L.B.62. (c) Hubbard v. Lees (1866), L. R. 1
{y) Adamsv.Adams{1900),W.N.32. Ex. 255.

{z) Hvhbardv. Lees {Um),^.!^. 1 {d) Evidence Act, 1851 (14 & 15
Ex. 255. Vict. c. 99).
Army By the Army Act, 1881, when a record is made in one of the
records in
regimental regimental books in pursuance of any Act or of the Queen's Ee-
books.
gulations or otherwise in pursuance of military duty, and purports
to be signed by the commanding officer or officers whose duty it
is to make such record, such record is evidence of the facts therein

recorded ; and a copy of any such record purporting to be a true
copy by the officer having the custody of such book shall be
evidence of such record (e).
Certified Foreign registers and other pubHc records, and certified extracts
extracts from
foreign
therefrom, are admissible as evidence in England as to those matters
registers. which are properly and regularly recorded therein, when it appears
that they have been kept under the sanction of public authority,
and are recognised by the tribunals of the county where they are
kept as authentic records (/). Under this rule parochial registers
in Scotland which are public records and admissible as evidence
by the common law of Scotland, are also admissible as evidence
in England (/).
Registration By the Births and Deaths Eegistration (Ireland) Acts, 1863
of births and
deaths in and 1880, provision is made for the compulsory registration of
Ireland.
births and deaths, and for the proof thereof, which is substantially
the same as the corresponding provision made by the English
statutes (g).
Registration The registration of births and deaths in Scotland is regulated

of births and
deaths in by the Eegistration of Births, Deaths, and Marriages (Scotland)
Scotland. Acts, 1854 and I860 {h). Eegistration is compulsory since 1854.
In case of death the medical attendant must transmit his certificate
to the Eegistrar, or if the death is sudden and unexpected the

procurator fiscalmust transmit to the Eegistrar the result of his
inquiry. The inquiry mad? by the procurator fiscal in Scotland
is not a public inquiry like the coroner's inquest in England. A
public inquiry into the cause of death may however be held under
the Fatal Accidents Inquiry (Scotland) Act, 1895 (i), where a person
meets with a fatal accident in the course of and apparently arising
out of some industrial employment or occupation. The inquiry is
before the sheriff and a jury, and it is the duty of the sheriff clerk
to transmit the finding of the jury to the Eegistrar of births,

deaths, and marriages. Provision is made for the keeping of a
(e) 44 & 45 Vict. c. 58, s. 163 (1), {g) 26 & 27 Vict. c. 11 ; 43 & 44
(g), (h). Vict. c. 13, s.28.
(h) 17 & 18 Vict. c. 80 ; 23 & 24
(/) Lyell V. Kennedy (1889), 14 Vict. c. 85.
A. C. 437. (i) 58 & 59 Vict. c. 36.
PRESUMPTION OF DEATH 399
marine register wherein are entered the particulars of the births

and deaths of Scottish subjects occurring at sea. All parochial
registers in Scotland before 1820 are in the custody of the Eegistrar-
General. Parochial registers from 1820 to 1855 are in the custody
of the parish registrars for each district.
Under the Eegistration of Births, Deaths, and Marriages Scottish
(Scotland) Act, 1860, the Eegistrar-General keeps a register en- ^"""j^^j.
titled " The Foreign Eegister," in which may be entered any
birth, death, or marriage of a Scottish subject which has taken

and which has been (1) in-
place in a foreign country since 1854,
timated to the Eegistrar within twelve months after the passing
of the Act, or (2) intimated within twelve months after the
happening of the occurrence and duly certified by the British

Consul of the foreign country or place.
Any extract fromany register kept by the Eegistrar-General Proof of entry
for birth, deaths, and marriages in Scotland, or by a parochial or register,
district Eegistrar, is admissible as evidence of the facts recorded

in the register, provided the extract is authenticated by the seal of
the Eegistrar-General or the signature of the parochial or district
Eegistrar, as the case may be (j). The Official Documents Evidence
Act, 1845, does not, however, apply to Scotland, and it is therefore
necessary to prove that the certified extract produced was in fact
issued and signed by the Eegistrar by whom it purports to be signed.
If a person has disappeared, and no direct evidence of his Presumption
lifeor death can be obtained, his death may be proved either

by (1) circumstantial evidence, that is to say, by proof of facts
from which a jury might reasonably infer the fact of death or (2) a ;
presumption of law arising from the fact of disappearance and

absence for seven years without being heard of.
The presumption of law arising from seven years' absence is Seven years'
not in England a statutory presumption it is a presumption of

;
common law based upon the analogy of two statutes relating to

presumption of death in special cases (fc). After the expiration
of seven years from the time a person was last seen or heard of,
there arises a primd facie presumption of the fact of death {I).
(j) 17 &
18 Vict. c. 80, s. 58 ; 10 tions, and 19 Car. 2, c. 6, relating
E dw. 7 &
1 Geo. 5. to the presumption of death in
(fc) JNTepeonv. Z>oe(1837), 2M. &W. claims for recovering possession of
894. The statutes referred to are land.
1 Jao. 1, c. 11, relating to the pre- (I) Pheni Trusts [1870),!,. H. 5 Ch.
sumption of death in bigamy prosecu- 139.
Evidence There must be evidence from those who would be likely to

necessary to
hear of the missing person if alive, that they have not heard of
raise pre-
sumption. him (m), and probably there must also be evidence that reason-
able inquiries have been made by advertisement and otherwise in
or about the place or places where he was last seen or heard of,
or where he was likely to have gone {n). In one case, however,

where an action was brought against an insurance company on a
policy effected by a creditor on the life of his debtor, the Court
appears to have presumed the death without any other evidence
than that of the debtor's wife, that her husband had deserted her
and run away with a nursemaid, and that she had not heard of
him for over seven years (o). The decision in this case appears to
throw the burden of making inquiries upon the party who desires
to rebut the presumption of death, and in an action ia the King's

Bench or Chancery Division it may be sufficient for the party
alleging death merely to call the missing person's nearest relations
in this country to say that he was living here and disappeared more
than seven years ago, and that they have not heard from him or
of him since the date of his disappearance. If, however, the

party alleging death knows that the missing person went or in-
tended to go to a foreign country, it seems clear that he cannot

ask the Court to presume death unless he has made reasonable
inquiry in that country for persons who might know something
about him. In the case of the Prudential Insurance v. Edmonds (p),
Lord Blackburn said, " there should have been an inquiry and
search made for the man amongst those who, if he was alive, would
be likely to hear of him ... so as to see whether or no there
has been such an absence of hearing of him as would raise the
presumption that he was dead." It does not seem reasonable

that the inquiry and search which Lord Blackburn demands
should be confined to relations or other persons resident in this
country if the person is known, or believed, to have gone to
reside in a foreign country. As a rule when inquiries are made
for a missing person all sorts of vague rumours and reports are
received from people who think they have seen him. Such
rumours and reports must be investigated, and ought not to be
withheld from the Court, even although the relations and friends
(to) Doe V. Andrews (1850), 15 McMahon v. McElroy {18GQ), Ir. E.

Q. B. D. 756. 5Eq. 1.
(n) Prudential Assurance v. Ed- (o) Willyams v. Scottish Widows

monds (1877), 2 A. C. 487 Allin's
; (1887), 4T.
L. R. 489.
Legacy, In re (1867), 17 L. T. 60 ; ip) (1877), 2 A. C. 487.
,
PRESUMPTION OP DEATH 401
believe them to be without foundation. If, however, the party

alleging death can satisfy the Court that the rumours and reports
are in fact devoid of reasonable foundation then the fact of such
rumours and reports having been received within the seven years
does not prevent the presumption of death from arising (g).
Sometimes a person disappears under circumstances which lead Disappear-
n1 • -f 1 1-
. ^ Ti ,1 •; • 1 ,
aiice under
to the mference that even ii he was alive it is very unlikely that circum-
his friends and relations would hear of him. He may have had jn^^ sô"v'^"
very good reasons for blotting himself out from the world which intentional
previously knew him. It has been said that under such circum-
stances the presumption of death does not arise from seven years'
absence. Thus where a girl of sixteen left her father's house
under circumstances which indicated an intention of concealing
herself and never returning home
(r), and where a young woman
left England and took a situation in Paris as a governess and

having become a Eoman Catholic quarrelled with her family,
ceased to communicate with them, and subsequently disappeared (s)
and where a convict having been transported and discharged after
having served his sentence was never heard of again (<), the Court
in each instance refused to presume death. Probably in an
action in the King's Bench or Chancery Division the Court ought
in every case of absence, and not being heard of for seven years,
to presume death in the first instance, thus laying the onus of
proving continuation of life upon the party alleging it. Circum-

stances such as existed in the above-mentioned cases are merely
facts from which the Court or jury may, in the face of the
presumption, find that the missing person is still alive.
Although death is presumed after seven years' absence, there No presump-

is no presumption of law as to the time of death (u). The onus to the date of
of proving life anyor death at particular time rests on the person Aenih.
alleging it {x). There is, on the one hand, no presumption of sur-
vivorship during the seven years {y), nor is there any presumption
(g) Prudential Assurance v. Ed- 37 L. J. Cli. 265. Stated as a rule of

monds (1877), 2 A. C. 487. law, there is no presumption of con-
(r) Watson v. England (1844), 14 tinuation of life in English law ; but
Sim. 28. where a person has been seen alive
(«) Bowden v. Henderson (1854), 2 and well on a certain date the proper
Sm. & G. 360. inference of fact may be that he was
(<) Mileham's Trust (1852), 15 Beav. alive for a reasonable time thereafter.
507. Pheni Trusts, In re (1870), L. R. 5 Ch.
(u) Pheni Trusts {1810), li.B,. 5 Ch. 139. Where a deed contains a grant
139. in favour of any individual there is a
(a!)i?ôde«,Znre(1887),36Ch.D.586. presumption in so far as any rights
Pheni Tmsts {1810),!,. H. 5 Ch.
(y) under the deed are concerned that the
139; Benham's Trust, In re (1867), grantee was alive at the date of the
I.L. 26
of death at any time before the expiration of seven years {z). The
time of death when it becomes material must be decided as a
question of fact upon such evidence as can be adduced (zz). The

fact that the missing person is to be presumed dead at the time
of the inquiry is not, however, to be disregarded in the attempt
to determine the date of death.The circumstances attending the
disappearance may not be such as would by themselves entitle a
jury to find that the man died at or about the time of such dis-
appearance. But when

added to the circumstances attend-
there is
ing the disappearance the presumption of law that at the date of

the inquiry the man is in fact dead, then the Court or jury may
very properly come to the conclusion that, if dead, the death
occurred at or about the time of disappearance (a). As a rule the
date of disappearance is a more probable date of death than any
other point of time during the seven years, and the end of the
seven years is the most improbable date to fix as the actual date
of death (b). If the Court finds it necessary to come to some
decision as to the date of death in the absence of any evidence
beyond the fact of seven years' absence, it fixes the date of
disappearance as the date of death (c).
Death may be It is not always necessary when a person has disappeared to
cSoumstMi-
"^^^^ ^^^ seven years before his death can be proved. When the
tial evidenoB circumstances attending the disappearance are such that a Court
lapse of seven 0^ jury may reasonably find, as a matter of fact, that the missing
years.
jjjg,^ ig (jead, the presumption of law arising from seven years'
absence is not required, and therefore death may be proved within
the seven years (d). Thus if a man was known to have embarked
on a vessel which has never reached port, death may be proved
when all reasonable hope of the vessel ever turning up has been
abandoned, and the underwriters on the vessel have paid a total
loss (e). So where a man alleged to be deceased was known to
have been shipwrecked and to have formed one of the crew of an

open boat which was launched in very rough weather and was
grant {Corbishley'a Trusts, In re Birchmore (1807), 13 Ves. 362;

(1880), U
Ch. D. 846). Beasney's Trusts, In re (1869), L. R.
(z) Lambe v. Orton (1859), 29 7 Eq. 498; Lakin v. Lakin (1865),
L. J. Ch. 286. 34 Beav. 443 ; Sillick v. Booth (1842),
{zz) Pheng Trusts (1870). L. R. 5 1 Y. & C. C. C. 117.
Ch. 139. (c) Aldersey,Inre,[lQQ5'\2Ch..\%l.
(a) Hickman v. Upsall (1876), 4 (d) R. v. Tolson (1889), 23 Q. B. D.
Ch. D. 144. 168.
(6) Lewes' Trusts, in re (1871), Norris, In the Goods of (1858),
(e)
L. R. 6 Ch. 356 ; Connor, In re 1 & Tr. 6 Main, In the Goods of
Sw. ;
(1892), 29 L. R. Ir. 261 ; WAster v. (1858), 1 Sw. & Tr. 11.

PRESUMPTION OP DEATH 403
never heard, of again, the Court of Probate gave leave to swear

the death within a year (/). In one case leave to swear the death
was given after three yearsThe missing man was seventy-
(g).
three years old at the time he disappeared, and complete search and
inquiry had been made for him without success. In a man of
that age death was a much more probable cause of disappearance
than it would be in the case of a younger man.
The practice of the Court of Probate in presuming death and Practice of
giving an apphcant for probate or letters of administration leave

i)ivi^[o°n i^°
to swear the death of a missing man apparently varies from the gi"ng leave
practice in other Courts. It has been frequently said in the Court death,
of Probate that that Court does not adhere strictly to the seven
years' presumption of law observed in other Courts. The Court
of Probate is probably more rigorous in requiring the applicant
to make complete inquiry and investigation into the circum-
stances attending the disappearance, and to ascertain, by all
reasonable advertisement and otherwise, whether any one can be

found who has seen or heard of the missing person. The Court
will not give leave to swear the death where there is reason to
suppose that the missing person went away with the intention of
concealing himself, and where therefore the absence for seven
years raises no reasonable inference of fact that he is dead {h).
As a rule the Court of Probate will not give leave to swear death
before the expiration of seven years from the date of disappear-
ance when there is no other evidence of death than lapse of time,
but it do so in special circumstances (i). When seven years
may
have elapsed the Court will give leave to swear death in the absence
of anything to show an intentional disappearance.
If the missing person is the assured who has insured his own Probate
life and the poUcy is vested in him the Court of Probate provides proteotion for
No action insurance
a very protection to the insurance company.
^ valuable ^
can be brought upon the policy until the assured
-111) s personal
companies.
representatives have completed their by probate or letters

title
of administration. This they cannot do until they have obtained

leave to swear the death, and from what has been said it is clear
that it is often more difficult to get the judge of the Court of
Probate to presume death than it would be to persuade a jury to
return a verdict of death.
(/) HurUton, In the Goods of, (h) LidderdaU, In re (1910), The

[1898] P. 27. Times Newspaper, March 24,
Matthews, In the Goods of, (i) Winston, In the Goods of, [1898]
(g)
[1898] P. 17. P- 143.
404 LIFE INSUEANOE CLAIMS
Notice to It is now recognised as the established practice to give notice

company of
application of an application for leave to swear the death to any insurance
for leave to company in which the missing person's life was insured (fc), and
swear death.
if the company appears and successfully resists the application it
may be allowed its costs against the applicant {I).
How far The company is not bound by the order of the Court of Pro-
leave to
swear death
bate giving leave to swear the death. Leave is usually granted
binds the to swear the death on or after the date upon which the missing
company.
person was last seen or heard of, but it is still open to the company
to defend proceedings against it either on the ground that
there is no evidence of death or that there is no evidence of death
before the date when the policy expired. If, however, the com-
pany disputes the death after the judge of the Court of Probate
has upon full investigation and inquiry presumed death it will
do so at the risk of having to pay all the costs of subsequent
proceedings.
Presumption By the Common Law of Scotland there is no legal presumption

of death in
Scotland. of death until the extreme limit of life is reached (m). The limit
of life is stated as 100 years (n). Until a person has reached that
age the Common Law presumes that he is still alive (m).
Statutory The Presumption of Life Limitation (Scotland) Act, 1891 (o),
presumption
in Scotland .
provides that when any person has disappeared and has not been
does not heard of for seven years the Court may presume death, and that
apply to
insurance where there is not sufficient evidence that he died at any definite
claims.
date he may be presumed to have died exactly seven years after
the date on which he was last known to be alive. The Act, how-
ever, does not apply to any claim against the insurers under a
upon the life of any person who has disappeared,
policy of assurance
and the person claiming under such policy must in any question
with the insurers prove the death of the person whose life is
insured in the same manner as if the Act had not been passed.
Evidence Death must be proved by such evidence as will satisfy the
necessary to
{k) Barber, in the Goods of (1886), arbitrary period of presumption, but

11 P. D. 78 ; Kirkbride, In the Goods no rule has ever been established (see
o/(1891), L. J. N. C. 96. Kennedy V. McLean (1851), 13 D. 705;
(I) Lidderdale, In re (1910), The Rhind's Trustees v. Bell (1878), 5 B.
Times Newspaper, March 24. 527).
(m) Williamson v. Williamson (w) Bruce v. Smith (1871), 10 M.
(1886), 14 B. 226. There have been 130.
occasional attempts to introduce an (o) 54 & 55 Vict. c. 29.
PRESUMPTION OF DEATH 405
Court that the person is in fact dead. Mere disappearance and satisfy Court
lapse of time short of 100 years from birth is not sufficient (p). person i^"^
dead,
But the presumption of hfe grows weaker as time passes, and the
older the missing person is at the time of the inquiry the more
easily will the presumption of Hfe be rebutted {q). In one of the
later cases it is stated that a man must within the limit of human
life be presumed to be ahve until his death is proved, or until
facts and circumstances are proved sufficient to raise a pre-

sumption that he died at some particular date (r). Probably,
however, that is placing the presumption of life too high, and the
real test appears to be whether on the whole evidence there is any
real doubt that the man is dead (g), and, if there is not, the Court
will hold that death has been proved (
s), even although there is
no evidence tending to show the proximate date of death (<). The

Court does not insist upon direct evidence of all the circumstances,
but will admit evidence of rumours, information, and belief (m).
In one case where a man had disappeared under circumstances

which made it improbable that he would communicate with his
relatives and friends, even if alive, the Court after evidence as to
his health and habits came to the conclusion that he was not likely
to live very long, and held that he was dead, twenty-five years
after his disappearance, and when, if alive, he would have been
eighty years of age (x). In another case where a man had been
last heard of as having been discharged from a hospital in Jamaica,
and had then expressed an intention of returning home, the Court

held that he might be deemed to have died seven years after that
date (y). The Court, therefore, will draw the best inference it
can from the facts of the case, and, if it is necessary to fix the date
of death, will do so in a more or less arbitrary manner where there
is no definite evidence pointing to any particular date.
In some cases where there was a strong probability of death Payment of
fund on
(p) Williamson v. Williamson {t) Bruce v. Smith (1811), 10 M. 130;
(1886), 14 R. 226 ; Barstow v. Gooh Ehind's Trustees v. Bell (1878), 5 B.

(1862), 24 D. 790; Fifev. Fife {1855), 527.
n D.Q51 ; Campbell V. Lament {1824:), {u) Laurie v. Drummond (1670),
3 S. 145. Mor. Diet. 12643; Hogg v. Whiiefield
{q) Bruce v. Smith (1871), 10 M. (1706), Mor. Diet. 12645 Forrester v. ;
130. Boutcher (1760), Mor. Diet. 11674;

Williamson
(r) v. Williamaon Stewart v. Hay (1760), Mor. Diet.
(1886), 14 R. 226. 11675 OampbeU's Trustees v. Camp-
;
(«) Ershine v. Steven (1622), Mor. hell (1834), 12 S. 382.

Diet. 12643; French v. Wemyss {x) Bruce v. Smith (1871), 10 M.
(1667), Mor. Diet. 12644; Sands v. 130.
Tenents (1678), Mor. Diet. 12645; {y) Rhind's Trustees v. Bell {1818),
Fairholm v. Fairholm's Trustees 5 R. 527.
(1858), 20 D. 813.
;
giving but the evidence was not sufficient to justify the Court in holding
security.
the death proved as a fact; the Court has permitted the person
entitled to the fund on the death of the missing person to enjoy
the income of it {z), or even to take possession of the capital on
giving proper security to refund it in the event of the missing person
appearing to claim it (a).
Section II. — Interest upon Policy Moneys
No interest Formerly interest upon the policy moneys could not be re-
allowed at
Common covered from the company, even although the company had
Law. wrongfully delayed payment (b).
Interest can now be recovered under the provisions of the

Common Law Procedure Act, 1833.
Common Law Procedure Act, 1833, see. 29

3 & 4 Will. 4,
29. The jury on the trial of any issue, or on any inquisition of damages
u. 42, sec. 29. may, if they shall think fit give damages in the nature of interest over and
above the value of the goods at the time of the conversion or seizure in all
actions of trover or trespass de bonis asportatis, and over and above the money
recoverable in all actions on policies of assurance made after the passing of
this Act.
Discretion of The Act does not give interest as of right. The jury or the Court
Court.
acting as a jury may exercise their discretion in the matter (c).
Interest runs The Court will not award interest unless the company was in
from date o£
default. default in making payment, and then interest will run only from
the time of such default. A claimant is not entitled to interest
until he has tendered to the company proper proof of death, and
a good title to the policy moneys (d). He must be able and wiUing
to give the company a complete legal discharge before interest
will begin to run (e).
Conflioting company in keeping the

Conflicting claims do not justify the
claims.
money payment has passed. Their duty is
afttr the time for
to pay into Court .or interplead, and if they have improperly
delayed doing so, they must pay interest from the date when
(z) Campbell Lamont (1824), [c) PowelVs Trusts, Inre (\&52),10
3 S. 145. Hare 134.
(o) Fettes v. Gordon (1825), 4 S. (d) The time of payment is fre-
149 Garland v. Stewart (1841), 4 D. 1
; quently the end of a fixed period,
Henderson v. Morton (1710), Mor. such as three or six months, after
Diet. 12646. proof satisfactory to the directors.
(5) Higgins v. Sargent (1823), 3 (e) Webster v. British Empire
D. & Ry. 613. Mutwl (1880), 15 Ch. D. 169.
—
CLAIMANT'S TITLE 407
the money was payable, until the date of payment in. In the
case of an interpleader, even although they may be entitled to
their costs of the interpleader summons they may nevertheless
have to pay interest on the sum paid in (/). Where a company
were requested by the claimants not to pay the money into Court
pending the settlement of the dispute between them it was held
that the company were not bound to pay interest (gf).
The rate of interest payable by the company on policy moneys Rate of
interest.
which are overdue, is apparently the ordinary commercial rate
of five per cent, simple interest (h).
Section III. —Claimant's Title
In settling a claim under a policy the insurance company Discharge of
ought not to pay unless they obtain a discharge

(1) from the person in whom the legal chose in action is vested,
that is who is entitled to sue the company at
to say, the person
law in own name, or from some person duly authorised to
his
receive the money on his behalf, and
(2) from any other person who has an equitable claim to
the policy moneys (and who is not merely a beneficiary under

a trust or a mortgagor or other person entitled to an equity of
redemption).
It it is not always necessary for a company Whether
has been said that
to insist upon obtaining a legal discharge, and that it will often clfarge'essen-
be sufficient for them to take a discharge from a person who, ti^l.
although he has not the legal chose in action, has undoubtedly
the sole beneficial interest in the policy moneys. No doubt in
business it is not always practicable or advisable to insist upon
strict legal formahties, and, in practice, companies do not always
take a legal discharge. That, however, is a question for the com-
pany. They must decide what risk it is worth while taking. It
is impossible to advise a company that they are absolutely safe
unless they have a discharge from the person or persons entitled
to sue them at law. So long as the legal chose in action remains
undischarged some equitable claim of which the company had no
notice may be made, and an action brought in the name of the
(/) French v. Eoyal Exchange (g) French v. Royal Exchange

(1857), 6 Jr. Ch. R. 523; Rosier's (1858), 7 Ir. Ch. R. 523.
Trusts, In re (1877), 37 L. T. 426. (h) Homer, In re, [1896] 2 Ch. 188.
4
proprietor of the legal chose in action. To such an action it
would be no defence for the company to allege that they had no

notice of the equity, if in fact the equity took priority over the
equity of the person to whom payment had been made. The
company, therefore, are in every case entitled to insist upon a
legal discharge (i).
Title to legal Primarily the person entitled to the legal chose in action is
chose in
action.
the assured, and his legal representatives after his death. The
assured is the person with whom the contract of insurance is made,
that is the person to whom the promise or covenant to pay is
made (fc).
Position of The simplest form of insurance is a covenant to pay to the

nominee.
assured, his executors, administrators, or assigns. But the
promise may be to pay to some third person. If such third

person is nothing more than a nominee, that is to say, if he is
not in fact a party to the contract, he has no right at law
against the company (Z).
The nominee is the agent for the time being of the legal owner
and has his authority to receive the money and give a discharge.
So long as the company have no notice of the withdrawal of
authority from the nominee they can safely pay to him and
accept his discharge in lieu of that of the actual legal owner.
The legal owner can, however, at any time withdraw his authority,
and if the company have notice of such withdrawal they can no
longer get a good discharge from the nominee.
Nominee The form of the poHcy is not conclusive, and the person who is
may, in be the assured, and the
apparently a mere nominee may, in fact,
fact, be the
assured. nominal assured may be merely an agent to effect an insurance
on behalf of the person to whom the pohcy moneys are made
payable. Thus a debtor may effect a policy which in form is an
insurance by him on his own life payable to his creditor, but which,
in fact, is an insurance by the creditor paid for by him out of his
own money. In such case the nominee as principal in the trans-
action is, upon disclosing his real position with regard to the con-
tract, entitled to sue at law in his own name, and is the legal
holder of the policy (m).
(i) Haycock's Policy, In re (1876), 1 Q. B. 147; P«ce v. Gaston (1833),
1 Ch. D. 611, 613. B. & Ad. 433 ;Tweddle v. Aikinson

(h) Dever, Ex parte (1887), 18 (1861), 1 B. & S. 393.
Q. B. D. 660. (m) Bawls v. American Mutual
(J.)
Cleaver y. Mutual Reserve, [1892} (1863). 27 N. Y. 282.
— . .
The legal chose in action may pass from the assured either Transfer of
by assignment or by operation of law. ^^^ ^^^^^ *'*'®
The legal chose in action can only pass by assignment if the by assign-
assignment is in writing and in strict accordance with the pro- ™®'^''
visions of the Policies of Assurance Act, 1867, or the Judicature
Act, 1873 (n). An assignment of the legal chose in action is
estabUshed by
(1) A properly stamped assignment in writing conveying either
unconditionally or by way of security the right to sue for the whole
policy moneys payable under the policy.
(2) Notice in writing to the company given before it received

notice of any other assignment.
The legal chose in action may pass by operation of law by operation
^^'
without assignment (1) on death, to the deceased's personal °^
representative; (2) on bankruptcy, to the trustee in bank-
ruptcy ; and (3) on the marriage of a married woman, to her
husband.
The passing of the legal chose in action to the personal re- death,
presentative on death is established by the production of the
original or an office copy of a properly stamped probate or
letters of administration granted by the Court of Probate in
England, or of a Scottish or Irish or Colonial grant sealed by the
Court of Probate in England (o)
The passing of the legal chose in action to the trustee in bank- banliruptoy,
ruptcy is established by the production of an office copy of the

adjudication order, and a copy under the seal of the Board of
Trade of the Board of Trade Certificate certifying the appointment
of the trustee (oo) .
Before the Married Women's Property Acts (1870 and 1882), marriage,
the legal choses in action of a married woman passed to her

husband by operation of law. Between 9th August, 1870, and
1st January, 1883, choses in action belonging to a married woman
as her separate estate, or purchased by her out of her separate
estate, did not pass to her husband, and since 1st January, 1883,
no chose in action of a married woman has passed to her husband

by operation of law (p)
(re)Infra, pp. 425-432. vested in tlie official receiver, and his

(o) Zw/ra, pp. 619-631. title will be proved by production of
(oo) Infra, pp. 580-619. In small an office copy of the order. Infra,
bankruptcies where an order for p. 618.
summary administration is made, the (p) Infra, pp. 535-552.
property of the bankrupt remains
410 LIFE INSUBANCE CLAIMS
Settlement The person entitled to the legal chose in action whether he

with person
entitled to
be the assured or his personal representative or an assignee under
legal chose the Policies of Assurance Act, 1867, or the Judicature Act, 1873,
in action.
is 'prima, facie entitled to payment (jpp). If the company has no
notice of any equitable claim the receipt of the person legally
entitled is a sufficient discharge (q), and persons having equitable
claims must look for satisfaction to the person who has received
the money {qq). The same rule applies to bond fide settlements of
claims (r). Until the company has notice of an equitable claim it
may deal freely with the person entitled at law either by settling
a claim, accepting a surrender, taking a charge on the policy for
money advanced, or otherwise (s). The company is in the position

of a debtor dealing with his creditor. The debtor may, until he has
received notice that some other person has an equitable interest,
agree with him to extinguish or modify the terms of the debt (i).
Notice of Immediately the company has notice of an outstanding equit-

equitable
claim.
able interest it cannot by payment or otherwise do anything
to take away or diminish the rights of the equitable assignee
as they stood at the time of the notice {u), and, if the company
disregards the notice and pays or settles with the person legally
entitled, itmay be called to account by the equitable assignee,
and may have to pay the money over again to him [v).
Settlement This, however, does not apply to payment made to a trustee (w)
with trustee
or mortgagee. or personal representative or to a mortgagee {x). Such person, if
entitled to the legal chose in action, may give a complete discharge

for the poHcy moneys when due notwithstanding the claims of
beneficiaries or persons entitled to the equity of redemption of

the mortgage.
Proof of The company are always entitled to insist upon strict legal
claimant's
title.
proof of a claimant's and every step in the title ought
title, there-
fore to be made clear by proper documentary evidence.

Production of Sometimes the claimant is unable to produce the policy.
policy.
(pp) Tristan v. Hardey (1851), 14 (*) Phipps V. Lovegrove (1873),

Beav. 232. L. R. 16 Eq. 80 ; Newman v. Newman
(q) London Investment Co. v. (1885), 28 Ch. D. 674.
Montefiore (1864), 9 L. T. 688. (u) Roxburgh v. Cox (1881), 17
(qq) Williams v. Sorrell (1799), 4 Ch. D. 520 ; Bricev. Bannister (ISIS),

Ves. 389. 3 Q. B. D. 569.
(r) Stocks V. Ddbson (1853), 4 (v) Brice v. Bannister (1878), 3
De G. M. & G. 11, 16. Q. B. D. 569.
(«) Phipps V. Lovegrove (1873), (w) Infra, p. 514.
L. R. 16 Eq. 80. (x) Infra, p. 504.
This alone is not a good reason for refusing payment provided

the non-production of the poHcy is satisfactorily explained. The
claimant may fail to produce the policy either because it is in the
hands of some other person who declines to give it up, or because
it has been lost.
Where the policy is in the hands of a third person, that person Policy in
may have document although
a right to retain the
° he has no claim ^^°^® °^
.
tnircl person.
to the pohcy moneys. A sohcitor may have a lien on it for his
charges, or the policy may have been the subject of an imperfect
gift sufficient to transfer the property in the document, but in-
sufficient to transfer the chose in action. Where the policy is in
the hands of a third person who has thus a right to retain it, the
company cannot insist on its production. The claimant is in a
position to prove his case, because he can subpoena the person
who retains the document, to produce it at the trial of the action.
The company are probably entitled to a statutory declaration
from the claimant, stating that he has asked for production of the
poUcy, but that it has been refused. If the policy is in the hands
of a third person who has no right as against the claimant to
retain it, the company are probably within their rights in insisting
that the claimant shall take the proper steps to obtain and pro-
duce it before payment is made to him. It may be noted here
that a mortgagee exercising his power of sale has a statutory
right under the Conveyance Act, 1881, section 20 (7), to recover
from any person other than a person having a prior charge on
the moneys, the pohcy and aU other documents of title.
When the policy is alleged to be lost, the company are pro- Lost policy,
bably entitled to ask for a statutory declaration from the claimants

stating the circumstances under which the policy was lost, and
averring that a dihgent search has been made. The declaration
should also contain a denial by the claimant of any assignment
deposit or charge by him, or ofany knowledge of a conflicting claim
to the moneys. It is usual to ask for an indemnity from the
claimant, but probably the company are not entitled to it (y),
and if the case is reasonably clear, and the company pay into
Court solely on the ground that the claimant declines to give
them an indemnity, they may be ordered to pay the claimant's
payment out (z).
costs of applying to the Court for
(y) Crokatt v. Ford (1855), 25 infra, 419.

p. See Bushnan v.
L. J. Ch. 552; England v. Tredegar Morgan (1833), 5 Sim. 635, where in
(1866), L. R. 1 Eq. 344. a suit in equity to recover money in-
(2) Harrison v. Alliance Assurance, sured under a lost policy the Court
.
412 LIFE INSUEANCE CLAIMS
Surrender of Where a policy is offered for surrender, the company must

policy.
not only satisfy themselves that the claimant has a proper title,
which would give him the right to receive the policy moneys if
due, but they must also satisfy themselves that the claimant has
the right to sell the policy because surrender is analogous to sale.
Where the claimant is a trustee or mortgagee, his power of sale

must be carefully considered (nz).
Bankruptcy Payment cannot be safely made after the company has notice
of claimant,
inquiry as to. of an act of bankruptcy committed by the claimant. If the
claimant became bankrupt within three months thereafter, and
the company had paid with knowledge of the act of bankruptcy,
they would have to pay over again to the trustee in bankruptcy.
In the present state of the law in England it is not necessary for
the company in the absence of notice to make inquiries as to

whether or not a claimant has committed an act of bankruptcy
or has become bankrupt. Payments made to a bankrupt before
the date of the receiving order without notice are protected by
statute, payments made after the date of the receiving order
without notice are apparently protected under the equitable
doctrine of notice (a).
Voluntary Even where the claimant is a voluntary assignee of the policy

assignee,
inquiry as to it is not necessary in England to make any inquiries as to the
solvency of
solvency of the assignor. The assignment may be subsequently
set aside at the instance of the trustee in bankruptcy or the
creditors of the assignor, but so long as the company has no
notice of the insolvency of the assignor it is protected. The
assignment is valid until set aside, and therefore payment of
the policy moneys when due upon the receipt of a voluntary

assignee gives the company a complete discharge. In accepting
a surrender of a policy for the surrender value from a voluntary
assignee the company becomes a purchaser for value without
notice,and is equally protected (aa)
Company has When payment of the policy moneys is claimed by an assignee,
no right to
assignee's the company is not entitled to demand delivery up to them of
documents of
the assignee's documents of title showing his title from the original
title.
assured. Having produced them to prove his claim against the
ordered the plaintiff to give the com- Bifter the date of the bankruptcy or
pany an inderonity and referred the sequestration are void against the
matter to the master to settle the trustee, and search ought to be made
terms thereof. in the bankruptcy records. Infra,
{ze) Infra, pp. 502, ,515, 533. p. 597.
In Ireland and Scotland, how-
(a) (raa) Infra, pp. 592, 597,-600.
ever, it is not so. All assignments
company he is entitled to retain them in order to protect himself

against any claims which might subsequently be made against
him (b) All that the company is entitled to is an acknowledg-
.
ment of the right to production and an undertaking to produce

when required (c).
If payment is made to an agent for the claimant the company Payment to

must satisfy themselves that the agent has sufficient authority claimant's
to receive the money. Under section 17 (2) of the Trustee Act,

1893, a trustee may appoint a solicitor or banker as his agent
to receive the insurance money by permitting such agent to have
the custody of and produce the policy with a receipt signed by
the trustee, and payment to such agent so producing the policy
and receipt is a sufficient discharge to the company {d). It has
been suggested that under section 56 of the Conveyancing Act, 1881,
a solicitor acting for any claimant may give the company a good
discharge by producing the policy with the receipt of the claimant
endorsed thereon. It is submitted that that section only applies
to a receipt for consideration money, and is inapplicable to a
receipt for poHcy moneys even where the policy is under seal.
Except, therefore, in the case of payment to a solicitor or banker
as agent for a trustee the company ought to insist upon the pro-
duction of a written authority authorising a named agent to
receive the policy moneys on the claimant's behalf.
Conveyancing and Law of Property Act, 1881, sec. 56
56. — (1) Where a solicitor produces a deed, having in the body thereof 44 & 45 Vict,
^^' ^^c- ^°-
or indorsed thereon a receipt for consideration money or other consideration, "•
the deed being executed, or the indorsed receipt being signed, by the person Receipt in
QGGci or
entitled to give a receipt for that consideration, the deed shall be sufficient jujoj-ged
authority to the person liable to pay or give thesame for his paying or giving authority for
the same to the solicitor, without the solicitor producing any separate or
payment to
other direction or authority in that behalf from the person who executed or
signed the deed or receipt.

(2) This section applies only in cases where consideration is to be paid or
given after the commencement of this Act.
Where the company has received notice of an equitable Title to

assignment, it must not only obtain a discharge from the person obose\^
action.
(6) Palmer, In re, [1907] 1 Cb. 486. {d) Trustees include executors and
(c) But where the deeds relate to administrators, but not mortgagees
the policy only without any other pro- (Trustee Act, 1893, see. 50). And see
perty, the usual practice is for them injra, p. 516.
to be handed over to the company.
entitled to the legal chose in action but must also see that the
equitable claim is satisfied. Subject to the discharge of the legal
chose in action the company may safely pay the equitable

assignee if it has no notice of any competing equitable claim (c).
Any settlement, surrender, or other arrangement made with such

equitable assignee is valid against all other equitable claims of
which they have had no notice (c).
Who is Prima facie the person who pays for the policy, that is to say,
entitled to
equitable
the person on whom the ultimate burden of the premiums falls,
interest in is the person entitled to the equitable and beneficial interest in

policy
moneys. the policy moneys (d). If one person bears the burden of the
premiums the fact that the policy is effected in the name of a
third person, or that the moneys are made payable to a third person
Payee or does not ipso facto entitle such third person to the beneficial
nominal
assured.
interest (dd). On the contrary, if such person is a stranger, the
presumption is that the policy was made in his name, or that he
was nominated as payee for the purpose of holding the moneys
in trust for the person who has paid for the policy, and for his
assigns (e). If, however, the person in whose name the policy is
effected, or who is nominated payee, is a wife or child of the person

who has paid for it or is a near relative to whom such person
stands in loco parentis, the presumption is that the pohcy was
intended to be a gift or portion (/). The resulting trust is thus
rebutted, and if the policy moneys are received by the nominal

assured or payee, he may retain them for his own benefit. Until
payment of the pohcy moneys, however, the nominal assured or
payee is in the position of a donee of an uncompleted gift. Unless
stocks V. Dobson (1853), 4

(c) that the person or persons who should
De G. M. & G. 11, 16 ; Ottley v. Grey be adjudged by the editor to be the
(1847), 16 L. J. Ch. 512 ; Desborough next-of-kin should be the only person
V. Harris (1855), 5 De G. M. & G. or persons entitled to receive and give
439. a discharge for the policy moneys.
(d) A
Policy No. 6402 of the The deceased was survived by three
Scottish Equitable, In re, [1902] 1 brothers and a sister. The editor
Ch. 282; Devers, Ex parte (1887), 18 adjudged the sister to be the next-of-
Q. B. D. 660 Cleaver v. Mutual
; kin, and paid the whole amount to
Reserve, [1892] 1 Q. B. 147. her. In an action by the brothers
(dd) Worthington v. Curtis (1875), against her, it was held that they had
1 Ch. D. 419 ; Weston v. Richardson no right to share in the fund (Hunter v.
(1882), 47 L. T. 514; Grant v. Hill Hunter (1904), 7 F. 136).
(1812), 4 Taunt. 380 ; Hodden v. (e) A Policy No. 6402 of the Scottish
Bryden (1899), 1 F. 710 ; Hopkins v. Equitable, In re, [1902] 1 Ch. 282 j
North Western Life (1900), 99 Fed. Pfleger v. Broum (1860), 28 Beav.

Rep. 199. In a Scottish case a news- 391 ; Field v. Lonsdale (1850), 13
paper coupon insurance promised Beav. 78.
payment of £1000 to the person (/ ) Lewin on Trusts (12th edition,
adjudged by the editor to be the next- p. 183).
of-kin of the deceased, and stipulated
he can show that there was an equitable assignment to him for

value or a declaration of trust in his favour, the real assured, may-
withdraw the authority to pay the money to him and direct the
company to pay it to himself for his own benefit (ff). The
relationship, in such cases, is merely evidence of intention on
the part of the person providing the policy, and if a contrary
intention appears from other evidence the wife or child will not
be entitled to a beneficial interest merely on the ground of relation-
ship (g).On the other hand, where a policy is effected in the name
of or made payable to a stranger, there may be evidence either
in the policy or otherwise to show that the policy was intended
for his benefit, and that he was not named as a bare trustee.
A policy No. 6402 of the Scottish Equitable Life, In re, [1902]

1 Ch. 282
In 1850 W. S. effected a policy on his own life. The policy purported to A policy of the
be " for behoof of H. S." and it certified that H. S. and her executors, adminia- ^°^'^^^
trators and assigns should be entitled on the death of W. S. to receive the
j^re
policy moneys ; it was further agreed that the policy moneys should be payable
to the executors, administrators, or assigns of the assured. H. S. was the
sister of the deceased wife of W. S., and after the death of the wife in 1850
W. S. and H.
went through the ceremony of marriage, and lived together
S.
as man and H. S. died in 1870, and W. S. died in 1900. W. S. had
wife.
always retained the poUcy in his possession, and paid the premiums thereon
until his death. The policy moneys were claimed by the executors of W. S-
on the one hand, and the personal representative of H. S. on the other. It
was held that this was like the case of a person purchasing property in the
name of another, where the presumption is that if it is in the name of a stranger
the stranger is not beneficially entitled, but holds it in trust for the purchaser,
but if it is in the name of wife or child, the wife or child is beneficially entitled.
Here H. must be deemed to be a stranger, and therefore, although in law
S.
her representative would be entitled to receive the moneys, in equity the

moneys belonged to the personal representatives of W. S.
The above decision is open to criticism. In the first place Above

H. S. was not a party to the contract, and the legal chose in action criticised,
was not in her and her representatives. It is even doubtful from
the wording of the policy whether she was the payee. She was
apparently designated as the person entitled to the beneficial
interest. That is the clear and obvious meaning of the Scottish
phraseology " for behoof of." It is submitted that in this policy
{ff)
Tweddle v. Atkinson (1861), 1 (g) Hadden v, Bryden (1899), 1 F.
B. & S. 393. 710.
there was in effect a declaration of trust in favour of H. S. who

thereby took a vested beneficial interest which passed to her
personal representatives, and that the legal chose in action and
the right in law to receive the money was in the assured and his
representatives.
Life insured Apart from a declaration of trust {h) or express or implied
without
interest.
contract, a person whose life is insured by another has no claim
to the policy moneys. Where the person effecting the insurance
has no interest in the life, that is a matter between the assured
and the company, but it gives the person whose life is insured no
claim to the policy moneys (i).
Assignment The equitable interest in the policy moneys can be assigned
of equitable
without any formality or notice to the company (m) . Priority of
interest in
policy notice may govern the question of priority of one equity over
moneys
another, but notice to the company is not necessary to complete
the assignment in equity between assignor and assignee {j) . A
voluntary assignment must be completed by an assignment de
presenti in writing, but where the transaction is for value the
Court will enforce even an oral promise to assign {jj).
Section IV. —Payment into Court
Payment into An company which cannot otherwise obtain a

insurance
Court Act,
1896.
satisfactory discharge for policy moneys payable by it may now
do so by paying the moneys into Court under the provisions of
the Act of 1896.
59 Vict. 0. 8. Life Assurance Companies (Payment into Court) Act, 1896
Short title. 1. This Act may be cited as the Life Assurance Companies (Payment into
Court) Act, 1896.
Interpreta- 2. In this Aot^-
tion. The expression " life assurance company " means any corporation, com-
pany, or society carrying on the business of life assurance, not being
a society registered under the Acts relating to friendly societies ;
The expression " life policy " includes any policy not foreign to the
business of life assurance.
Power to pay 3. Subject to rules of Court any life assurance company may pay into the
money into High Court, or where the head office of the company is situated within the
Court.
(h) Langelier v. Charlehoia (1903), (ii) Infra, p. 436.

34 Can. S. C. 1.
Henaon v. Blackwell (1845), 4 {j) Infra, p. 438.
(i)
Hare, 434 Hodden v. Bryden (1899),
; ( j7) Infra, pp. 438, 458.
1 F. 710.
PAYMENT INTO COURT 417
jurisdiction of the Chancery Court of the County Palatine of Lancaster either
into that Court or into the High Court, any moneys payable by them under a
life policy in respect of which, in the opinion of their board of directors, no
sufficient discharge can otherwise be obtained.
4. The
receipt or certificate of the proper officer shall be a sufficient
Receipt of
discharge to the company for the moneys so paid into Court, and such moneys officer suffi-
shall, subject to rules of Court, be dealt with according to the orders of the '^^'
°{f"*
^ ^^^^'
High Court or the Palatine Court, as the case may be.
5. This Act does not extend to Scotland.
Extent o£
Act.
Rules of the Supreme Court, Order LIVc. jr. s. c.

O .54c
1. An assurance company desiring to make a payment into Court under
the Act shall cause an affidavit, by its secretary, or other authorised officer,
to be filed, intituled " In the matter of the Policy No. , effected with
[here give the name of the company] and in the matter of the Act," and setting
forth :—
(a) A short description of the policy and a statement of the persons
entitled thereunder, according to the terms of the policy, with the
names and addresses of such persons, so far as the same are known
to the company.
(6) A short statement of the notices received by the company claiming an
money assured, the dates when such notices
interest in or title to the
were received, the dates of withdrawal of such notices, if any, as
have been withdrawn, and the names, and, except as to notices
withdrawn, the addresses, so far as the same are known to the com-
pany, of the persons by whom such notices have been given.
(c) A statement that, in the opinion of the board of directors of the
company no sufficient discharge can be obtained otherwise than by
payment into Court under the Act.
(d) The submission by the company to pay into Court such further sum,
if any, whether for interest {k) or otherwise, as the Court or a Judge
may direct, and to pay any costs which the Court or a Judge may
consider under the circumstances of the case ought to be paid
by the company.
(e) An undertaking by the company forthwith to transmit to the pa3T]aaster
any notice of claim received by the company after the making of
the affidavit, with a letter referring to the title of the affidavit.
(/) The place where the company may be served with any petition,
summons, order, or notice of any proceeding relating to the money.
2. The company shall not deduct any costs or expenses of or incidental to
the payment into Court (I).

3. No payment shall be made into Court under the Act where any action
to which the company is a party is pending in relation to the policy or the

moneys thereby assured except by leave of the Judge to be obtained by
summons in the action.
4. The company shall forthwith give notice of such payment by prepaid
{k) Ante, p. 406. been made under the Act the com-
{l) Infra, pp. 418, 423, note. pany must bear their own costs of
In Ireland it was held that even payment in Power's Policies, In re.
although no rules of procedure had [1899] 1 Ir. R. 6.
I.L. 27
letter through the post, to the several persons appearing by the affidavit to
be entitled to or interested in the money assured and paid into Court, or to
have given notice of claim to the company, except where the notice has been
withdrawn, and except so far as the name or address of any such person is
unknown to the company.

5. Any person claiming to be entitled to or interested in the money paid
into Court may apply in the Chancery Division, by petition or, where the
amount does not exceed £1000, by summons in respect thereof.
6. No petition or summons relating to the money shall be answered or
issued unless the applicant has named therein a place where he may be served
with any petition or summons, or notice of any proceeding or order relating
to the money.
7. Unless the Court or a Judge shall otherwise direct, the applicant shall not,
except when he asks for pajrment of a further sum of costs by the company,
summons on the company, but shall serve the same on
serve such petition or
or give notice thereof to every person appearingby the affidavit on which
payment into Court was made to be entitled to, or interested in, or to have
a claim upon the money, or who has given any further notice which has been
transmitted to the paymaster as aforesaid.
8. These Rules (whichshall come into operation forthwith) may be cited
as the Rules of the Supreme Court (Life Assurance Companies), 1896, and with
reference to the Rules of the Supreme Court, 1883, as Order LIVc.
Advantage of The advantage of proceeding under the Act of 1896 is that

°*
Isoe^"*
the company can get an absolute discharge against all claims
present and future and not only, as in the case of interpleader,

where there is an existing conflict between rival claimants.
Thus, where difficulty arises from the fact that the person
entitled to sue at law cannot be ascertained, or from the fact that
the company has had actual or constructive notice of equitable
claims from persons who at the date of payment cannot be ascer-
tained, or generally where owing to amateur or bad conveyancing
the title is not satisfactory, the Act provides a solution.
Disadvantage The disadvantage of proceeding under the Act of 1896 is that
^'^^ °^
1896^ *^^ company has to bear its ownpayment in, and if
costs of
it is ultimately held that it was over cautious, and that it
could have got a perfectly good discharge without payment in
it may be ordered to pay the costs of the claimant's application
to have the money paid out. Frequently, however, the company

can arrange beforehand for payment of its costs by the claimants,
as payment into Court under the Act may be the cheapest way
out for them, and where the company acts reasonably there is
not much danger of its being mulcted in further costs.
When a The right of an insurance company to get a discharge under

company :3
^-^^ j^^^ depends solely on the fact that in the honest opinion of
the board of directors no sufficient discharge can otherwise be entitled to

"^'
obtained (m). The right of the company to impose the costs of ^^^
legal proceedings upon a claimant depends upon the opinion of
the board of directors being not only honest but in the opinion
of the Court reasonable (n).
Harrison v. Alliance Assurance, [1903] 1 K. B. 184
In 1875, B effected a policy on the life of A. B died shortly afterwards, Harrison v.
and letters of administration were granted to his widow who was party to -^Viiance
a deed of family arrangement whereby the poKcy was assigned to trustees of
H
whom was the last survivor. Notice of the deed was given to the company
in 1882,and the life dropped in 1901. Many years before the poUoy had been
and of this fact the company had notice and continued to accept pay-
lost,
ment of the premiums from the trustees. The company offered to pay the
money to H, the surviving trustee upon receiving a sufficient indemnity,
but the parties were unable to agree as to the terms of the indemnity. H
commenced an action to recover the money and the company took out a
summons in the action for leave to pay the money into Court. The Court gave
leave, and Collins, M.R., said, " Unquestionably the case is brought within
the latter words of the section, for it is distinctly stated in the affidavit filed
on behalf of the defendants that their board of directors are of opinion that no
sufficient discharge can be obtained in this case otherwise than by proceeding
under the Act and there is, it seems to me clearly, ground for that opinion,
;
for although there may be under the circumstances a strong presumption

that the plaintiff has a good title I do not think it can be said that his title
is absolutely free from doubt. This appears to me to be one of the kind of
doubts for the purpose of meeting which the Act was passed. It must be
borne in mind that the defendants in seeking the protection of the Act do so
pay any costs to which the plaintiff may, in consequence,
at the risk of having to
be put if their own attitude has been in any way unreasonable. If the plaintiff's
title to the policy money be as clear as his counsel alleges it to be then no
doubt such order will hereafter be made against the defendants with regard
to the plaintiff's costs as justice to him may require." Subsequently,
on the plaintiff's application for payment out of Court, Buckley, J., ordered
the company to pay the plaintiff's costs (o).
When a company is liable to be sued in more than one country

for the same amount, as for instance in Scotland and England,
payment into Court in one country is not an absolute bar to pro-
ceedings in the other country (p), but, as a rule, if payment into
Court is made in the country where the claim is made payable,
the Courts in the other country would stay proceedings until the
(m) Harrison v. Alliance Assurance (o) Article by Mr. A. R. Barrand,

Co., [1903] 1 K. B. 184. .Journal of the Institute of Actuaries,
(«) Harrison v. Alliance Assurance vol. xli. p. 203.
Co., [1903] 1 K. B. 184; Carroll's (p) Cook v. Scottish Equitable
Policy, In re (1892), 29 L. R. Ir. 86. (1872), 26 L. T. 571.
claims against the fund paid, in had been adjudicated on. The
fact that legal proceedings for determining the question in dispute
have been commenced in Scotland will not necessarily prevent
the company from paying the fund into the English Court, and
this would be their proper course if the money is made payable
in England, and they are likely to be sued in England.
Alternative Possible alternatives to payment into Court under the Act of

procedure. 1896 are payment into Court under the Trustee Act, 1893, and
interpleader.
Trustee Relief Before the Policies of Assurance Act, 1867, it was much more
Act. 1847.
difficult than now for a company to get a legal discharge owing
to the greater difficulty in ascertaining who was entitled to sue
at law,and the companies adopted the device of paying the moneys
into Court under sections 1 and 2 of the Trustee Eelief Act, 1847,
which were substantially the same as section 42 of the Trustee
Act, 1893 (q). This course of procedure was apparently acquiesced
in for some time, and the insurance companies in any case of
reasonable doubt got a clean discharge and an order for their

costs as between solicitor and client to be paid either out of the
fund or by the party who had failed in his claim against the
fund (r). This whole procedure was based on the assumption

that the insurance company as stakeholders, were in the position of
trustees. The practice continued some time after the passing
until
of the Policies of Assurance Act, 1867, and only received a check

when Jessel, M.E., expressed an opinion (s) that insurers were
not in any sense trustees, and were not entitled to the benefit of
the Trustee Eelief Act. At the same time he held that if an
insurance company did pay the policy moneys into Court under
circumstances which made it difficult for them to get a discharge,
and the claimants applied to have it paid out to them, the com-
pany were entitled to have their costs as between solicitor and
client, because the claimants, by making the application, had
(q) Hall, In re (1861), 10 W. R. 37 ; costs, such as the expense of making

United Kingdom Life, In re (1865), preliminary inquiries and investi-
34 Beav. 493* Moaeley's Policy, In gating the title {Webb's Policy, In re
re (1869), 21 L. T. 384 ; Chapman v. (1866), L. R. 2 Eq. 456).
Besnard and Keays (1869), 17 W. R. (r) United Kingdom Life, In re
358; Jeffery'a Policy, In re (1872), (1865), 34 Beav. 493; Webb's Policy,
20 W. R. 857. The company were /»i?-e (1866), L. R. 2Eq. 456; Gobbe's
only allowed their costs of the legal Settlement, In re (1866), 15 L. T. 170.
proceedings, and were not allowed («) Haycock's Policy, In re (1876),
charges and expenses beyond these 1 Ch. D. 611.
acquiesced in the fund being treated as a trust fund. This was

followed by a decision of the same judge to the effect that a
claimant could disregard the payment into Court altogether, and
sue upon the policy.
Matthew v. Northern Assurance (1878), 9 Ch. D. 80

The assured voluntarily assigned a policy on his own Hfe. The assignee Matthew v.
claimed the policy moneys on the death of the assured, and a claim was also Northern
made by the assured's personal representatives. Apparently the company did
not communicate with the personal representatives, but intimated to the
assignee that they could not pay without their concurrence, and shortly after-
wards paid the money into Court. Jessel, M.R., said that the company
ought to have given the executors notice of the assignment, and asked them
whether they disputed it. They had no justification for not taking the proper
steps to ascertain whether there was a dispute or not. If the company had
satisfied themselves that there were in fact conflicting claims they could have
interpleaded or paid into Court under the provisions of the Judicature Act,
1873. In a case where there was no dispute the company had no right to
relief under the Trustee Relief Act.
from the above case that an insurance company Company not

It is clear
cannot now be deemed to be a trustee of the poHcy moneys even tii'^^pôiicl

where the form of the policy is a charge upon the funds of the moneys.
company without any direct promise to pay. An insurance
-company is in the position of an ordinary debtor, and must be
treated accordingly. It cannot therefore avail itself of the
Trustee Act, except in so far as any debtor may do so under the
provisions of the Judicature Act, 1873. The proviso to section 25 Judicature
(6) of that Act provides that in the case of assignments of choses in seo.'25 (6).
action to which the Act applies if the debtor, trustee, or other
person liable in respect of the debt shall have had notice that
such assignment is disputed by the assignor or any one claiming
under him, or of any other opposing or conflicting claims he shall
be entitled to callupon the several persons making claim thereto

to interplead, or he may, if he think fit, pay the money into Court
under and in conformity with the provisions of the Acts for the
relief of trustees.
The provision by payment into Court

for the relief of trustees Trustee Act,
is now section 42 of the Trustee Act, 1893. The section and the > •
rules for payment in are given below. It is doubtful, however,

whether an insurance company can ever be advised to make a
payment in under this Act, as it would probably be said that since
1896 the proper course of procedure, if the company desire to
make a payment into Court is under the Act of that year. Even
if payment into Court under the Trustee Act is now open to a
life insurance company at all, the costs of payment in are in the
discretion of the Court (t), and although it was formerly the practice
to give the company paying in under the Trustee Belief Act, 1847,
their costs of payment in, in any case where there was a reasonable
doubt, it is probable that the Court would now decline to give a
life insurance company any better terms than they would get
under the Act of 1896; that is to say, they would at least have
to bear the costs of payment in.
56 & 57 Viot. Trustee Act, 1893, see. 42

c. 63.
Payment into
42.^
—
(1) Trustees, or the majority of trustees, having in their hands or
Court by under their control money or securities belonging to a trust, may pay the same
trustees. into the High Court ; and the same shall, subject to rules of Court, be dealt
with according to the orders of the High Court.
(2) The receipt or certificate of the proper officer shall be a sufficient
discharge to trustees for the money or securities so paid into Court.
(3) Where any moneys or securities are vested in any persons as trustees,
and the majority are desirous of paying the same into Court, but the con-
currence of the other or others cannot be obtained, the High Court may order
the payment into Court to be made by the majority without the concurrence
of the other or others and where any such moneys or securities are deposited
;
with any banker, broker, or other depository, the Court may order payment
or delivery of the moneys or securities to the majority of the trustees for the
purpose of payment into Court, and every transfer payment and delivery
made in pursuance of any such order shall be valid and take effect as if the
same had been made on the authority or by the act of all the persons entitled
to the moneys and securities so transferred, paid, or delivered.
R. S. C, Rules of the Supreme Court, Order LIVb

O. 5te.
Lodgment 4. — (1) Where a trustee desires tomake a lodgment in Court under section
under section forty-two of the Act he shall make and file an affidavit intituled in the matter
42. of the trust (described so as to be distinguishable) and of the Act, and setting
forth :—
(a) A short description of the trust and of the instrument creating it.
(6) The names of the persons interested in and entitled to the money or
securities, and their places of residerice to the best of Ms knowledge
and belief.
(c) His submission to answer all such inquiries relating to the application
of themoney or securities paid into Court, as the Court or Judge
may make or direct.
(d)The place where he is to be served with any petition, summons, or
order or notice of any proceeding relating to the money or securities.
Provided that if the fund consists of money or securities being, or being
(t) Carroll's Policy, In re (1892), 29 L. R. Ir. 86.

; —
part of, or representing a legacy or residue to which an infant or person beyond

seas absolutely entitled, and on which the trustee has paid the legacy duty,
is
or on which no duty is chargeable, the trustee may make the lodgment (with-
out an affidavit) on production of the Inland Revenue certificate in manner
prescribed by the Supreme Court Funds Rules for the time being in force.
(2) Where the lodgment in Court is made on affidavit
(a) the person who has made the lodgment shall forthwith give notice
thereof, by prepaid letter through the post, to the several persons
whose names and places of residence are stated in his affidavit
as interested in or entitled to the money or securities lodged in
Court
(6) no petition or summons relating to the money or securities shall be
answered or issued unless the petitioner or applicant has named
therein a place where he may be served with any petition or
summons, or notice of any proceeding or order relating to the money
or securities or the dividends thereof ;
(c) service of any application in respect of the money or securities shall

be made on such persons as the Court or Judge may direct.
The other alternative method in a case to which the Judicature Interpleader.
Act apphes is by interpleader (u). There can be little doubt that

this procedure is still open to an insurance conapany (x). The
advantage of it is that in the ordinary course if there is a real
dispute between two or more claimants the company will get
their costs out of the policy moneys, such costs being ultimately
borne by the unsuccessful claimant or claimants (y). The dis-
advantage of interpleader is that the company will not get an

absolute discharge from all claims, and therefore it can only be
resorted to in cases when the company is satisfied that one or
other of the actual claimants is the person entitled to the money.
Eules of the Supreme Court, Order LVII. RS C 57

Belief by way of interpleader may be granted,— ^j^^^ ^^^.^^
(a) Where the person seeking relief (in this Order called the appHcant) by inter-
is under liability for any debt, money, goods, or chattels, for or pleader
granted,
(m) Deshoroicgh v. Harris (1855), 5 to give the company an indemnity
De G. M. & G. 439, 458 ; Prudential as to costs if they will adopt the
Assurance v. Thomas (1867), L. B. cheaper procedure and pay into

3 Oh. 74. Court instead of interpleading.
(x) But see Chapman v. Besnard Where there were conflicting claims
and Keays (1869), 17 W. B. 358, of numerous incumbrancers and the
where a bill of interpleader was re- company paid into Court upon an
fused on the ground that the com- indemnity as to costs, it was held
pany's proper remedy was to pay that such costs could not be allowed
the money into Court. out of the policy moneys as mort-
(y) The company can
fact that the gagees' costs and expenses, but must
by interpleading saddle the claimants be borne by the incumbrancers who
with the whole costs of the inter- gave the indemnity ( Weniger's Policy,
pleader proceedings will often prove In re (No. 2), [1910] W. N. 278).
a strong inducement to rival claimants
— . ;
in respect of which he is, or expects to be, sued by two or more

parties {in this Order called the claimants) making adverse claims
thereto.
2. The applicant must satisfy the Court or a Judge, by affidavit or other-
wise,
(o) That the applicant claims no interest in the subject matter in
dispute, other than for charges or costs ; and
(6) That the applicant does not collude with any of the claimants
and
(c) That the applicant, except where he is a sheriff or other officer
charged with the execution of process by or under the authority

of the High Court who has seized goods and who has withdrawn
from possession in consequence of the execution creditor admitting
the claim of the claimant under Rule 16 of this Order, is willing
to pay or transfer the subject matter into Court or to dispose of it
as the Court or a Judge may direct.
Adverse titles 3. The applicant shall not be disentitled to relief by reason only that the
of claimants. titles of the claimants have not a common origin, but are adverse to and
independent of one another.
4. Where the applicant is a defendant, application for relief may be made
atany time after service of the writ of summons.

When appli- 5. The applicant may take out a summons calling on the claimants to
cation to be appear and state the nature and particulars of their claims, and either to
made by a maintain or reHnquish them.
defendant.
6. If the apphcation is made by a defendant in an action the Court or a
Staji of
action. Judge may stay all further proceedings in the action.
Order upon 7. If the claimants appear in pursuance of the summons, the Court or a
summons. Judge may order either that any claimant be made a defendant in any action
already commenced in respect of the subject matter in dispute in lieu of or
in addition to the applicant, or that an issue between the claimants be stated
and tried,and in the latter case may direct which of the claimants is to be
plaintiff, and which defendant.
Disposal of 8. The Court or a Judge may, with the consent of both claimants, or on
matters in the request of any claimant, if having regard to the value of the Subject matter
summary
manner.
in dispute itseems desirable so to do, dispose of the merits of their claims and
decide the same in a summary manner and in such terms as may be just.
Questions of 9. Where the question is a question of law, and the facts are not in dis-
law. pute, the Court or a Judge may either decide the question without directing the
trial of an issue, or order that a special case be stated for the opinion of the
Court. If a special case is stated. Order XXXIV. shall, as far as applicable,
apply thereto.
Failure of 10. If a claimant, having been duly served with a summons calling on
claimant to him to appear and maintain, or relinquish, his claim, does not appear in pur-
appear, or
suance of the summons, or, having appeared, neglects or refuses to comply
neglect to
obey sum- with any order made after his appearance, the Court or a Judge may make an
mons. order declaring him, and all persons claiming under him, for ever barred
against the applicant, and the persons claiming under him, but the order shall
not affect the rights of the claimants as between themselves.
Order under 11 Except where otherwise provided by statute, the judgment in any action
Rule 8, final. or on any issue ordered to be tried or stated in an interpleader proceeding,
and the decision of the Court or a Judge in a summary way, under Eule 8 of
ASSIGNMENT 425
this Order, shall be final and conclusive against the claimants, and all persons
claiming under them, unless by special leave of the Court or Judge, as the case
may be, or of the Court of Appeal.
The company cannot by interpleader raise any question Payment in
between themselves and a claimant (z). When the company pany claim
interest.
themselves claim a charge or other interest in the policy moneys,
they should deduct the amount claimed by them before payment
in or before calling upon the claimants to interplead. Under the
Trustee Eelief Act, 1847, it was held that where a company paid
policy moneys into Court without reservation of any claim to it

on their own behalf, the payment in was equivalent to an admission
that they held it and had no personal interest,
solely as trustees,
and they could not afterwards make any claim upon the fund (a).
Section V. —Assignment
Before the PoUcies of Assurance Act, 1867, and the Judicature Assignment
Act, 1873, policies were assignable in equity, but not at law. The ohoseîn^'^
legal right of an assignee, that is to say, the right to sue the com- action,
pany at law in his own name depends entirely upon one or other
of the above statutes. The former applies to life policies only,
the latter to all legal choses in action, and therefore to all classes
of insurance policies.
Both these statutes are primarily intended to simplify pro- Effect o£
cedure, and to give an assignee of a legal chose in action a direct provisiras.
instead of an indirect remedy against the debtor. Neither

statute makes any chose in action assignable which was not
previously assignable in equity, nor does either interfere with
assignments in equity by requiring any technicality which was
not previously required by courts of equity. The formalities
required by these statutes are required merely as a condition

precedent to the passing of the right to sue at law. Where such
formalities have not been observed the right of the assignee to
proceed in equity against, or in the name of, the assignor, may

still exist according to the old rules of equity which the statutes
leave intact (6).
P"^"^' ^"^ ''^ (^^'^^j,

Bignold v. Avdland (1840), 11 , («) i^-ff'"^''
„.
^™-
{z)
_„
^^-
M W. ±t. 00/.
(6) Brand«v.£>MwZop,[1905]A.C.454.
426 TITLE TO LIFE POLICIES
30 & 31 Vict, Policies of Assurance Act, 1867

c. 144.
An Aot to enable Assignees of Policies of Life Assurance to sue thereon in their
own Names. [20th Aiigust 1867.]
Whebeas it is expedient to enable Assignees of Policies of Life Assurance

to sue thereon in their own Names :
Be enacted by the Queen's most Excellent Majesty, by and with the

it
Advice and Consent of the Lords Spiritual and Temporal, and Commons, in
this present Parliament assembled, and by the Authority of the same, as
follows :
Asssignees of 1. Any Person or Corporation now being or hereafter becoming entitled,

Life Policies
by Assignment or other derivative Title, to a Policy of Life Assurance, and
may sue in
their o^ti possessing at the Time of Action brought the Right in Equity to receive and
Nanaes. the Right to give an effectual Discharge to the Assurance Company liable under
such PoKoy f of Monies thereby assured or secured, shall be at liberty to sue at
Law in the Name of such Person or Corporation to recover such Monies.
Defence or 2. In any Action on a Policy of Life Assurance, a Defence on equitable
Reply on
Grounds, or a Reply to such Defence on similar Grounds, may be respectively
equitable
Grounds may pleaded and relied upon in the same Manner and to the same Extent as in
be pleaded. any other personal Action.
Notice of 3. No Assignment made after the passing of this Act of a Policy of Life
Assignment to Assurance shall confer on the Assignee therein named, his Executors, Adminis-
be given.
trators, or Assigns, any Right to sue for the Amount of such Policy, or the
Monies assured or secured thereby, until a written Notice of the Date and
Pirrport of such Assignment shall have been given to the Assurance Company
liable under such Policy at their principal Place of Business for the Time
being, or in case they have Two or more principal Places of Business, then
at some One of such principal Places of Business, either in England or Scotland
or Ireland, and the Date on which such Notice shall be received shall regulate
the Priority of all Claims under any Assignment and a Payment bond fide
;
made in respect of any Policy by any Assurance Company before the Date on
which such Notice shall have been received shall be as valid against the Assignee
giving such Notice as if this Act had not been passed.
Principal 4. Every Assurance Company shall, on every PoUcy issued by them after
Places of
the Thirtieth Day of September, One thousand eight hundred and sixty-seven,
Business to
be specified specify their principal Place or principal Places of Business at which Notices
on Policies. of Assignment may be given in pursuance of this Act.
Assignment 5. Any such Assignment may be made either by Endorsement on the
by Endorse- Policy or by a separate Instrument in the Words or to the Bfiect set forth in
ment or
separate
the Schedule hereto, such Endorsement or separate Instrument being duly
Instrument. stamped.
Notices of 6. Every Assurance Company to whom Notice shall have been duly
Assignment to given of the Assignment of any Policy under which they are liable shall,
be acknow-
ledged. upon the Request in Writing of any Person by whom any such Notice was
given or signed, or of his Executors or Administrators, and upon Payment in
each Case of a Fee not exceeding Five Shillings, deliver an Acknowledgment
in Writing under the Hand of the Manager, Secretary, Treasurer, or other
principal Officer of the Assurance Company of their Receipt of such Notice ;
and every such written Acknowledgment, if signed by a Person being de jure

—
ASSIGNMENT 427
or de facto the Manager, Secretary, Treasurer, or other principal Officer of the

Assurance Company whose Acknowledgment the same purports to be, shall
be conclusive Evidence as against such Assurance Company of their having
duly received the Notice to which such Acknowledgment relates.
7. In the Construction and for the Purposes of this Act the Expression Interpreta-
" Policy of Life Assurance," or "Policy," shall mean any Instrument by tion of Terms.
which the Payment of Monies, by or out of the Funds of an Assurance Com-
pany, on the happening of any Contingency depending on the Duration of
Human Life, is assured or secured and the Expression " Assurance Company "
;
shall mean and include every Corporation, Association, Society, or Company

now or hereafter carrying on the Business of assuring Lives or Survivorships,
either alone or in conjunction with any other Object or Objects.
8. Provided always, That this Act shall not apply to any Policy of Assur- Not to apply
ance granted or to be granted or to any Contract for a Pajmient on Death to Contracts

'^'^^ *™
entered into or to be entered into in pursuance of the Provisions of the Acts T^j.^'^
Sixteenth and Seventeenth Victoria, Chapter Forty-five, and Twenty-seventh
and Twenty-eighth Victoria, Chapter Forty-three, or either of those Acts, or
to any Engagement for Payment on Death by any Friendly Society.
9. For all Purposes this Act may be cited as "The Policies of Assurance Short Title.
Act, 1867."
SCHEDULE.
I A.B. of, (fee, in consideration of, <Ssc., do hereby assign unto CD. of,
Executors, Administrators, and Assigns, the [within] Policy of Assur-

(fee, his
ance granted, &o. [here describe the policy]. In witness, c&c.
Under the above statute the right of an assignee of a Hfe pohcy Right of
to sue in his own name, and accordingly his ability to give a legal sue atTaw
discharge, is dependent on the following conditions :
under Policies
J
01 Assursriicc
(1) The assignee must have the equitable right to receive the Act.
money.
(2) He must have a properly stamped assignment in writing
either by indorsement on the policy or by a separate

instrument.
(3) Notice must have been given to the company in accord-
ance with the Act.
The right in equity to receive the insurance money is con- Right in
sidered in detail below. The qualification is introduced to guard
^QêwQ the
against the assignee obtaining a better title under the Act than he money.
would formerly have had when suing in the name of the assured (c).
It means that the claimant must either be beneficially entitled

to the money, or be entitled to receive it in the capacity of a trustee,
as in the case of a trustee under a settlement or of a mortgagee
with power to receive the moneys under a mortgaged policy.
Obviously it is impossible for a company to ascertain with
(c) Scottish Amicable Life v. Fuller (1867), Ir. R. 2 Eq. 53.

certainty whether any claimant is the person who possesses the

ultimate right in equity to receive the money, because there may
be equities of which the company has no notice, but which are
effective against the claimant. Apparently, however, the Act
points not to the person who may thus, irrespective of notice to
the company, have the ultimate right in equity, but to the person
who for the time being has the right as against the company.
The company, therefore, in considering who has the right in equity
to receive the money, need not be concerned as to possible equit-
able claims of which they have no notice, formal or informal.
But they must consider all equities of which they have any notice
whatsoever, even although formal notice in accordance with the
Act has not been given. If, then, on considering all equities of
which they have notice the proper conclusion is that the person
who has first given formal notice under the Act would not,
according to the rules of equity before the Act, have been entitled
to receive the money and give a discharge, such a person is not
under the Act entitled to sue in his own name, nor has he under
the Act the power to give a legal discharge to the company.
When, therefore, there are two assignees, and the company has
notice of both assignments, but the one who has priority in equity
has not got a formal assignment, or has not given first formal
notice to the company, and the other has, the company cannot
under this Act obtain a legal discharge from either or both, for
apparently the right to sue at law and to give a legal discharge

is still vested in the assignor. How far the Judicature Act
remedied this defect will be considered below.
Assignment An agreement to assign is not an assignment within the Act.
within the
meaning of
the Act. Spencer v. Clarke (1878), 9 Ch. D. 137
Spencer v. The assured deposited his policy with A as security for an advance. No
Clarice. notice of this depositwas given to the company and the assured afterwards
applied to B for an advance upon the policy. He accounted for the non-
production of the policy by falsely stating that he had left it at home. B
thereupon advanced the money upon receiving a memorandum of deposit
whereby the assured stated that in order to secure the repayment of the money
lent he had deposited the policy in question, and promised to make, execute
and deliver when requested to do so a valid and effectual mortgage of the
policy. B gave notice of this memorandum to the insurance company, but
no further mortgage was executed, and the policy remained in the possession
of A. B had a good equitable charge on the policy money and the only ques-
tion was whether he was entitled to priority over A, who had possession of the
policy, but had never given notice to the company. The Court held that the
ASSIGNMENT 429
policyhad not been assigned to B within the meaning of the Act, and, therefore
B had not acquired the right to sue at law. In order to bring the case within
the statute there must, according to the plain words of the statute and the
explanatory form of assignment in the schedule, be an assignment, and an
agreement to assign upon request is not an assignment. B, therefore, took
no benefit from the statute, and the question of priority between him and A
depended on purely equitable principles. A was held entitled to priority
because he had possession of the policy, and B had thereby constructive notice
of his charge {d).
The Assurance Act, 1867, applies not only to an Assignment

Policies of
unconditional assignment, but also to an assignment by way of jôrtslse^
mortgage. within the
Act.
Haycock's Policy, In re (1876), 1 Ch. D. 611

The assured had mortgaged his Ufe policy some twenty-five years before Haycock's
his death, and notice had been given to the company. The assured subse- policy. In re.
quently assigned the policy, but on his death the company refused to pay
the moneys to the assignee without proof that the mortgage had been paid off.
The Court held that they were justified in refusing payment since the mort-
gagee was the person entitled to sue in law under the PoUoies of Assurance Act,
1867, and they were entitled to have a discharge from him.
The Judicature Act, 1873, sec. 25 (6)
25. — (6) Any absolute assignment,by writing under the hand of the 36 & 37 Vict,
assignor (not purporting to be by way of charge only), of any debt or other ^ y'' ^^''^
legal chose in action, of which express notice in writing shall have been given
to the debtor, trustee, or other person from whom the assignor would have been
entitled to receive or claim such debt or chose in action, shall be, and be deemed
to have been effectual in law (subject to all equities which would have been
entitled to priority over the right of the assignee if this Act had not passed),
to pass and transfer the legal right to such debt or chose in action from the
date of such notice, and all legal and other remedies for the same, and the
power to give a good discharge for the same, without the concurrence of the
assignor : Provided always, that if the debtor, trustee, or other person liable
in respect of such debt or chose in action shall have had notice that such
assignment is disputed by the assignor or any one claiming under him, or of
any other opposing or conflicting claims to such debt or chose in action, he
shall be entitled, if he think fit, to call upon the several persons making claim
thereto to interplead concerning the same, or he may, if he think fit, pay the
same into the High Court under and in conformity with the provisions of the
Acts for the relief of trustees.
(d) This decision standing alone and Weniger's Policy, In re, [1910]
suggests that if there had been a 2 Ch. 291, show that even if there
written assignment within the mean- had been a complete assignment the
ing of the Act, B would have had constructive notice of a prior charge
priority, but as this was a question would have prevented B acquiring
of priority inter se between two priority over A in a final distribution
claimants the later cases of Newman of the policy moneys.
V. Newman (1885), 28 Ch. D. 674,
—
Right of It will be observed that the right of an assignee to sue at law

assignee to
sue at law under this Act is not, as under the Policies of Assurance Act, de-
under the pendent on the assignee having the right in equity to receive
Judicature
Act. the money (e). All that is necessary is that
(1) There has been an assignment in writing which is valid

in equity as between assignor and assignee.
(2) There has been express notice in writing to the company.

The assignee whose assignment first complies with these two
conditions gets the legal right of action, and accordingly the right
to give a legal discharge. Notice of other assignments prior in
equity does not apparently af!ect his right to sue at law, and there-
fore it seems reasonably clear under the Judicature Act that if
there were two assignees and the company had notice of both
assignments, but the one who had priority in equity had not a
written assignment, or had not given formal notice, while the other
had, the company could obtain a legal discharge from the latter,
and could get a complete discharge on receiving the consent of
both to the payment made. There would be no necessity, if only
this Act applied, to get any discharge from the assignor. The
Whether fact, however, that the two Acts are somewhat inconsistent on
Judicature
Act can be
this point, and that the Policies of Assurance Act is specially
relied on in applicable to policies of life assurance, whereas the Judicature
settlement of
life policies. Act applies generally to all legal choses in action, makes it at least
doubtful whether in the case of a life policy the latter can be

safely relied on. It is of the utmost importance that a company
should always obtain a discharge from the person entitled to sue
at law, because if it does not it may have to pay over again at
the instance of some equitable assignee of whose claim it had no
notice, but whose equity was, among the assignees, prior to all
others, and who could accordingly sue the company in the name of
the assignor or his representatives if he or they were still entitled
to sue at law and the fact that the company had no notice of the
;
equity,and had paid on the discharge of another equitable assignee,

would be no defence to the action. The safest course, therefore, for
a life company to adopt is to assume that the Policies of Assurance
Act alone applies, and not to pay on the sole receipt of an assignee,
unless he has, as far as notice to them is concerned, both the right
in equity to receive the money and the right to sue in his own name,
and, if he has not both, to insist on a discharge from the assignor
or his personal representatives as well as from the assignee,
(e) Westof England Bank V. Batchelor (1882), 51 L. J. Ch. 199.

ASSIGNMENT 431
A mortgage in ordinary form with a proviso for redemption Meaning of
is an " absolute assignment " within the meaning of the Judi- assignment.
cature Act, and entitles the mortgagee to sue in his own name (/).
Such a mortgage does not purport to be " by way of charge only,"
because the property comprised in it does in fact pass to the
mortgagee. A document given " by way of charge " is not one
which transfers the property with a condition for reconveyance,
but is a document which only gives a right to payment out of a

particular fund or particular property without transferring that
fund or property. Probably in this respect the Policies of Assur-
ance Act and the Judicature Act, although expressed differently,

apply to precisely the same class of assignments. A mere promise
to assign would not be within the Judicature Act any more than
it is within the Policies of Assurance Act, and an equitable charge
or mere right to payment out of a fund would not be an assign-
ment within the Policies of Assurance Act any more than it is an
" absolute assignment " within the Judicature Act. An actual
transfer of the right by way of mortgage is, however, within
both Acts.
Owing to conflicting decisions it must be considered a moot Whether part
point as to whether a legal chose in action is divisible so that the ^g asTigned'so

legal right to sue for part of the debt can be assigned to A, and, ^^ to give
the legal right to sue for another part of the debt assigned to B. right to sue
** ^^'"'
The most recent decision is that of Bray, J., in Forster v. Baker,
where he held that part of a debt could not be assigned under
the Judicature Act, and if this is right then by parity of reason-
ing the sum assured by a policy could not be divided and the
legal right to sue for part only assigned under the Policies of
Assurance Act. The case of bonuses might be distinguished on
the ground that there were separate promises in respect of the
principal sum and the bonuses added thereto, but 'prima facie all
sums secured by the same policy and payable on the same con-
tingencies ought to be treated as one single debt and therefore
indivisible if the principle enunciated by Bray, J., is correct.
Skipper & Tucker v. HoUoway, [1910] 2 K. B. 630
Certain disputes between A and B were settled in the terms inter alia that Skipper S
Tucker v.
A should pay to B £126. B thereafter executed a deed of assignment in
(/) Tancred v. Delagoa Bay Ey. (1889), 23 Q. B. D, 239.
favour of his solicitor who had acted for him in the matter, purporting to
assign so much of the debt of £125 as would cover his proper costs, charges,
and expenses not exceeding £30. The solicitor's bill amounted to £32. He
gave written notice of the assignment to A, and thereafter sued him for £30.
Darling, J., held that there was a valid assignment of the legal chose in action
in respect of part of the original debt and that the solicitor was entitled
to
recover.
Forster v. Baker, [1910] 2 K. B. 636
FoMer v. A promissory note discounted by Baker was bought by Bowles. When

Baker. the promissory note had become due Bowles sued Baker and recovered judg-
ment for £675. Bowles then purported to assign to a Miss Forster the judg-
ment debt to the extent of £560. Miss Forster thereafter obtained leave
ex parte to issue execution on the judgment, and subsequently issued a bank-
On an application to set aside the order giving
ruptcy notice against Baker.
was held by Bray, J., that the Judicature Act did
leave to issue execution it
not give a creditor any power to assign part of the debt with all its remedies
to an assignee, and the order was accordingly set aside. On appeal the Court
of Appeal held that whether or not part of a chose in action was capable of
assignment under the Judicature Act, execution could not be issued on part
of a judgment debt and therefore they dismissed the appeal.
Statutory Neither the Pohcies of Assurance Act nor the Judicature Act
provisions do
not affect affects the equitable right of any assignee to receive the poHcy
equitable moneys. Although one assignee may, by giving notice in the
claims to
policy prescribed form, acquire the right to sue the company in his own
moneys.
name, he acquires that right subject to all equities which would
have been available against him if the Act had not been passed.
The ultimate rights of competing assignees must therefore be
decided on the old rules of equity relating to notice and priority
without reference to the provisions of ihe statutes, and without
reference to the question whether or not the notice upon which
priority is claimed is a sufficient notice under the statutes (c/).
ITew^man v. Wew^man (1885), 28 Ch. D. 674

Newman v. A question of priority arose in connexion with certain claims on a life policy.
Newman. It was contended that where a firstassignee had given informal notice to the
office his claim could be defeated by a second assignee giving a formal statutory
notice. North, J., declined to accept that view, and said, " The Act was
passed in order to avoid the necessity of joining the assignor of the policy in
actions against the insurance office, and it provides that if a certain notice
is given to the office then the assignee may sue without joining the assignor.
Then these words occur, " And the date on which such notice shall be received
{g) Newman v. Newman (1885), 28 Ch. D. G74 West of England v.

Batchelor (1882), 51 L. J. Ch. 199.
ASSIGNMENT 433
shall regulate the priority of all claims under any assignment." It was
contended that these words went much further than was necessary for the
protection of the insuranceoffice, and affected the rights of the parties inter se.
The argument goes as far as this, that A having given an insufficient notice,
and B having afterwards given a statutory notice, their rights must for all
purposes be governed by the terms of the statute as to priority, although B
had at the time notice of A's charge. In my opinion that is not the meaning
of the statute, which was not intended to affect the rights of persons claiming
interests in the money It was intended to give
outside the insurance office.
a simpler remedy against an insurance and also to give facilities to

office,
insurance offices in settling claims by enabling them to recognise as the first

claim the claim of the person who first gave such notice as is required by the
statute. It was not intended in my opinion to enact that a person who had
advanced money upon a second charge with notice of the first, and made
subject to it should, by giving statutory notice to the office, exclude the person
who had the prior incumbrance. In my opinion the Act does not apply to
the present case.''
Weniger's Policy, In re, [1910] 2 Ch. 281

In 1892 the Royal Insurance Company issued a policy to Weniger on his Weniger's
own life, payable to him if alive on November 20, 1909, or to his personal P°î'^y> ^^ i'^-
representatives in the event of his death before that date. Weniger charged
the policy as follows : (1) Deposit with the company to secure advances
amounting to £250 ; (2) Memorandum of charge to Kapp to secure £146,
and expressed to be subject to the company's charge erroneously stated as
£240; (3) Charge in favour of Metropolitan Credit Company to secure £115
(4) Charge in favour of the Indo-European Telegraph Company to secure
£600, including £250 and interest paid to the insurance company. The
policy was handed to the telegraph company, and they paid premiums
amounting to £115. (5) Memorandum of charge to Kapp to secure a further
sum of £73 ; (6) Charge in favour of Cohen for £250, expressed to be subject
to the first charge in favour of the company for £250 (7) Charge in favour ;
of Ramsay expressed to be subject to the first charge in favour of the company

for £250. No formal notices to the insurance company were given until all
the above charges had been created. Formal notices were then given in the
following order (1) Metropolitan Credit Company, (2) Ramsay, (3) Kapp,
:
(4) Cohen, (5) Telegraph Company. Weniger was alive on November 20,
1909, and the insurance company paid the policy moneys into Court under the
Life Assurance Companies (Payment into Court) Act, 1896. Ramsay took
out a summons to which the other incumbrancers were made respondents.
He contended that the Telegraph Company came first, but only in respect of
the £250, and that all the other incumbrances ranked in the order of notice
to the company. Parker, J., held that in default of gaining priority by giving
notice the incumbrances tpok according to the order of the dates of their
charges. No incumbrancer by giving notice could gain priority over another
of which he had actual or constructive notice at the time he advanced his
money. An incumbrancer having taken a charge for a specific advance
could not add subsequent advances to the charge so as to acquire priority
over mesne incumbrancers. Such mesne incumbrancers owed no duty to the
prior incumbrancer to give him notice of their incumbrances. If the prior
i.L. 28
; ; — —
; ; ;
incumbrancer had taken a charge to cover further advances, he would have

had a right to add them to the charge so as to acquire priority over mesne
incumbrances of which he had no notice, but that was not the case before the
Court. Having regard to the above principles the Court held that the proper
order of payment was as follows (1 Telegraph Company, £250 and premiums
: )
paid by it. It took this as coming in the shoes of the insurance company
who had the first charge, and it was entitled to add the premiums as they were
paid to preserve the security (2) Metropolitan Company, who, by reason
;
of its prior notice, took priority over Kapp, of whose charge it had no notice
when it advanced its money (3) Ramsay, who was entitled to payment up
;
to the amount due to Kapp on his first charge, Kapp would take priority
over the Telegraph Company in respect of his first advance, but not in respect
of his second advance, because when he made the second advance he had
constructive notice of the Telegraph Company's charge. The policy was in
the Telegraph Company's hands, and if he had made inquiry he would have
discovered the charge of £600. On the other hand, although Ramsay would
also be postponed to the Telegraph Company because he had constructive
notice of its charge, he took priority over Kapp by reason of prior notice, and
therefore was entitled to stand in his shoes and take priority over the Telegraph
Company to the extent of Kapp's first charge. (4) Kapp, if anything remained
due to him on his first security after satisfying Ramsay (5) Telegraph ;
Company, for the balance of its charge, Cohen being also postponed by reason
of constructive notice ; (6) Kapp ; (7) Cohen.
Notice of It is convenient to deal here in brief with notice, the different

assignment.
reasons for giving notice, and the kind of notice requisite in each
case. An assignee of a poUcy must give notice to the insurance
company for the following reasons :
(1) to give him the right to sue in his own name under the
Policies of Assurance Act or the Judicature Act
(2) to bind the company so that if they pay to another
claimant they may be held responsible
(3) to acquire priority over earlier assignees who have not
given notice
(4) to preserve priority against subsequent assignees.
To give In the case of (1) the notice must be strictly in accordance

assignee the
with the provisions of the respective statutes, that is to say, in
right to sue
at law. the case of life policies it must be in accordance with the provisions
of the PoUcies of Assurance Act, and the notice must therefore
comply with the following requirements :
(a) it must be in writing ;
(b) it must give the date and purport of the assignment
(c) it must be addressed to the company's principal place of

business as specified in the policy
' "
ASSIGNMENT 435
must be received by the company before a similar formal

(d) it
notice has been received from any other assignee.

In order to establish beyond question the fact and date of
service of notice it is usual to require an acknowledgment in
writing from the company, either in the form of a separate
receipt or (more conveniently) on a duplicate of the notice. For
this acknowledgment (though not for registration) the office is
entitled to charge a fee of 5s. Qi).
In the case of (2) there is little doubt that before the Policies To bind the
of Assurance Act, the company would have been bound by any eqSty"'''
definite information of an equitable claim upon the policy moneys,
although not in writing, and not given by the claimant, and notice
to any officer or servant of the company held out by them as
having authority to receive such notices would have been sufficient.
It is conceived that under the Act, although an informal or belated
notice would not give the assignee a right to sue at law in his own
name and to give a legal discharge, it would, if definite, bind the
company in equity, and the company could not, in the face of
such notice, safely pay the assignor or a subsequent assignee who
had given a formal notice.
Pohcies of life insurance usually contain a condition to the Condition
effect that " the agents of the company are not authorised to forSal'ifotioe
accept notice or intimation of any assignment of or charge upon to be served
any policy," and in accordance with the provisions of the Act it office™''^^*
is notified that " the company's principal places of business at

which alone notices of assignment may be given are . . . and
the company will not recognise nor be held bound by any notice
or intimation unless served on them at one of those places, and
duly acknowledged by the manager, secretary, or other principal
officer of the company." Such a condition is an intimation to Notion to
^^^^
policy holders and assignees that the company's agents are not
persons authorised to receive notices of assignments, and there-
fore notice to an agent would not 'prima facie be notice to the
office, although it might be if the company had so conducted its
business as to lead to the belief that notwithstanding the condition
on their policy notice might properly be given to any agent, or
to some one particular agent. Probably the condition does not
protect the company if the notice is in fact communicated to
the head office.
(fe) If notice is given under the parently under no obligation to give

Judicature Act the company is ap- an aokno-wledgmeut, which, however,
—
To acquire In the case of (3) assignees before the Act took priority
priority.
primarily in order of date, but subject to the right of any assignee
to acquire priority if he gave notice to the office before the office or
he himself had notice of an earlier equity.Only a formal notice had

the effect of giving the assignee precedence. Probably the notice
had to be in writing. Neither the Policies of Assurance Act nor
the Judicature Act has any bearing on the question of priorities
among assignees, and incumbrancers inter se, and therefore
priorities over earlier equities are still acquired by a notice
which must be formally given to the company or its authorised
agent, but which need not necessarily comply with the terms of
the Act or the conditions of the policy.
To preserve In the case of (4) an informal notice to the company of an
priority.
equitable claim, although not sufficient to give that claim priority
over earlier equities, is sufficient to prevent later equities acquiring
priority by formal notice. Knowledge by the company's directors,
principal officers, or any agent whose duty it is to communicate
the matter to the directors is sufficient for this purpose.
Notice to be A sub-assignee of a policy must give notice
given by sub-
assignee of (a) to the company—
policy. for the same reasons as the assignee ought to give notice.
If the assignee has already given notice, no further notice
is necessary to protect the sub-assignee against subse-
quent assignments by the assignor, but notice is neces-
sary to protect him from subsequent sub-assignments or
dealings with the office by the assignee.

(6) to the assignor —
in order to prevent the assignor, if he has received the
moneys, paying the assignee, or, in the case of an assign-
ment by way of mortgage, to prevent the mortgagor
paying off the debt in whole or in part to the mortgagee.
Assignment The right to the proceeds of an insurance policy or any part

in equity.
thereof has always been assignable in equity either by way of
gift, sale, mortgage, or charge. The equitable right was enforce-
able by proceedings in equity against the assured or his legal
representatives and the company for payment (m), or the assured
they are required to do under the 454, 462 ; Mitchell v. City of London
Policies of Assurance Act, 1867. Assurance (1888), 15 Ont. A. B. 262 ;
(to) Cook V. Black (1842), 1 Hare, Kelly V. Larkin, [1910] 2 Ir. R. 550.
390 Brandt v. Dunlop, [1905] A. C.
;
ASSIGNMENT 437
or his legal representatives might upon the offer of a proper in-
demnity as to costs be compelled to allow the equitable assignee

to sue the company at law in their name {n). If the assured or
his legal representatives received payment or released the company
from hability, the assignee could sue them at law for the proceeds
of the policy or damages (o).
Under modern procedure, if the person entitled in equity has
not also the right to sue the company at law in his own name under
the Policies of Assurance or Judicature Acts, he may enforce his
right by calling on the person who has the legal title to permit
the use of his name, or, if he refuses, by suing such person and the
company as joint defendants.
Life insurance policies have long been held to be marketable Assignees
commodities which can be validly assigned either voluntarily or for interest in
valuable consideration to persons who have no interest in the life (p). ^'*^'
Where a was
life policy expressed to be " not assignable in
any Policies
case whatever," and provided that the company should not be be^'noi
bound by notice of any trust, equitable charge, or lien, it was held assignable,"
that that meant that an assignee would not have the benefit of
the Policies of Assurance Act, 1867, as against the company, and
that the company might obtain a complete discharge by pay-
ment to the representatives of the assured notwithstanding any
adverse claims ; but that there was nothing to prevent an assign-
ment in equity which might be enforced against the represen-
tatives (q). It is clear in the case of an ordinary policy that the
assured cannot, by taking a policy purporting to be " not assign-
able," restrain himself from anticipation. In the case, however,
of a policy payable to a married woman as her separate property
shemay be restrained from anticipation, and thus, where a married
woman effected an endowment policy payable at the end of ten
years or on the death of her husband before the expiration of that
period, and the policy was expressed to be " not assignable," it
was held by the Court of Appeal in Ireland that that operated as
a restraint on anticipation, and that therefore a mortgage made
by the wife during the currency of the policy was void (r).
(n) Ashley -v. Ashley (1829), 3 Sim. Bunyon thought that notwithstanding
149. the non-assignable condition the com-
(o) Gerard V. Lewis (1867), L. R. 2 pany could not safely disregard notices
C. P. 305; Patrick, In re, [1891] 1 of%quitable assignments (Life Insur-
Ch. 82, 88. " ance, 2nd edition, p. 256).
ip) Ashley v. Ashley (1829), 3 Sim. (r) Lavender's Policy, In re, [1898]
149. 1 Ir. R. 175.
(?) Turcan.In re {lS88),^0Ch.T>. 5.
^Vhat consti- Except in the case of voluntary gifts which must be com-
tutes an
equitable
pleted in order to be enforceable, and in the case of marriage
assignment. settlements which must, under the provisions of the Statute of
Frauds, be evidenced by some deed or written memorandum, no
formality is necessary to pass the equitable right to the proceeds
of an insurance policy. Questions of priority between equitable
assignees may depend upon the giving of notice to the company,
but a right enforceable in equity, whether it be a sale, mortgage,
or charge, may be created in any manner which shows the in-
tention of the parties (s), and an assignment or agreement to

assign {t) is binding- as between assignor and assignee without
notice to the company (m), deposit of the policy {x), or any other
act than the expression of intention inter se {y).
Brandt v. Dunlop, [190S] A. C. 454
Brandt v. A firm of merchants were financed by a bank on condition that moneys

Dunlop. becoming due from purchasers should be paid directly by such purchasers
to the bank. The merchants having sold certain goods instructed their
purchasers to pay the purchase money to the bank. It was held that there
was a complete equitable assignment of the purchasers' debt to the bank.
Gorringe v. Irwell (1886), 34 Ch. D. 128
Oorringe v. Ahmited company being indebted to H. & Co. wrote to them, " We hold
Irwell. sum of about £425 due to us from 0. & Co. for goods
at your disposal the
delivered by us." No notice was given to C. & Co., but it was held to be a
good equitable assignment of the chose in action.
Mangles v. Dixon (1852), 3 H. L. C. 702

Mangles v. & Co., shipowners, being entitled to freight under a charter party
A. B.
Dixon. from C. D. & Co. charterers, and being indebted to E. P. & Co., their bankers
deposited the charter party with E. P. & Co. endorsed " To Messrs. C. D. & Co.
Please to pay the amount of what is due from this date to Messrs. E. E. & Co.
or their order. A. B. & Co." This was held to be a complete equitable assign-
ment of the moneys becoming due on the charter party.
Myers v. United Guarantee (1855), 7 De G. M. & G. 112
Myers v. The depositees of a life policy having sub-mortgaged it commenced an action

United to recover the policy moneys from the company. Pending the action they gave
Guarantee. notice to the sub-mortgagees to hold any balance at the disposal of a certain
bank. This having been communicated to the bank was held to be a valid
charge in its favour upon the policy moneys.
(s) Brandt v. Dunlop, [1905] A. C. 12 Jr. Ch. R. 289 Mangles v. Dixon

;
4S4, 462. (1852), 3 H. L. C. 702, 730.

(t) Cook v. Black (1842), 1 Hare, (x) Chowne v. Baylis (1862), 31
390. Beav. 351.
(u) Gorringe Irwell (1886), 34
v. (y) Myers v. United Guarantee
Ch. D. 128 ; Justice v. Wynne (1860), (1856),7DeG. M. & G. 112.
ASSIGNMENT 439
Cliowne V. Baylis (1862), 31 Beav. 351
A, who had insured his life, feloniously abstracted money from B. Before Chowne v.
conviction, and in consideration of the money he had taken, A gave B the Baylis.
following letter addressed to the office :
" Please take notice that I wish to
transfer my interest in the policies No. to B." B sent tMs letter to the
office who acknowledged it, but B did not obtain possession of the policy.
Afterwards A formally assigned the policy,
and handed it over to his solicitor
to secure a debt of £500. was held that the abstracted money was a debt
It
due from A to B, and that there was therefore good consideration for the
assignment to B ; a felon could for valuable consideration assign his property
before conviction unless merely colourably to avoid forfeiture [d] ; the notice to
the although expressing only a desire to assign, was in equity a sufficient
office,
assignment, and B was held entitled to priority over A's solicitor. Sir John
Romilly, referring to the letter, said, " It is impossible to say that such a
transaction and such a document has no meaning, and that it was intended
have no meaning, and yet, unless it assigned his interest in the policy it
to
means nothing. It is to be observed that no formal instrument is required
for the purpose, all that is wanted is that the document should express the
intention of the assignee thereby to make the assignment. I read it exactly
as had been written, I hereby transfer, etc' Unless it means this,
if it '
—
what was there for the office to take notice of a decision not fulfilled ? It is,
I think, absurd to suppose that any person who wrote and signed such a
document could so intend it or that the office could so receive it."
Cook V. Black (1842), 1 Hare, 390

A life policy contained a suicide clause that " if the assured commit suicide Cooh v. Blach.
and the policy have been assigned " to any person having a hand fide
shall
interest in the life, the company would pay such person to the extent of such
interest. The assured being indebted to C, the policy was deposited with him
along with the following memorandum " I will leave in your hands a policy
:
. . . you the payment of the sum of £260 due, and

for collaterally securing to
owing by me to you and I will assign the same to you whenever requested
. . .
so to do." This was held to be a good equitable assignment of the policy

and within the condition.
A
direction by a creditor to his debtor to pay to a third person Direction to
is mere revocable mandate until communicated to such third comnmni."°
a
person (e), and the mandate may be revoked by any dealing with ^^^^^ '°
the debt by the creditor which is inconsistent with the execution of
the mandate (/). Therefore when the assured directs the company
to pay the policy moneys to a particular person, that person cannot
enforce payment unless the matter has been communicated to
(d) At the date of this decision a (e) Morrell v. Wootten (1852), 16

conviction for felony or treason in- Beav. 197; Field v. Lonsdale (1850),
volved the forfeiture of the felon's 13 Beav. 78.
property to the Crown. Forfeiture, (/) Scott v. Porcher (1817), .3 Mer.
however, was abolished in 1870, 652.
33 & 34 Vict. c. 23.
him in such a way as to express the assured's intention of conveying

to him the benefit of the policy {g).
Deposit o£ The mere dehvery of a poHcy for valuable consideration is a
the policy
without sufficient equitable assignment of the chose in action, and no
memoran- written memorandum or notice to the company is necessary (i).
dum.
The nature of the transaction, whether a sale, mortgage, or charge,
may be gathered from contemporaneous circumstances or parol
evidence.
Priority of In questions of priority among assignees and incumbrancers

equitable
claims. of a policy, it is submitted that, so long as the moneys are in the
hands of the company or deposited in Court, all priorities inter se
must be determined on the footing that all the assignees are

equitable assignees. A well-known principle in the law of in-
cumbrances is that whereas the equitable assignee takes subject

to all prior equities, an assignee who has acquired the legal
title takes priority over equities prior in time, but of which

he had no notice at the time he acquired his title (k). Before
the Policies of Assurance Act, 1867, and the Judicature Act,
1873, all assignments of policies were purely equitable assign-
ments of the chose in action. Since those Acts the assignee
may acquire the right to sue at law in his own name, but
that does not, in questions of priority between him and other
assignees, put him in the position of a person who has acquired the
legal title (l). It follows that before the policy moneys have
actually been paid over to an assignee he must, on questions of
priority, be treated as having a purely equitable title. When the
money has actually been paid to him, and he is in possession of
it, he does get the advantage of being legal owner, and if he
obtained possession without fraud is subject only to equities of
which he had notice at the time he took possession (m).
Equitable Equitable assignees rank primarily in order of date, and there-
rank in orde fore take subject to all prior equities, whether or not they had
of date, notice of them at the date of their assignment (n).
Foster, In re (1873), Ir. R. 7 Eq.

(?) (k) Newman v. Newman (1885), 28
294 Orozier v. Phoenix (1870), 2
; Ch. D. 674 Shropshire Union v. The
;
Hann. New Br. 200. Queen (1875), L. R. 7 H. L. 496, 506.

(i) Maughan v. Ridley (1863), 8 {I) Weniger's Policy, In re, [1910]
L. T. (N. S.) 309 ; Le Feuvre v. Sul- 2 Ch. 291.
livan (1855), 10 Moore P. C. 1. (m) Justice v. Wynne (1860), 12
In Scotland a written assignation Ir. Ch. R. 289.
isnecessary. Scottish Provident Inst. {n) Shropshire Union v. The Queen
V. OoTjen (1886), 16 R. 117 Brownlee ; (1875), L. R. 7 H. L. 496, 506;
V. Eohh (1907), 9 F. 1302. Oapell V. Winter, [1907] 2 Ch. 376.
—
ASSIGNMENT 441
An equitable assignee for value may, however, acquire priority or notice to

'^°™P^"y'
over an equity prior in point of time provided he took the assign-
ment without actual or constructive notice of such equity, and
(1) has given formal notice to the company before the com-
pany had knowledge of the prior equity (o) ; or
(2) the holder of the prior equity by words or conduct misled

him, and induced him to take an assignment which he would
not otherwise have taken (p).
In order to acquire priority over an earlier equity an assignee Priority
must have given formal notice to the company (q). The notice fomsTnotice
°°iy'
must be given by or on behalf of the assignee to the company or
its authorised agent. Probably it must be in writing and be
given with the intention of perfecting the assignment.
The fact that the company has received informal notice of Informal
,1 , .
1 -i
an assignment does not give such assignment any priority over
, • notice pre-
serves pri-
earher equities. But informal notice coming in any way to the °"'^y-
knowledge of the company or to the knowledge of an agent whose

duty it is to communicate the matter to the company is, if definite,
sufficient to fix the company with liability in equity to the assignee
and to prevent any subsequent assignee from obtaining priority

by giving a prior formal notice (r).
Notice given in general terms of the fact that a policy has been Notice of
assigned or charged by a particular deed is notice of the contents ^thoiS'^mr-

of the deed, and of the nature and extent of the assignment or tioulars.
charge (s). But where the notice states that a certain deed
creates a particular charge specified in the notice, that is not notice
of another charge which in fact the deed contains, but which is
not specified in the notice, and priority may be acquired in respect

of the specified charge, but lost in respect of the other charge {£).
Where a director or other officer or agent of the company is a Knowledge
party to the assignment or is so concerned with it that his interest other officer,
is not to disclose his knowledge of the assignment, that know-

ledge is not the knowledge of the company so as to fix the company
(o) Ward v. Duncombe, [1893] Ch. 488, 490 ; Humberstone v. Chase

A. C. 369 ; Dearie v. Hall (1828), 3 (1836), 2 Y. & C. Ex. 208 and see
;
Russ. 1. cases on sufficiency of notice required

( p)
Shropshire Union v. The Queen to take a policy out of the order and
(1875), L. R. 7 H. L. 496, 606 ; disposition of the assignor.
Jmtiee v. Wynne (1860), 12 Ir. Ch. R. (a) Bright's Trusts, In re (1856), 21
289. Beav. 430.
(q) Arden v. Arden (1885), 29 Ch. (t) Bright's Trusts, In re (1856), 21
D. 702. Beav. 430 ; Crawford v. Canada Life

(r) Lloyd v. Banks (1868), L. R. 3 (1897), 24 Ont. A. R. 643.
with liability, or to prevent subsequent equities acquiring

priority (u).
Notice by In the case of a sub-assignee or sub-mortgagee of a chose in
sub-assignee.
action, notice of the sub-assignment or sub-mortgage must be
given to the holder of the fund in order to acquire or preserve
priority among other sub-assignees or sub-mortgagees. For this
purpose notice to the assignor or mortgagor is not necessary. If
the assignee or mortgagee has given notice of his interest to the

holder of the fund no further notice need be given by the sub-
assignee or sub-mortgagee in order to acquire or preserve priority
among other assignees and mortgagees (a;).
Priority of A sub-assignee takes the same equity as the assignor from whom
sub-assignee.
he took, and thus where an assignee or mortgagee has, by giving
notice, acquired priority over assignments or incumbrances earlier
in date, but of which he had no notice, a sub-assignee or sub-

mortgagee gets the advantage of that priority notwithstanding
that he had full notice of the earlier equities {y) ; and conversely
if an assignee or mortgagee took with notice of an earlier equity
a sub-assignee or sub-mortgagee from him cannot acquire priority
over such equity although he took without notice of it (z).
Notice to one Where notice of an assignment is required to be given to

of several
trustees. trustees as the holders of a fund, it should be given to all the
trustees living at the time of the assignment. Where notice has
been given to all the trustees or to a sole trustee it has been held
that it need not be repeated to new trustees subsequently assumed
into the trust (a). Notice to one of several trustees is probably
sufficient so long as that trustee is aUve, but on his death a new
notice would have to be given, and in default a subsequent assignee
giving notice to all the trustees would acquire priority (b).
Knowledge of An equitable assignee for value cannot by giving notice to

earlier
equities.
the company acquire priority over any earlier equity if he had
notice of such earlier equity at the time he took his assignment (c),
and this applies equally to the case where the earlier equity
(u) Martin v. Sedgwick (1846), 9 (a) Wasdale, In re, [1899] 1 Ch. 163.
Beav. 333 Browne v. Savage (1859),
; It is usual, however, and safer to give
6 Jur. (N. S.) 1020. notice to the new trustee.
(x) Ex parte Barnett (1845), De (6) Phillips' Trust, In re, [1903] 1
G. 194 Jones v. Gibbons (1804), 9
; Ch. 183.
Ves. 407. (c) Newman v. Newman (1885), 28
(y) Lowther v. Carlton (1741), 2 Ch. D. 674 ; Le Feuvre v. Sullivan
Atk. 241. (1855), 10 Moore P. C. 1 Weniger's ;
(z) Ford V. White (1852), 16 Beav. Policy, In re, [1910] 2 Ch. 291.
120.
ASSIGNMENT 443
is a purely voluntary assignment (d). If however an equitable

assignee took his assignment without notice of an earlier equity
he may acquire priority over that equity by giving first formal
notice to the company notwithstanding that before he gave the
notice he had become aware of the earlier equity (e).
The fact that an equitable assignee for value did not, on taking
his assignment, make any inquiry as to the existence of earlier
equities does not disentitle him from obtaining priority if neither

he nor the company had any knowledge of an earlier equity (/).
An equitable assignee is deemed to have knowledge of a prior Assignee may
equity, not only when he has actual knowledge of the circum- gtûotive"
stances, but also when he has knowledge of facts which ought to notice of
have put him as a prudent man upon inquiry. Knowledge of

such facts is constructive notice of any equitable assignment
which reasonable inquiry would have disclosed. Thus, where a
policy was deposited as security for a loan, but no notice was
given to the company, and the assured subsequently mortgaged
the policy by deed, the non-production of the policy to the mort- Non-pro-
gagee was held to be constructive notice to him of some earlier
p"i°*y"°*
charge upon the policy, and even although the mortgagee had
given notice to the company, and the depositee had not, the
depositee was held to have the prior equity (g). An intending
mortgagee should always insist on production of the policy or
a satisfactory explanation of its non-production, and if he merely
accepts the word of the mortgagor that he " left it at home by
mistake " (h), or that it " was at his bank for safe custody " (i),
he cannot acquire priority over an earlier depositee merely by
taking a formal assignment and giving formal notice to the
company.
In the case of real estate a mortgagee or purchaser, even when Priority over
he has got the legal estate, may be postponed to a subsequent jl^s nedi-
equitable title if he has been negligent in leaving the title deeds gently left
in the possession of the mortgagor or vendor, and has so enabled him hands of
assignor.
to commit a fraud by conveying the estate to another purchaser
V. Wynne (1860), 12
{d) Justice Ch. 291 ; Spencer v. Clarke (1878), 9
Ir.Ch. R. 289 ; Holmes, In re (1885), Ch. D. 137 ; Hiern v. Mill (1806), 13
29 Ch. D. 786. Ves. 114.
(e) MutiLal Liife v. Langley (1886), (h) Spencer v. Clarhe (1878), 9 Ch.
32 Ch. D. 460. D. 137.
(f) Dallas, In re, [1904] 2 Ch. (i) Maxfleldv. Burton (l%nZ),'L.'R.
385 ; Meux v. Bell (1841), 1 Hare, 73. 17 Eq. 15.
(g) Weniger's Policy, In re, [1910] 2
or incumbrancer without notice of the former transaction (fc).
This principle, however, hardly appHes to an assignment of a chose

in action of which due notice has been given, because, although
the document of title is in the hands of the assignor the assignee
should not omit to make inquiry of the debtor whether the chose
in action has already been assigned or charged. Thus, where an
assignee of a policy by deed gave notice to the company but
left the policy in the hands of the assured who subsequently
obtained a loan by depositing it with a person who had no notice
of the first assignment, it was held that the first assignee was not
postponed to the depositee (l).
An assignee by deed who had neither given notice to the

company nor taken possession of the policy would probably lose
priority against a subsequent assignee who would thus take
without means of ascertaining the existence of the assignment
and would have been misled by the negligent conduct of the
by deed (m).
assignee
Voluntary A voluntary assignee cannot obtain priority over an earher
assignee
obtains no
equity by giving formal notice to the company, and in a contest
priority by between one or more voluntary assignees they rank according
notice.
to their priority in point of time without regard to priority of
notice (n).
Money in If policy moneys have been paid into Court equitable assignees
Court stop
;
who have not previously given notice to the company must obtain
order.
a stop order which takes the place of notice to the company (o).
A stop order operates to give the same but no greater priority
than notice to the company when the moneys are in its
hands (p).
If an insurance company has a charge on its own poUcy it
will as a rule deduct the amount of such charge before payment

into Court. If the company pays in the whole poUcy moneys
it must obtain a stop order so as to preserve its charge as against

puisne incumbrancers (g).
Notice by Neither the personal representatives of a deceased person (r)
personal
ik) Walker v. Linom, [1907] 2 Ch. Ch. D. 497 Mutual Life v.
;
104. (1886), 32 Ch. D. 460.

(l) Neale v. MoUneux (1847), 2 ip) Montefiore v. Ouedalla, [1903]
Car. & K. 672. 2 Ch. 26 ;Holmes In re (1886), 29
(m) Shropshire Union v. The Queen Ch. D. 786.
(1875), L. R. 7 H. L. 496, 506 ; and (q) Swayne v. Swayne (1848), 11
see Dallas, In re, [1904] 2 Ch. 385. Beav. 463.
[n) Justice v. Wynne (1860), 1 (r) RusselVs Policy Trusts, In re
Ir. Ch. R. 289. (1872), L. R. 15 Eq. 26.
(o) Pinnock v. Bailey (1883), 23
ASSIGNMENT 445
nor the trustee in bankruptcy of a bankrupt person (s) can obtain representa-
priority over assignees or incumbrancers by giving prior notice ^^^^"'^
of their title ; but an assignee without notice of a bankruptcy bankruptcy,
may acquire priority over the trustee in bankruptcy by giving

notice of his assignment before notice is given by the trustee (<).
When a person has an interest, by way of charge or otherwise, Effect of
in a poHcy he is entitled to enforce his claim against the person

^hefe poHcy
who receives the money from
company notwithstanding that
the ôj^l or
the policy was as against the company unenforceable, and the

person receiving the money cannot allege as against his assignee
or mortgagee that the policy was void or illegal (u). Where,
however, a company makes a purely ex gratia payment in respect
of a policy upon which they deny all liability, the person to
whom such payment was made for his own benefit is not, unless
he is in a fiduciary position, bound to account for it to the persons
who would have been entitled to the policy moneys if the policy
had been enforceable.
A policy holder cannot get rid of liens or charges on a policy Poiicy sur-
by surrendering and taking a new policy in its place. The ''^"dered in

it
^
6xcii£iiig6 lor
new policy will be subject to the same equities which attached new policy
to the old, and the company will be bound to the extent of its cSims attach.
knowledge of these equities.
KTesbitt v. Berridge (1864), 10 Jur. N. S. 53
A mortgagor sold his equity of redemption on two policies. A sub-

^^sim ^
purchaser of the equity paid off the mortgagee and surrendered the two policies Berridge.
to the office and the office granted one new policy on the same terms. After-
wards the sale of the equity was set aside on the ground of insufficient value,
and the mortgagor was held entitled to redeem the substituted policy on the
same terms as he would have been entitled to redeem the old policies.
An assignment of a poHcy carries with it prima facie the right Right to

°'
to possession of the document. But the document and the right p°^^^^^?°"
to the policy moneys are both property, and each is property

of a different kind, and the right to the one may pass without
the right to the other, and one person may be entitled to hold the
document as against the person who has the sole right to the
policy moneys.
(«) WalUs,Inre,[1902]lK.B.119. (u) WortUngton v. Curtis (1875)

Ibbetson, Ex p. (1878), 8 Ch. D. 519. 1 Ch. D. 419 ; A.-G. v. Murray [19031
(t) Russell's Policy Trusts, In re 2 K. B. 64.
(1872), L. R. 15 Eq. 26.
Neale v. Molineux (1847), 2 Car. & K. 672

Neale v. A having a policy on his own life assigned
deed, and due notice
it to B by
Molineux.
was given to the office. A was allowed to remain in possession of the policy,
and subsequently deposited it with C as security for an advance. C had no
notice of the assignment. On the death of A, B sued C in detinue for
possession of the policy. C pleaded that B fraudulently allowed the pohcy
to remain in the hands of A. The jury found that there was no fraud, but
only negligence. As negligence was not pleaded, B, the plaintiff, had judgment,
but no decision was given as to whether or not a plea of negligence would have
been a good defence to the action.
Where The case of Neale v. Molinevx was argued on the analogy of

assignee has
negligently title deeds to land. It has been held that the right to the title
left polioy in
deeds runs with the legal ownership, and that a vendee is entitled
hands of
assignor. to recover them notwithstanding that owing to his negligence
they remained in the hands of the vendor, who subsequently
deposited them by way of equitable mortgage [x). On the other
hand, if a first mortgagee negligently leaves the title deeds in the
possession of the owner and the owner mortgages the land again and
deposits the title deeds with a second mortgagee without notice
of the first mortgage, the first mortgagee cannot recover them
without first paying off the second mortgagee. The analogy of
the policy to title deeds of land is by no means complete, but it
is submitted that a similar distinction applies. If the policy is
assigned for value unconditionally, and not by way of mortgage

any manner sufficient to convey the equitable title,
or charge, in the
presumption is that the property in the document passes at the
same time, whether it is delivered or not. If so, the assignee can,

notwithstanding his negligence in leaving it in the possession of
the assignor, recover it from a subsequent assignee with whom it
has been deposited without notice, even although by giving first
notice such depositee may have priority in respect of the right to

the policy moneys. On the other hand, if the poHcy is assigned
by way of mortgage the property in the document remains in the
assured, and if the first mortgagee has negligently left it in posses-
sion of the assured, and he has subsequently deposited it with a

second mortgagee the first mortgagee will probably not be entitled
to possession unless he undertakes to pay off the second mortgagee.
Possessory A possessory lien on the policy, such as a solicitor's lien, may be
lien.
enforced against the assured or other person entitled to the policy
(x) Harrington v. Price (1832), 3 B. & Ad. 170.

ASSIGNMENT 447
moneys The right to retain the document against assignees

{y).
of the poHcy moneys does not depend upon the person exercising
the lien having given notice to the company {z).
Where the intention of a donor by delivery of a policy was to Although gift
make a gift of the poUcy moneys and incidentally of the docu- moneys'void,
ment to the donee, the gift of the poHcy moneys may be void by S^^ °*
^°''\s
reason of its being an imperfect voluntary assignment, but the valid.
gift of the document may nevertheless be good so that the donee

can hold it against the person entitled to the policy moneys (a).
When a voluntary or a fraudulent assignment is set aside as

against a trustee in bankruptcy the trustee is entitled to delivery
up of the policy.
West of England Bank v. Batchelor (1882), 51 L. J. Ch. 199
A on his own life. He mortgaged it to B, but this mortgage West of

effected a policy
was paid and the policy and reassignment remained in the hands of A's England
off
solicitors. A subsequently mortgaged his policy to the W. E. Bank, and natchcl'or

thinking the original policy was lost, he delivered to them a certified copy
which he obtained from the company. The Bank gave notice of their mortgage.
Subsequently they ascertained that the policy was in the hands of A's solicitors,
who claimed a lien on the document for their professional charges but had ;
never notified their claim to the company. The Bank brought an action
against the solicitors claiming delivery up of the policy, and a declaration that
they had a first charge on the policy. The Court held that they were not
entitled to the policy. Fry, J., said, " The assignee of a chose in action takes
subject to all the equities. It appears to me that that is in no way altered by
the Policies of Assurance Act, 1867, or by the provisions of the Judicature Act.
The one makes the right to receive the money a condition precedent to the
right to sue at law, and the other makes an assignment of a chose in action
subject to all existing equities. The plaintiffs then say that the priority of
the equity constituted by the lien was repelled by the negligence in not giving
notice of that lien to the insurance office. The question therefore arises
whether such notice ought to be given in order that a solicitor may retain his
lien. To answer that question one must inquire what is the nature of a
solicitor's lien. It is merely a passive right, a right to hold the piece of paper
or the piece of parchment as the case may be, until he is paid. In this case it
gives the solicitor no right against the fund, but merely a right to embarrass
the person who claims the fund by the non-production of the piece of paper
. . . the fact that the assignor does not hold that piece of paper is notice to
all the world that somewhere else than in the hands of the person with
it is
whom they are dealing, and therefore the fact of the solicitor holding the
paper is notice to all the world that that paper is held by some one who is not
{y) Head v. Egerton (1734), 3 P. W. Gibson v. Overbury (1841), 7 M. & W.

280. 555.
(z) West of England Bank v. (a) Rummens v. Hare (1876), 1
Batchelor (1882), 51 L. J. Ch. 199 ; Ex. D. 169.

present ; and that is the only thing of which it is necessary to give notice . . .
there is no possibiUty of a fraud being committed by reason of the solicitor

not giving notice,"
Rummens v. Hare (1876), 1 Ex. D. 169
Eummtna v. The holder of a policy on his own life handed it to his mother in ciroum-
Hare. stances which showed an intention to give her the benefit of it. Subsequently
A married. On the death of A his widow, as executrix, claimed the proceeds
of the policy. The company declined to pay without production of the policy,
and the widow thereupon brought this action in detinue for the policy and
premium receipts. It was argued for thewidow that, as the benefit of the
policy could not pass as a voluntary gift by mere delivery of the document,
the right to the policy moneys was in the executrix, and incidentally she was
entitled to the policy. The Court of Appeal held that, whoever might be
moneys, there was a good gift of the document by A to
entitled to the policy
his mother. Lord Cairns said, " This was a gift of the policy, and although
there was no consideration for it, yet it was a valid gift to the mother with
whatever advantage she could obtain from it. It has been pointed out during
the argument that the deceased could not have claimed to have the document
returned to him nor can his administratrix now claim it. We have nothing
to say as to the money which is secured by it. This is one of those cases in
which the plaintiff may not be able to recover the document which is the
evidence of the debt, while the person who holds that evidence may not be
able to recover the debt itself ; but with that we have nothing to do."
Gibson v. Overbury (1841), 7 M. & W. 555

Gibson V. A policy was deposited as security for money advanced, but no notice was
Overhury. given to the company. Subsequently the depositor became bankrupt, and
the assignee in bankruptcy brought an action of trover against the deposit ee,
claiming the deliveryup of the policy on the ground that the property had
passed to him as property in the order and disposition of the bankrupt.
The Court held that the deposit was made by way of lien on the document,
and not by way of charge on the policy moneys, and that although the assignee
in bankruptcy might be entitled to the policy moneys he was not entitled to
the document which remained subject to the lien. Apparently if the delivery
of the policy to the depositee had been merely collateral to a charge on or
mortgage of the policy moneys, and the charge or mortgage had been set aside
as against the assignee in bankruptcy, he would have been entitled to recover
the policy from the depositee.
Mortgagee's Under the Conveyancing Act, 1881 (d), a mortgagee with a power
statutory
right to pos-
of salemay recover a policy from any person (other than a person
session of having an interest in the policy moneys in priority to the mort-
policy.
gage), notwithstanding that such person has a lien on the docu-
ment as against the mortgagor (d).
((i) 44 & 45 Vict. c. 41, s. 21 (7),

— —
ASSIGNMENT 449
When a policy of insurance has been dealt with in. a coimtry Conflict o£
^^'
other than the country by the law of which the original contract
isgoverned there may be a conflict of law. The questioi:^ as to
which code of law ought to be applied to the particular circum-
stances, must be determined by the rules of private international
law. Those rules are not very clearly. defined, but the following
may be accepted as more or less definite principles upon which an
English Court wiU act :
1. The validity and effect of an assignment of chattels are Rules of
frwid law of the place where ^^ÛonalUw.

facie determined according to the
the chattels are situate at the time of the assignment (e).
2. The validity and effect of an assignment of a chose in action
which is represented by a negotiable instrument is prima facie
determined according to the law of the place where the instrument
is situate at the time of the assignment (/ ).
3. Assignments of a chose in action not represented by a

negotiable instrument are subject to the following rules :
(a) Where the question is the validity or effect of an assignment

as between assignor and assignee, it will be determined
according to the lex contractus of the assignment (g).
(b) Where the question is a competition between assignees, and

the lex contractus of all the assignments is the same, the
priority inter se will be determined according to that
law (h).
(c) Where the question is a competition between assignees, and

the lex contractus of the various assignments is different,
the priority inter se will be determined according to the

lex contractus of the original contract (i).
(d) Where the question is the liability of the original debtor to

be sued in the name of an assignee, the right of the
assignee to sue at law will be determined according to
the lex contractus of the original contract (k).
4. The lex contractus-, whether of an original contract or of

an assignment, is the law which the parties intend shall govern
(e) Inglis v. RdberUon, [1898] A. C. (h) North Western Bank v. Poynter,

616. [I895]A. C. 56.
(f)Emhirico8 v. Anglo -Austrian {i) Le Peuvre v. Sullivan (l?:55),\0
Bank, [1905] 1 K. B. 677 ; Alcock v. Moore P. C. 1 ; and see In re Queens-
Smith, [1892] 1 Ch. 238. land Mercantile and Agency Co.,
(g) Lee v. Ahdy (1886), 17 Q. B. D. [1892] 1 Ch. 219.
Z0Q;ScottishProm.dent-v.Cohen{\9,&Q), (k) North Western Bank v. Poynter,
16 B. 112; Colonial Bank V. Cady [1895] A. C. 56; O'Callaghan v.
(1890), 15 A. C. 267; North Western Thomond (1810), 3 Taunt. 82.
Bank v. Poynter, [1895] A. 0. 56.
I.L. 29
the incidents of the contract (l). The lex contractus is prima jade
the law of the place where the contract is made (m), but the form
of the contract (n), the residence or domicile of the parties, or the
fact that the contract is to be performed in another place (o),
affords evidence of the intention of the parties that the contract

shall be governed by some law other than the law where the
contract is made.
Applied to It is submitted that the assignment of an insurance pohcy is not
assignment
of insurance to be treated on thesame footing as the assignment of a negotiable
policy. instrument, but that the rules 3 and 4 are the rules which ought to
be applied in order to determine the validity or effect of the assign-
ment of a policy in any case where there is a conflict of law. It
has been suggested that a policy under seal stands upon a different
footing, inasmuch as a specialty debt is deemed to be situate in

the place where the document of title is, and that all assignments
should be regulated by the law of that place. No doubt for certaia
purposes of English law a specialty debt is deemed to be situate
in the place where the document of title is, as, for instance,
in questions Of probate and death duties (p). The distinction,
however, between specialty and simple contract debts is not one
which has any universality among the laws of the different nations,
and, on a question of international law, the distinction ought to
be disregarded. It is submitted, therefore, that, on the question
as to which of two different codes of law ought to be applied to
the assignment of a policy, a policy under seal stands upon pre-
cisely the same footing as a policy under hand only.
Lee V. Abdy (1886), 17 Q. B. D. 309

Lee V. Ahdt/. A policy was issued by the Reliance Mutual Life Insurance Society from its
head office in London, and purported to insure a person therein described as
being resident in Cape Colony. The assured, while resident and domiciled
in Cape Colony, purported to assign the policy to his wife. By the law of
the Colony an assignment from husband to wife was void, and the question
then arose whether the law of Cape Colony or of England should control its
validity. The case was argued before a Divisional Court on points of law on
the pleadings. Day, J., said it would be difficult on the facts then before them
to determine where the original contract of insurance was made or where the
policy moneys were payable, but that it was unnecessary to go into these
(I) Spurrier v. La Cloche, [1902] (o)Banhes, In re, [1902] 2 Ch. 333 ;
A. C. 446 ; Le Feuvre v. Sullivan Hansen v. Dixon (1907), 96 L. T. 32.

(1855), 10 Moore P.O. 1. {p) Commiseioner of Stamps v.
(m)Leev.Abdy{1886),nQ.B.T>.309. Hojpe, [1891] A. C. 476, 481; Winans
(n) Spurrier v. La Cloche, [1902] V. The King (1908), 24 T. L. R. 445.
A. C. 446.
ASSIGNMENT 451
questions. The subject matter of the assignment was a chose in action

which had no The general rule was that the validity and incidents
locality.
of a contract must be determined by the law of the place where it is entered
into. The assignment, if it existed at all, must exist by virtue of the contract
between assignor and assignee. That contract was made in Cape Colony
by persons domiciled there, and it was invalid by the law of Cape Colony,
and therefore the assignment was void. Wills, J., came to the same conclusion,
and partly upon the same reasoning, but he also laid some stress upon the fact
that the policy was issued to an assured resident in Cape Colony, and therefore
the original contract was made, with knowledge that an assignment might be
made elsewhere than in England, and the reasonable view to take was that
the parties contemplated that any assignment should be controlled by the
law of the country where it might be made.
Le Feuvre v. Sullivan (1855), 10 Moore P. C. 1

A policy was issued by an English insurance company to the assured, who Le Feuvre v.
was domiciled in Jersey. The policy was contained in the ordinary form of Sullivan.
the company's policies issued in England, but the contract was presumably
made, and the poUcy issued, through their agent in Jersey. The assured
subsequently deposited the policy in England with a domiciled Englishman
as security for a debt. No notice of this deposit was given to the company,
and afterwards the assured obtained a duplicate policy from the company
on the false assertion that the original was lost, and purported to assign it
for valuable consideration to his wife. The wife gave notice to the company
of her assignment, and on the death of the assured brought an action on the
policy in Jersey. The depositee of the original policy claimed a lien for his
debt. The question was whether the validity of the security should be decided
by the law of Jersey or of England. The Privy Council held on appeal from
the Royal Court of Jersey that the policy was an English instrument, and
formed and evidenced an English contract, and that as the deposit was made
in England to a domiciled Englishman the law of England must be applied.
The deposit was therefore a valid security, and was preferable to the wife's
claim unless the latter took without notice of the deposit.
Scottish Provident v. Cohen (1888), 16 B. 112
A Scottish insurance office issued a life policy in Scotland to a domiciled Scottish

Scotsman. The assured being subsequently resident in England deposited Provident v.
the policy with a domiciled Englishman as security for an advance, ^°"'^^'
and notice
of the deposit was given to the office. The assured was made bankrupt in
Scotland, and in a question between his trustee in bankruptcy and the English
depositee it was held that, although according to the law of Scotland the
deposit would not have been a good assignment, yet in a transaction completed
in England the law of England must apply and the deposit was good as against
the trustee representing the general creditors in Scotland.
Inglis V. Robertson, [1898] A. C. 616
A domiciled Englishman was the proprietor of a parcel of whisky in a Inglis v.

bonded warehouse situate in Scotland. He purported to create a charge Robertson.
upon the whisky by pledging the delivery warrants in England to an English

creditor but no notice was given to the warehouseman. The whisky was
;
arrested by a creditor in Scotland. In a competition between him and the

English pledgee it was lield that the rights of the parties must be decided
according to Scots law, and that, as by the law of Scotland a pledgee of goods
in a warehouse must make good his title by notice to the warehouseman, the
title of the creditor in Scotland must prevail.
Embiricos v. Anglo-Austrian Bank, [1905] 1 K. B. 677

Emhirkos v. A cheque in Austria upon a London bank in favour of a payee
was drawn
Anglo- resident in London. The cheque was stolen in Austria and the payee's en-
Austrian
dorsement was forged, and it was discounted in Austria in good faith. It was
Bank.
afterwards endorsed to the defendants in London, and cashed by them in
good faith. In an action by the payee for conversion it was held that the
law of Austria must apply, and that as according to Austrian law a title upon
a forged indorsement taken for value without gross negligence was a good
the title of the defendants must prevail. The decision of the Court was
title,
based on the principle that the assignment of a movable which can be touched
gives a good title thereto according to the law of the country where the movable
is situate, and they adopted the reasoning in Alcoch v. Smith, that in this
respect the case of a negotiable instrument is not different from a, sale of

chattels,and the dictum of Romer, J., in that case, where he says, " Transfer
in one country of a document of title to a debt or to an interest in personal
property is governed by the law of the country where the transfer takes place,
although the debt may be due from persons living in, or the personal property
may be situate in, a foreign country,"
North Western Bank v. Poynter, [1895] A. C. 56
Norih Western Merchants in Liverpool were owners of a cargo afloat on its way to a port
Bank v. in Scotland. They received the bills of lading, and a bank in Liverpool having
Poynter.
agreed to advance them money on the cargo, the bills of lading were deposited
with the bank. Afterwards the bills of lading were redelivered to the merchants
so that they might sell the cargo on behalf of the bank. They sold the cargo
to a firm in Glasgow. The merchants' creditors in Scotland arrested the pro-
ceeds in the hands of the Glasgow firm. In a competition between them and
the English bank it was held that the title of the bank must prevail. Lord
Watson said, " Where a movable fund situated in Scotland admittedly belongs
to one or other of two domiciled Englishmen, the question to which of them
it belongs is prima facie a question of English law."
Colonial Bank v. Cady (1890), 15 A. C. 267
Colonial Bank The registered owner of certain share certificates in an American company
V. Cady. died domiciled in England. His executor delivered the certificates and transfers
signed in blank to a broker in London with the object of having himself
registered an owner. The broker fraudulently deposited the certificates and
transfers with a London bank in security for an advance. It was alleged that
according to American law the executor would be estopped by his negligence
ASSIGNMENT 453
from claiming the shares against the bank. The Court held that in a question
between the executor and the bank English law applied, and that the executor
was entitled to recover the certificates and transfers from the bank. Lord
Watson said, " The interest in the railway company's stock which possession
of these certificates confers upon a holder who has lawfully acquired them
must depend on the law of the company's domicile. But the parties to the
various transactions by means of which the certificates passed from the
possession of the respondents into the hands of the appellants are all domiciled
in England, and it is, in my opinion, clear that the validity of the contract of
pledge . . . and the right to retain and use the documents must be governed
;
by rules of English law " and Lord Hersohell said, " I agree that the question
what is necessary company or to
or efiectual to transfer the shares in such a
them where there is, or must be held to have been, an
perfect the title to
intention to transfer them must be answered by a reference to the law of the
State of New York. But I think that the rights arising out of a transaction
entered into by parties in this country, whether, for example, it operated to
effect a binding sale or pledge as against the owner of the shares must be
determined by the law prevailing here."
Kelly V. Selwyn, [1905] 2 Ch. 117

A
was entitled to a reversionary interest under an English trust. He was Kelly v.
resident and domiciled in the United States, and while there purported to Selwyn.
assign his reversionary interest to his wife. No notice of this assignment was
given to the trustees. Afterwards A, being in England, purported to assign
his reversionary interest by way
mortgage to X, who gave notice to the
of
trustees. it was held that as the
In a competition between A's wife and X,
trust was an English trust, the question of priority must be decided according
to EngUsh law, and as A's wife had failed to complete her title by notice the
claim of X must prevail.
In the great majority of cases the rules above stated will not English policy
be difficult to apply. Thus, in the case of an English policy ScoWandor

issued by a company with its principal office situate in England, °*^''.
an assignment, say, in Scotland (which is a foreign country for country,
purposes of private international law) must, as between assignor
and assignee be -prima facie determined according to Scots law,
and if the assignee takes a good title by Scots law, that must
prevail against the assur.ed and his personal representatives or
general creditors, whether in Scotland or England. If the assured

assigned his poHcy twice over in Scotland to domiciled Scotsmen,
a competition between such assignees would 'prima facie be
decided according to Scots law. If the assured assigned his policy
first in Scotland and then in England, the validity of each assign-
ment would prima facie be decided according to the law of the
country where it was made, but a competition between the two
assignees on a question of priority would be determined according

to English law. In any claim made against the company, the
.right of any assignee to sue at law in his own name, and so his
ability to give a legal discharge; would be determined according
to English law. The company, however, would not on that
account be entitled to disregard claims made by an assignee
holding a good title by Scots law in a case where Scots law pre-
vailed between the claimants. Such title would be good in equity
in an English Court, and the company could not pay the person
entitled to sue at law and disregard the equitable title.
Section VI. — Voidable Assignments

Misrepresen- An assignment or agreement to assign "a policy of insurance
tation as
ground for
may be rescinded on the ground of misrepresentation. Specific
rescission. performance of an agreement to assign will not be granted if there
was any misrepresentation of material fact made by or on behalf
of the assignee (r). Fraudulent misrepresentation is ground for
rescission if each party can restore what he has received under the
contract (s). Innocent misrepresentation is ground for rescission
if (i) the agreement to assign is still incomplete for want of a
formal assignment, and (ii) the party against whom rescission is
claimed can be placed in statu quo ante.

A beneficiary under a settlement cannot enforce his claim
against the trustees if the settlement in his favour has been
obtained by his fraudulent misrepresentation (t).
Damages for Where an assignment is induced by the fraud of one party,

fraud.
the other party may, as an alternative to his remedy by way of
rescission, bring an action for damages for the loss sustained (m).
Mutual mis- An assignment or agreement to assign is void ah initio if it is

take or error
in eseeniial-
made under a mutual mistake or error in essentialihus (x). The
ibus. mere ignorance of material facts is not in itself sufficient to vitiate
an assignment, but if the facts go to the root of the contract the

assignment is void on the ground that the essential basis of
the contract as concluded was non-existent (y).
(r) Brealey v. Collins (1831), You. (m) Barber v. Morris (1831), 1

317. Mood. & Rob. 02.
(«) Jones V. Keene (1841), 2 Mood. {x) Scottv. CoMZsora,[1903]2Ch.249.
& Rob. 348. (y) Thomson v. Lambert (1868),
Hosier's Trust,
(t) In re (1877), 37 Ir. R. 2 Eq. 433 ; Turner v. Harvey
L. T. 426. (1821), Jao. 169.
VOIDABLE ASSIGNMENTS 455
An assignment or agreement to assign is also void, ah initio if False repre-
the assignor was induced to execute the document by a false to nature of
representation as to the character of the document he was document,
signing Prima facie a man is presumed to be acquainted with

(z).
the and effect of a document which he signs he

contents ;
cannot afterwards say that he did not read it, or that he was told
the effect of it was something other than its true effect (a). But the
rule does not apply when a misrepresentation is made, as to the
character of the document as a whole, and the person signing it
is thereby put off inquiry as to the precise contents.
Thomson v. Lambert (1868), Ir. R. 2 Eq. 433

A man knowing that his father had met with an accident, and was ill, Thomson v.
and knowing that that fact was material for the purpose of valuing a pohcy Lambert.
of insurance on his father's life, agreed to purchase the policy without dis-
closing the fact to the vendor. A Court of Equity refused the application
of the vendor for an injunction to restrain the purchaser from enforcing
the agreement at law. The judge held that mere concealment of a material
fact was not sufficient to invalidate the agreement, but that if the concealment
had been of a fact which formed an essential element of the contract as if the
purchaser had known that his father's death was imminent or if he had made
any false statement to the vendor he would have set the contract aside and
restrained the proceedings at law.
Jones V. Keens (1841), 2 Mood. & Eob. 348

A
purchaser sent his agent to negotiate for the purchase of a life policy Jones v.
for £999. The person whose life was insured was then in extremis. The Keene.
vendor, who had no knowledge of this fact, asked the purchaser's agent how
much he thought the policy was worth, and he said £60. The vendor there-
upon sold him the policy for that amount. Upon the death of the assured
the vendor brought this action in trover against the purchaser, and the
judge, in summing up the case to the jury said that if they were of opinion
that the vendor and his agent knew that the person insured was then in extreme
danger when the agent said the policy was worth £60 the plaintiff was entitled
to a verdict. The plaintiff had a verdict and judgment for the value of the
policy.
Scott V. Coulson, [1903] 2 Ch. 249

An agreement to purchase a life policy was made under the mutual belief Scott v.
insured was then in being.

As a matter of C""*''""'
that the life fact the life had
already dropped, and the purchaser became aware of that fact before com-
pletion. He did not disclose it to the vendor, but took a deed of assignment.
Subsequently the insurance company paid the moneys into Court, and the
vendor brought an action against the purchaser claiming to have the contract
and deed of assignment set aside, and to have the policy moneys paid out
{z) Foster v. Mackinnon (1869), (a) Howatsonv. WM,[\QQ'7}\Ch.

L. R. 4 C. P. 704 ; Bagot v. Chapman,, 537.
[1907] 2 Ch. 222.
:
to him. The Court of Appeal held that he was entitled to the relief asked
the agreement was void on the ground of mutual mistake as to the basis of
the contract, and the assignment made in pursuance of it could not be
supported,
Barber v. Morris (1831), 1 Mood. & Bob. 62

Barber v.
The vendor of a policy did not disclose the fact that the annuity which
Morris.
constituted his interest in the life was redeemable. After the poUcy had
been assigned the annuity was, in fact, redeemed, and the vendor's interest
in the life thereby ceased. The purchaser then alleged that the poUoy was
worthless in accordance with the judgment in Oodsall v. Boldero (c), and
brought an action for damages. Lord Tenterden, in summing up, said that
the question for the consideration of the jury was whether at the time of the
sale the defendant made any improper concealment of facts within his know-
ledge, andif he did so the contract was void and the plaintiff was entitled to
recover. He then pointed out that although the policy was unenforceable,
as the law then stood, yet the practice of the companies was to pay, notwith-
standing that the interest had ceased, and the defendant might well have
thought the matter was of no importance. The jury gave a verdict for the
defendant.
Bagot V. Chapman, [1907] 2 Ch. 222
Bagot V. A married woman was entitled to a reversionary interest. To secure a

Chapman. loan of £12,000 made husband the husband and wife executed a joint
to her
mortgage deed whereby they assigned the reversionary interest and covenanted
to repay the money advanced. In an action by the mortgagees for foreclosure
the wife pleaded non est factum, alleging that her husband, who was a solicitor,
told her that the mortgage deed which he requested her to sign was a document
which would enable him to raise money at some future time should he require
it; but that he was not going to use it, and she should not suffer. She under-
stood that if her husband did raise money it would be out of her reversionary
interest, but she had no idea that any present charge was created or that she
was making herself liable to payân3rthing. Swinfen Eady, J., held that, as
the nature of the deed was wholly misrepresented to her it was not her deed,
and was void against her.
Duress and An assignment of a policy of insurance may also be set aside

undue
influence.
on the ground that it was obtained by duress or undue influence.
An assignment so obtained is not void ab initio, but is voidable (d).
Duress impHes some kind of physical coercion or threat of personal

violence, inducing a party to make a contract against his free will(e).
Undue influence is the exercise of that authority which a person

in a strong position can exercise over a person in a relatively weak
(c) (1807), 7 East, 72, afterwards (d) Ormes v. Beadel (1860), 2 D. G.

overruled in Dolby v. India and F. & J. 333.
London Life (1854), 15 C. B. 365. (e) Leake on Contracts, 5th Edition,
p. 279.
position (/). In the case of certain transactions, undue influence

is presumed (g). Thus, in any sale of a reversionary interest by
a poor or ignorant person acting without independent advice,
and in all transactions between trustees and beneficiaries, solicitors
and clients, medical man and patient, parent and child, husband
and wife, the onus is on the purchaser of the reversionary interest,
or on the trustee, solicitor, medical man, parent and husband to
show that the transaction was fair and reasonable. In the case
of a sale of a reversionary interest, that cannot now be set aside
on the sole ground of undervalue (k), but where the vendor is a
poor or ignorant person acting without independent advice the
onus is still on the purchaser to show that it was a fair and reason-
able transaction {i).
When an assignment of a policy is set aside as between assignor Right to
and assignee on the ground of fraud, mistake, duress, or undue aga/nst pur-
influence, persons claiming under the assignee take no better title
cheers from
" ° assignee,
than the assignee himself, notwithstanding that they may have
been purchasers for value and without notice of the defect in the
original assignment (k). An assignee of a chose in action takes
subject to all prior equities {l) and the equity of an assignor to
set aside his assignment on the ground of fraud is prior to the
equity of the purchaser for value from his assignee. The fact
that by written assignment and notice to the company, such
purchaser has a right to sue the company in law in his own name
does not, it is submitted, give him any priority (m).
Lawrence v. Galsworthy (1857), 3 Jur. W. S. 1049
A solicitor bought his client's policy at an auction for less than the full Lawrence v.
(^^^sworthy.
value. The solicitor subsequently deposited the policy with a third person to
secure advances made by such person to him. The sale of the policy to the
solicitorwas set aside on the ground of the confidential relationsMp between
soUcitor and client, and it was held that the client was entitled to the policy
moneys subject to the price given by the solicitor and any premiums paid
by him being a first charge thereon. To that amount but no further the
depositee was entitled to be paid in respect of his charge, and the client was
entitled to receive the balance.
A trustee in bankruptcy takes subject to all equities, and As against

trnsf,p.fi in
(/) Baudaina V. Richardson, [1Q06] (k) Lawrence v. Galsworthy (1857),

A. C. 169. 3 Jur. (N. S.) 1049.
(g) Leake on Contracts, 5th Edition, (l) AthencBum Life v. Pooley (,1858),
pp. 283 et seq. 3 De G. &

J. 294 ; Graham v. Johnson
(h) Sales of Reversions Act, 1867 (1869), L. R. 8 Eq. 36, 43.
(31 Vict. c. 4). (m) Ante, p. 432.
(i) ^/•i/v.£ane(1888),40Ch.D.312.
—
bankruptcy accordingly an assignment to a bankrupt may be set aside on

of assignee.
the ground of misrepresentation or mistake both against the
bankrupt and the trustee in bankruptcy, and the assignor may
elect to set aside the assignment even after the date of the
receiving order and with full knowledge of the bankruptcy (w).
Validity of A voluntary assignment inter vivos of a policy of insurance will

voluntary
assignments. not be enforced against the assignor or his personal representatives
unless
(1) the assignment is complete as between assignor and

assignee, or
(2) the assignor has constituted himself a trustee for the

assignee.
Equity will The old Chancery doctrine was that no Court of Equity would
not complete
imperfect gift. compel the completion of a voluntary conveyance of property (o).
If the owner of property capable of being assigned in law agreed

or purported to assign it for a valuable consideration, but did not
actually transfer the property in law, a Court of Equity would
treat the equitable right as having been transferred to the assignee,
and would compel the assignor to complete the assignment by
But if a similar agreement or
transferring the property in law.
assignment was made voluntarily, a Court of Equity would not
assist the volunteer by completing the transaction. If, however,
the intending assignor having the legal title had declared himself
to be a trustee of the property for the intended assignee, a Court

of Equity would enforce the trust against him, although purely
voluntary (p). Where, therefore, a voluntary assignment of
property was incomplete and insufficient by lack of formality to
transfer the property in law, the Court was sometimes astute to
find a declaration of trust in an incomplete assignment. A mere

promise to assign infuturo was never deemed sufficient, but many
Declaration judges held, and particularly in the case of gifts from a man to
of trust.
his wife, that, where words purporting to assign the property de
presenti were used, but the form was not sufficient to convey the
property in law, the Court ought to presume a declaration of trust
in favour of the donee (g). In the case of gifts between strangers,
those decisions cannot be reconciled with the judgments of the
(n) Eastgate, In re, [1905] 1 K. B. (g) Grant v. Cfrant (1865), 34 Beav.

465. 623 ; Richardson v. Bichardaon (1867),
(o) Duffield V. Elwes (1827), 1 L. R. 3 Eq. 686 Morgan v. Malleeon
;
Bligh (N. S.) 497. (1870),L. R. lOEq.475; BaddeUyv.

(p) Pye, Ex parte (1811), 18 Ves. BaddeUy (1878), 9 Ch. D. 113 Bridge ;
140, 149. V. Bridge (1852), 16 Beav. 315.

Lords Justices in Milroy v. Lord (r), where it was held that an

imperfect gift could not be construed as a declaration of trust
unless therewas something besides the mere intention to give to
show that the donor intended to constitute himself a trustee. In
the case of Breton (s), Hall, V.C., applied the principle of Milroy v.
Lord to an intended gift of furniture from a husband to his wife.
It may be that, as before the Married Women's Property Acts a Assignment
husband could not have transferred the legal estate in any pro-
perty to his wife, a document in the form of an assignment might
properly have been construed as a declaration of trust {t), but
no reason why such an assign-
since those Acts, there seems to be
ment should be construed differently from an assignment between
strangers, or why a trust should be presumed unless there is, apart
from an imperfect assignment, some evidence to show that the
husband intended to constitute himself a trustee.
In the preceding paragraph the equitable doctrine against The rule
completing a voluntary assignment has been considered solely afststfno-
as applied to assignments of property which is assignable at law. volunteers

But/policies
r appUedto
13
oft assurance, being choses
1, 1,
m
•
^-
action,
4.
were not assign- assignments
able at law, and they, together with purely equitable rights, such
other'choses'^
as the interest of a cestui que trust, could only be assigned in in action,
equity. On the one hand, it was argued that as an assignment of

those rights could only be enforced by resorting to a Court of
Equity, the equitable doctrine ought to apply, and that the Court
would not give its assistance to a voluntary assignee (u). On the
other hand;it was argued that (1) the rule only applied where an
assignee had to come Equity -for assistance to com-

to a Court of
plete his assignment, and that where a right was only assignable
in equity, the assignment was complete by any form of words
purporting to transfer the property de fresenti, and as no
assistance was required from the Court to complete the assign-
ment, it would be enforced, although voluntary (a;) ; (2) an
assignment de fresenti of an equitable right or of a right assign-
able only in equity, was tantamount to a declaration of
trust {y).
(r) (1862), 4 De G. F. & J. 264, (m) Bridge v. Bridge (1852), 16

followed in Richards v. Delbridge Beav. 315 ; Ward v. Avdland (1845),
(1874), L. R. 18 Eq. 11 ; HeaHley v. 8 Beav. 201.
2VicAoZson (1875), L. R. 19 Eq. 233. (x) Ellison v. Ellison (1802), 6
(s) (1881), 17 Ch. D. 416 ; and see Ves. 656.
Moore v. Moore (1874), 18 Eq. 474. (y) Magawley's Trust, In re (1851),
(t) Ex parte Whitehead (1885), 14 5 De G.& Sm. 1.
Q. B. D. 419.
Authorities The result of the decisions appears to be that a voluntary

summe up.
pj-Qjjijgg ê juturo to assign a chose in action, such as an insurance
policy, is not enforceable against the promisor or his representa-
tives {z) ; but if written words have been used purporting to
assign the right de presenti, there is a complete assignment which
is enforceable, although voluntary (a). No delivery of the pohcy
or notice to the company is necessary to complete the assignment
Oral gift of between assignor and assignee (&). A more difficult question is
policy.
whether oral words purporting to assign the policy de presenti can
ever amount to a complete assignment enforceable in equity
against the assignor. As an assignment an oral declaration is, no
doubt, incomplete. The assignee has no means of perfecting his
title to sue in law. The assignor has not done everything which
is necessary to give the assignee a title as complete as possible.
As an assignment, therefore, it ought not to be enforced in equity.

But equity will enforce an oral declaration of trust of personalty (c),
and if it was clearly proved that the donor expressly constituted
himself a trustee of the policy, that would be sufficient without
writing. In the absence of an express declaration of trust, it
might be argued that a trust ought to be implied from words of
present but imperfect gift. Although some of the older cases,
like Kekewich v. Manning (d), support this view, the trend of
modern authority is against it, and it is submitted that an oral
trust, even between man and wife, can only be constituted by

words which clearly indicate the intention of the donor to retain
the property in his own hands for the benefit of the donee (e). It
follows that a bare oral statement by a policy holder that he gives
it to another confers upon that other no interest which can be
enforced in law or equity (/). Delivery of the policy to the

intended donee does not carry the matter any further as regards
(z) D'Angihau, In re (1880), 15 Ch. 408 ; BrownZee v. ieo66 (1907), 9

Ch. D. 228, 235 ; King, In re (1879), F. 1302.
14 Ch. D. 179 ; Vavaaseur v. Vavas- (ft) Fortescue v. Barnett (1834), 3
aeur (1909), 25 T. L. R. 251. Even My. &K.36 ; Justices. Wynne{li60),
where the promise is under seal it 12 Ir. Ch. R. 289; Patrick, In re,
creates no legal or equitable interest [1891] 1 Ch 82
in the poUoy. The only effect of the
^^^ MeFaddm v. Jenkins (1812), 1
seal is to give the promisee a right 01 pj/ \no jgir
action for damages on the covenant ,'
, ,,'„^,.' t^ „ ,, „ ^ ,»c
(Ward V. AudU^ (1846), 16 M. & W. (^) d^Sl), 1 De G. M. & G. 176.
862 Cox v. Barnard (1850), 8 Hare, (e) Vavasseur v. Vavaaseur (1909),
;
310) 25 T. L. R. 250.
a) King, In re (1879), 14 Ch. D. (/) Howes v. Prudential (1883),
179 ; Pearaon v. Amicable (1859), 27
179; 49 L. T. 133.
Beav. 229 ; Oriffm, In re, [1899] 1
the policy moneys {f), but it may give him a good title to the
policy as a document (g).
Fortescue v. Barnett (1834), 3 My. & K. 36

The holder of a life policy executed a voluntary deed whereby he purported Fortescue v.
to assign the policy to trustees for the benefit of his sister and her Harnett.
children,
This deed was dehvered to the trustees, but the policy remained in the hands
of the grantor. No notice of the settlement was given to the insurance office,
and subsequently the grantor surrendered his policy to the company for a
cash payment. Leach, M.R., held that as the assignment of the policy was
complete between assignor and assignee without delivery of the policy or
notice to the company, the assignment was valid in equity, and he ordered
the grantor to find security for the amount of the policy and bonuses.
Kekewieh v. Manning (1851), 1 De G. M. & G. 176

Money Government Stock was bequeathed by a testator in trust for Kekewich v.
in
his widow life, and thereafter to his daughter absolutely.
for The daughter ^^ci^^^'"^-
executed a marriage settlement, and assigned her interest under the will to
trustees for the benefit of the issue of her marriage and her niece. There
was no issue of the marriage and the daughter contracted a second marriage,
and purported to settle the same interest for the benefit of the issue of that
marriage. On the death of the testator's widow the trustees of the second
settlement contended that, as the first trust in favour of the niece was voluntary,
a Court of Equity could not enforce it. The daughter, it was contended, did
not constitute herself a trustee, and the assignment to the trustees of the
settlement was incomplete, as no legal right passed to them. It was only
equivalent to an agreement to transfer, and a Court of Equity would not
enforce such an agreement if it was voluntary. Wigram, V.C., acceded to
this argument, but his decision was reversed by the Lords Justices, who held
that the Court would enforce the voluntary settlement in favour of the niece.
They were of opinion that a purely equitable title might be effectually assigned
by a voluntary deed, but they would not decide whether notice to the legal
owner was necessary to complete such a transaction but whatever rule
;
there might be against volunteers, it did not apply to the case of one who, in
the language of the Court, was termed a cestui que trust claiming against his
trustee, for a trustmight certainly be created gratuitously. This case,
therefore, was decided, not on the ground that there was a complete assignment
to the trustees of the settlement, but on the ground that there was a declara-
tion of trust, and apparently that, inasmuch as the legal estate had not been
conveyed to the trustees, the settlor constituted herself a trustee.
Pearson v. Amicable (1859), 27 Beav. 229

The holder of a poUoy executed a voluntary deed whereby he assigned the Pearson v.
policy to two trustees upon certain trusts for his father, mother, brothers Amicable.
and sisters. On the death of the holder his executors claimed the policy
moneys on the ground that they had the legal title and a Court of Equity would
(//) James v. Bydder (1841), 4 (g) Rummens v. Hare (1876), 1
Beav. 600 ; Maggison v. Foster (1843), Ex. D. 169.

2 Y. & C. 336.
not enforce a voluntary assignment where the settlor had not constituted
himself a trustee. Romilly, M.R., held that the settlement was valid and
complete and that a Court of Equity would enforce it. In giving judgment,
he said, " No person can state too strongly to command my assent the pro-
position that if a voluntary assignment of any property is imperfect and
incomplete and the assistance of a Court of Equity is required to give effect to
it, this Court will not interfere to perfect the instrument. I also fully admit
that in these cases there is a distinction between that species of instrument
which by assignment passes the property, and that which simply operates as
a declaration of trust. The question is whether this is a complete instrument
or whether it requires the assistance of a Court of Equity for its enforcement.
I am of opinion that it is a complete and perfect instrument. If this were
an assignment of the poUcy for value and the purchaser had come into this
Court for its assistance to render the assignment more complete, what would
remain to be done ? The assignor would say, What can I do more than I have '
already done ? If you had told me out of Court what further assurance, or
what further deed or assignment was necessary to make this instrument more
complete, I would have executed it.' The question whether anything remains
to be done to complete the assignment of a policy is exactly the same whether
it arises upon a voluntary instrument or upon one for valuable consideration :
whether it be one or the other, the question must be. What is there that the
assignee can require the assignor to do to make the instrument more complete ?
The error in the argument of the executors is this it is assumed that this is :
a suit in which an assignee has come here to ask the aid of the Court in making
this instrument more complete but he does nothing of the sort. It is said
;
by the executors, If the plaintiffs do not require the assistance of this Court,
'
why do they not proceed at law ? but the proceeding suggested in this case
'
would be against the executors ; this is not a suit against the executors, it
is a suit against the insurance company. The insurance company say, We are '
perfectly ready to pay, we do not contest your claim you want nothing to ;
make the instrument more complete, and we are ready to pay the amount,
but we must not remain open to two suits and therefore, as the executors;
raise an adverse claim to the policy, it is not for us to decide whether it is a

valid claim or not, and we require the assistance of this Court to prevent
our being doubly vexed by two suits, and to determine wljich of the two
claimants is entitled to the money due on the policy. We admit the claim
respecting it, there is the money which we are ready to pay into Court.' The
trustees of the settlement say, '
Our instrument is perfect and complete we ;
do not ask for any relief against the executors, why should we not have the
money ? The insurance office is right in paying to us it is for the executors ;
to make out their claim.' If the assignment had been made for value it is
clear that the assignor could nothave prevented the assignee from using his
name company, if they had resisted the demand, and
in suing the insurance
this Court would not and could not have allowed the assignor to say his name
should not be made use of. The executors can stand in no better situation
than the assignor this Court would not have prevented the assignee from
;
making use of the name of the assignor if the insurance company had resisted
payment. But here the assignment is voluntary it is irrevocable, and in :
the form usual in all these instruments, and the Court will not allow the
grantor to contradict his deed, The Court will not assist a volunteer, but it
does not say, on the other hand, that it Avill assist an assignor in defeating his
voluntary deed. been founded on the supposition that by

The argument lias
this suit the trustees are asking the assistance of a Court of Equity, but in
truth they come here only to resist the executors of the assignor, who have
raised a claim which the assignor himself was not entitled to raise, and which
they, standing in his shoes, are not entitled to raise, but which, nevertheless,
makes it impossible for the trustees to receive the money until the claim of
the executors is disposed of."
Justice V. Wynne (1860), 12 Ir. Ch. B. 289

The holder of a policy executed a voluntary settlement, whereby he Justice v.
assigned the policy- to trustees in trust for A. No notice of this settlement Wynne.
was given to the office, and the holder afterwards executed a voluntary deed
whereby he purported to assign the policy to X. On the death of the holder
X obtained possession of the policy from the trustees and obtained the policy
moneys from the company. A thereupon brought this action against X for
the proceeds of the policy. X contended that as he had possession of the
money a Court of Equity would not enforce against him the claim of a voluntary
assignee of the chose in action. The Court held that as the policy had been
duly and formally assigned to trustees as fully and irrevocably as it was possible
for the holder to do, the title of the cestui que trust was complete as against the
assignor. The Court further held that X obtained the policy with knowledge
of the trust, and that he got possession of the policy on a false pretence. He,
therefore, took no better title to the money than his assignor, and the Court
would enforce the trust against him.
King, In re (1879), 14 Ch. D. 179

The holder of six Ufe policies wrote to one of the two trustees of his marriage King, In re,
settlement as follows :
" I am desirous of making a settlement upon my children
of six policies of assurance upon my life (giving particulars). In order to

carry my desire you herewith as one of the trustees of the
into effect, I send
proposed settlement the three policies in the London Life. The other three
policies are at present mortgaged to the Hand-in-Hand, but I undertake to
pay off the amount of their claim. The trusts will be precisely the same as
those contained in my marriage settlement, and I hereby undertake and agree
. . .'to execute to you and another trustee to be named by me, but whom I
have not yet decided upon, an assignment by way of settlement of the six
policies . such assignment to contain covenants by me to keep up the
. .
policies, and to pay the mortgage debt and all such other clauses and provi-
sions as may be necessary . and until the settlement is executed I am to

. .
be bound by this agreement in the same manner as if the settlement were

actually executed." Two days after writing this letter the settlor enclosed
it with the three policies in the London Life, and the following letter :
" The
enclosed is the formal letter of assignment previous to a deed, and as binding.
Please take charge of it, and I shall see you again upon it by-and-by." No notice
of this settlement was given to the offices, and no formal settlement was executed.
The settlor subsequently made a will. On his death his executors obtained
payment of the three London Life policies, but the Hand-in-Hand having,
since the settlor's death, had notice of the settlement, declined to pay until
the conflicting claims of the beneficiaries under the will and those under the
settlement should be determined. The question was raised by a special case.
The beneficiaries under the will contended that the deceased had not declared
himself a trustee, and had not completed the intended voluntary settlement,
and a Court Equity would not assist the beneficiaries thereunder by com.
of
pleting it. V.C, held that the letters contained a complete assignment
Hall,
of the policies, and that the beneficiaries of the settlement were entitled to
the proceeds. In his judgment he said "Mr. Romer disputes its being an
intended settlement at all he says that it was not a settlement in itself, but
;
an agreement at a future time to settle the policies. ... If the matter had
remained on the first letter it might well have been contended that, although
the letter mentioned the policies, there was not an assignment of them as con-
templated, but two days afterwards Mr. King sent the previous letter, wliich
he called the formal letter of assignment and as binding,' to the trustee,
'
and asked him to take charge of it. A deed was necessary because of the
covenants. He by the previous letter undertook to execute a deed which
should contain covenants to keep up the policies, and to pay the mortgage
debt. A deed of assignment of what ? Of the six policies. I do not know
what more is wanted. The settlor said that he meant to execute a deed, and
that was consistent with his anxiety to make the settlement, and also with his
having parted with the policies. The fact that the undertaking to execute
a settlement was in part incomplete does not, to my mind, show that the other
part was not complete. There was no intention of reserving to himself the
power of retiring from that which was complete so far as it could under the
circumstances be completed by handing over the three policies, and he could
not hand over the other three because they were in the hands of the mortgagee.
But he bound himself to pay off the mortgage debt. The settlor not having
executed the contemplated deed the case is not one in which there can be an
action for specific performance to enable the parties to get the benefit of the
undertaking. was pointed out that there was to be another trustee

It "
to be named by me, but whom I have not yet decided upon,' but it is manifest
that the settlor meant that the one trustee of his marriage settlement should
be a trustee until some other person should be associated with him. With . . .
reference to the point argued, that no notice was given to the offices of the
assignment, I think the answer to it is the case of Fortescue v. BarnetV^
Howes V. Prudential (1883), 49 L. T. 133

Howes V. A man, having taken out a policy in his own name upon his own life for
Prudential.
£100, handed the policy to his wife, saying that it was for her sole use and
benefit on condition that she paid the premiums. She did pay the premiums
until her husband's death. He left a will whereby he devised the whole of
his efiects to his children. Lopes, J., held that the policy, being a chose in
action, did not pass to the wife by delivery without a written assignment, and
therefore passed to the children under the will.
Patrick, In re, [1891] 1 Ch. 82

Patrick, In re. A by bills of sale executed a
creditor for certain specialty debts secured
voluntary settlement whereby he purported to assign the debts to trustees
with power to sue for them and to execute all assurances that mighl be
expedient. The bills of sale were not expressly assigned nor handed over to
the trustees, and no notice was given to the debtors. The settlor afterwards
received payment of the debts and died intestate. In an action for the
administration of the estate and the trusts of the settlement it was held by
the Court of Appeal that the debts had been completely assigned to the
trustees, and that the was therefore liable to make good to
intestate's estate
the trust the debts which the settlor had got
in. Lindley, L.J., said, " The
appeal raised two questions, viz. (1) Whether the debts referred to were so
completely assigned by the settlement that the assignees of them could have
recovered them from the persons who owed them to the settlor without any
further assistance from him. (2) Whether the settlor having himself got
them in was liable to make good to the trustees of the settlement the amount
received by him. The settlement must be read to carry out and not to
. . .
defeat the intention of the settlor, and, although the settlement does not in
terms assign either the bills of sale or the goods, it directs the trustees to get
in the debts, and it empowers them to do whatever is necessary for that
purpose. Under these wide words the trustees could, in my opinion, put in
force either in the name of the settlor, or, if necessary, in their own name, all
or any of the powers contained in the bills of sale or could do whatever might be
necessary to revest the goods in their respective grantors on pa5rment off of
the moneys due on their respective securities. Indeed, if it were necessary to
imply an assignment to the trustees of the bills of sale and of the goods com-
prised inthem I am by no means sure it would be going too far to imply such
an assignment. Be this as it may, in my opinion the settlement amounted to
a complete, and not to an incomplete, assignment of the debts mentioned in
the schedule to it within the principle of Kekewich v. Manning, which is the
leading case on this subject. The fact that notice of the assignment was not
given to the debtors did not render the gift incomplete. See Fortescue v.
Barnelt Donaldson v. Donaldson. If once the conclusion is arrived at that
;
the assignment of the debts was complete, and not incomplete, it follows that
the settlor having got in the debts himself is accountable to the trustees of
the settlement for the amount he so got in. This was decided in Fortescue v.
Barnett. There is no question here of following trust money, and the right
of the plaintiffs is only to rank as creditors against the estate of the deceased
for the amount of the debts he got in."
Brownlee v. Robb (1907), 9 F. 1302.
A butcher residing in Scotland was insured in the Scottish Provident. With Brownlee
the assistance of a police constable he executed the following document : — v. Eobb.
" I, J. hand over my policy to my daughter, E. S. R., now wife of 6. B.,
R.,
dairyman. Signed by J. B." It was witnessed by five witnesses, and in
their presence handed to E. S. R., together with a certified copy policy, which
had been obtained from the insurance company on the allegation that the
original was lost. The Court of Session held that if they construed the
document in the light of surrounding circumstances there was a written
assignment, sufficient according to Scots law to transfer the title in the policy
moneys to E. S. R. Lord Ardwall, dissenting, held that the document did no
more than record the fact that the assured had delivered the corpus of the
policy, that was not sufficient to convey the title to the policy moneys, and
I.L. 30
parole evidence was incompetent to show what the intention of J. R. was in

delivering the document to his daughter.
Vavasseur v. Vavasseur (1909), 25 T. L. E. 250
Vavasaeur v. After the death of his wife the assured, being old and infirm, asked two
Vavasseur. daughters to assist him in the management of his affairs. In order to do this,
one of them had to give up remunerative employment. While assisting their
father he called them, and said, " I want to speak to you very specially. Now
I am getting old I am very anxious you should understand your own affairs.
Your two other sisters are married and provided for by their husbands, but for
you, my two dear daughters, I wish to make special provision. When I am
gone you are to take my insurance money out of the Equitable, and you will
be able to live very comfortably. Will you promise me to do it ? " The
daughters promised. On several occasions afterwards their father reminded
them that they were to have the policies. The policies were not mentioned
in the father's will. After his death the daughters claimed them on the following
grounds : (1) imperfect gift which equity would enforce ; (2) declaration of trust;
(3) contract whereby their father promised to give them the policies in con-
sideration for their services. was held that they had no claim to the policy
It
moneys. There was no gift de presenti, but merely a promise de futuro.
There was no declaration of a trust, but merely an expression of a wish, and
when to that was added the fact that the wish was to be acted upon after the
testator's death it was clear that all that was proved amounted only to an
oral will. There was no evidence to show that the daughters had given their
services to their father in consideration of a promise in regard to the policies.
Exceptions to The rule that an oral gift of a policy is an imperfect gift which
^^^^ ^'^^ ^^ enforced, is subject to two exceptions (1) where the
imperfeT^* :
gift. donee is afterwards appointed executor of the donor ; (2) where

the gift is a donatio mortis causa and the policy is delivered to the
donee.
Where donee Where there is an imperfect gift and the donor appoints the
appointed donee an executor of his will, the passing of the legal title by
operation of law to the executor completes the gift, and gives him,
as against creditors and beneficiaries under the will as good a title
as if the gift had been complete in the first instance. The rule
applies, although the donee is only one out of several executors.
He must show that the intention of the testator at the time of
the alleged gift was to make a gift depresenti, and that his intention
remained unaltered down to the date of his death.
Stewart, In re, [1908] 2 Ch. 251
Stewart, The was the widow, and one of four executors appointed by the
plaintiff
In re. will of her late husband. A few days before his death the husband purchased
through his brokers three bonds to bearer for £500 each. He paid his brokers
for the bonds, but they had not been delivered at the time of his death. Shortly
before his death, which occurred suddenly, he called his wife into the dining-
room and told her that he had something to show her that would interest
her. He
thereupon handed her an envelope containing the broker's letter,
and the bought note, at the same time saying to her, " I have bought these
bonds for you." He died before anything further was done. It was held that
legal title of the plaintifE as executor completed the gift, and that she was
beneficially entitled to the bonds.
Where a document which represents or is the evidence of a chose Donatio
in action is dehvered by a person in extremis on condition that it

shall be the property of the donee in the event of his death, there
is a donatio mortis causd of the chose in action which the Court
will enforce against the donor's representatives (i). A policy of
insurance has been held to be a subject of donatio mortis causd (k).
Ifthe poHcy is delivered by a person in the extremity of sickness

and in contemplation of death under circumstances which indicate
an intention to give, the Court will assume that it was given to be
retained only in the event of death (l) . The uncorroborated evidence
of the donee may be sufficient to estabhsh the gift, but it is the
duty of the Court to sift such evidence very carefully (m).
An assignment of a policy made for an illegal consideration will Assignments

not be enforced against the assignor. oonsidlration.
Settlements are frequently made in favour of a woman by a Settlements
man who has iUicitly cohabited with her. A settlement in fact tion""?'*^^"^^'
made in consideration of future illicit intercourse is void for unlawful
illegality, although ex facie the settlement is voluntary and no
illegal purpose appears in the deed {n). A settlement made in
consideration of past unlawful intercourse is not void for illegality,
because past consideration is no consideration, and the settlement
stands in law as a voluntary settlement unaffected by the
illegality (o). Thus, a settlement made by a man on his
mistress and children born by her is unimpeachable if made after
the intercourse has been discontinued (p)- And a settlement
made during unlawful cohabitation is not void unless it can be
(i) Ward v. Turner (1751), 2 Ves. (m) Dillon, In re (1890), 44 Ch. D.
Sen. 431 ; DuffieU v. Elwea (1827), 76.
1 Bligh (N. S.) 497 ; Dillon, In re (n) Benyon v. Nettlefold (1850), 3
(1890), 44 Ch. D. 76. Mac. & Q. 94.
(h) Amis V. Witt (1863), 33 Beav. (o) Hill v. Spencer (1767), Amb.
619 ; Witt V. Amis (1851), 1 B. & S. 641.
109. (p) Skarfv. Soulby '{184:Q), 1 Mac,
(I) Gardner v. Parker (1818), 3 & G. 364.
Madd. 184.
proved that a promise express or implied to continue the illicit
intercourse formed part of the consideration {q).
Settlements Settlements of property made in separation deeds between

providing for
separation of
husband and wife may be void for illegality. A deed of separation
spouses. providing for the wife and made after the spouses have definitely
agreed to separate is valid and enforceable during the separation (r).
But a deed between husband and wife providing for a prospective

separation will, as a general rule, be illegal, and a deed providing
for present separation is annulled upon the subsequent reconcilia-
tion of the spouses (s). No implied condition of chastity attaches
to a provision in favour of the wife made in a deed of separation.
Settlements Agreements made in general restraint of marriage are void, and
in restraint of
marriage. where a gift is made on condition that the donee does not marry,
the condition will not be enforced, and the donee takes the gift
freed from the illegal condition (t). Agreements in partial restraint

of marriage are not void where the restraint is reasonable, as where
the agreement is not to marry under a specified age or a specified
person or without the consent of a specified person or persons (t).
A restraint upon remarriage -in the case of a widow or widower

is not illegal {u). Similar conditions attached to a gift will be
enforced if there is a gift over in the event of the condition being
broken (<). Where there is no gift over, the condition will be
treated as merely in terrorem, and therefore inoperative.
Settlements Where the legal estate in property is vested in the trustees of
on illegal
consideration a settlement, the fact that the settlement was made on an illegal
completed by consideration does not entitle the settlor to come into a Court of
transfer of
property to Equity and have the settlement set aside, and therefore where a
trustees.
settlement was made before the Deceased Wife's Sister Act, by
a man in consideration of an intended cohabitation with bis-
deceased wife's - sister, and property consisting of shares was
assigned to the trustees of the settlement in trust for the bene-
ficiaries, it was held that the personal representatives of the settlor
(q) Gray v. Mathias (1800), 5 Ves. to live together again under reason-
286; Hall v. Palmer (1844), 3 Hare, able security to the wife in case of
536; ValUmce, In re (1884), 26 Ch.D. the husband again being guilty of
353. conduct which would result in a sepa-
(r) Jones v. Waiie (1842), 9 CI. & F. ration order being made against him,
101. the settlement was held to be legal
(«) Weaimeath v. Salisbury (1831), {Harrison v. Harrison, [1910] 1
5 Bli. S.) 339.
(N. But where K. B. 36).
husband and wife were at the time («) Whiting's Settlement, [1905] 1
living separate under a justice's Ch. 96.
order against the husband, and the (m) AlUn V. Jackson (1875), 1
object of the deed was to enable them Ch. D. 399.
VOIDABLE ASSiaNMENTS 469
after his death had no right to have the settlement set aside, or
to claim any interest in the fund {x). This rests on the principle
that incases of illegality where the illegal object has been effected,
the Courts will not interfere in favour of either party, so that
possession becomes the most important consideration. In the
case of a settlement of a policy the legal estate cannot be vested
in the trustees, and therefore the principle of the case just cited
has no apphcation. The trustees may have the right to sue
the insurance company in their own names, but the settlement
would necessarily form part of their title to sue, and if the per-
sonal representatives disputed their claim on the ground of
illegality,and the insurance company paid info Court, the personal
representatives could defeat the trustees' claim by showing that
the settlement was made for an illegal consideration.
An assignment of a policy of insurance by way of security for Assignment
money lent may be set aside or varied under the Money-lenders lenders.^'^'
Act, 1900 (y).
Money-lenders Act, 1000, sees. 1, 2, 6

1.
— Where proceedings are taken in any Court by a money-lender for
(1) 63 & 64 Vict,
the recovery of any money lent after the commencement of this Act, or the ^'"
?; .
enforcement of any agreement or security made or taken after the com- transactiraia
mencement of this Act, in respect of money lent either before or after the of money-
commencement of this Act, and there is evidence which satisfies the Court lender,
that the interest charged in respect of the sum actually lent is excessive, or
that the amounts charged for expenses, inquiries, fines, bonus, premium,
renewals, or any other charges, are excessive, and that, in either case, the
transaction is harsh and unconscionable, or is otherwise such that a Court of
Equity would give relief, the Court may reopen the transaction, and take an
account between the money-lender and the person sued, and may, notwith-
standing any statement or settlement of account or any agreement purporting
to close previous dealings and create a new obligation, reopen any account
already taken between them, and relieve the person sued from payment of
any sum in excess of the sum adjudged by the Court to be fairly due in respect
of such principal, interest and charges, as the Court, having regard to the risk
and all the circumstances, may adjudge to be reasonable and if any such ;
excess has been paid, or allowed in account, by the debtor, may order the
creditor to repay it and may set aside, either wholly or in part, or revise, or
;
alter, any security given or agreement made in respect of money lent by the
money-lender, and if the money-lender has parted with the security may
order him to indemnify the borrower or other person sued.
(2) Any Court in which proceedings might be taken for the recovery of
(») Ayerat v. Jenkins (1873), L. B. (y) 63 & 64 Vict. c. 51.

16 Eq. 282.
— — "
money lent by a money-lender shall have and may at the instance o£ the
borrower or surety or other person liable, exercise the like powers as may be
exercised under this section, where proceedings are taken for the recovery of
money lent, and the Court shall have power, notwithstanding any provision
or agreement to the contrary, to entertain any application under this Act by
the borrower or surety, or other person liable, notwithstanding that the
time for repayment of the loan, or any instalment thereof, may not have
arrived.
(3) On any application relating to the admission or amount of a proof
by a money-lender in any bankruptcy proceedings, the Court may exercise the
like powers as may be exercised under this section when proceedings are
taken for the recovery of money.
(4) The foregoing provisions of this section shall apply to any transaction
which, whatever its form may be, is substantially one of money-lending by a
money-lender,
(6) Nothing in the foregoing provisions of this section shall affect the rights
of any boni fide assignee or holder for value without notice.
(6) Nothing in this section shall be construed as derogating from the
existing powers or jurisdiction of any Court.
(7) In the application of this Act to Scotland this section shall be read as
if the words " or is otherwise such that a Court of Equity would give relief
were omitted therefrom.

Registration 2, —
(1) A money-lender as defined by this Act
of money- a money-lender in accordance with
(o) shall register himself as regula-
lenders, &c.
tions under this Act, at an office provided for the purpose by the
Commissioners of Inland Revenue, under his own or usual trade
name and in no other name, and with the address, or all the
(«),
addressesif more than one, at which he carries on his business of
money-lender ; and
(6) shall carry on the money-lending business in his registered name, and
in no other name and under no other description, and at his
and at no other address ; and
registered address or addresses,
(c) shall not enter into any agreement in the course of his business
as a money-lender with respect to the advance and repayment
of money or take any security for money in the course of his busi-
ness as a money-lender, otherwise than in his registered name.
Definition of 6. The expression " money-lender " in this Act shall include every person
money- whose business (a) is that of money-lending, or who advertises or announces
lender.
himself or holds himself out in any way as carrying on that business ; but shall
not include
(a) any pawnbroker in respect of business carried on by him in accordance
{z) Means the name in which he lender. The question is whether

was carrying on business at the time there is sufficient continuity about
of registration {Whiteman v. Sadler, the transactions to show that they
[1910] A. C. 514). are part of the lender's business
{a) The mere fact that a person {Newton v. Pyke (1909), 25 T. L. R.
has on several occasions lent money 127; Newman v. Oitghton, [1911] 1
at remunerative rates of interest is K. B. 792).
not sufficient to make him a money-
—
with the provisions of the Acts for the time being in force in relation
to pawnbrokers (aa) ; or
(6) any the meaning of the Friendly Societies 59 & 60 Vict.
registered society within
Act, 1896, or any society registered or having rules certified under <=. 25.
sections two or four of that Act, or under the Benefit Building
Societies Act, 1836, or the Loan Societies Act, 1840, or under the 6 & 7 Will 4
Building Societies Acts, 1874 to 1894 ; or c. 32.
(c) any body corporate, incorporated or empowered by a special Act of ^ *- ^ ^'^'t-
Parliament to lend money in accordance with such special Act ; or "'
(d) any person bond fide carr3dng on the business of banking or insurance
or lond fide carrying on any business not having for its primary
object the lending of money, in the course of which and for the
purposes whereof he lends money (6) ; or
(e) any body corporate for the time being exempted from registration
under this Act by order of the Board of Trade made and pubUshed
pursuant to regulations of the Board of Trade.
The effect of the Act upon assignments of poHcies and the

settlement of claims thereon may be briefly summarised as
follows :
When an assignment of a policy is made to a money-lender as Harsh and

"oconscion-
security for a loan, the transaction may be reopened by the
Court on the ground that the charges are excessive, and that the tion may be
harsh and unconscionable, and the amount of the "°P®°^

•
transaction is
debt charged on the policy may be extinguished or reduced.

Until the Court has reopened the transaction the assignment Valid until
'^^''P®"® •
is vaHd for the agreed amount of loan and interest, and provided
the transaction was not wholly illegal the money-lender can give
a good discharge for the policy moneys to the amount of the debt
and interest charged on the policy (c).
If money- and in
before the Court has reopened the transaction the
lender has transferred the policy to a third person bond fide and purchaser for
for value the transaction cannot be set aside as against him, and ^^^"^"
therefore provided the transaction was not wholly illegal such a

transferee can give a good discharge for the policy moneys to the
extent of his interest in the policy notwithstanding that as against
the money-lender the assignment to him may have been set
aside.
Such business may include loans

(aa) becoming payable had a claim from
by a pawnbrokerof above ten pounds a money-lender as mortgagee and
(Newman v. Oughton, [1911] 1 K. B. notice from the assured or his repre-
792). sentatives that he or they intended
(6) An art dealer discounting bills to apply to the Court to have the
of customiers and friends was held to transaction reopened the company
be within this exception {Litchfield v. would not be justified in making
Dreyfus, [1906] 1 K. B. 584). payment to the mortgagee pending
(c) But if the company on a policy such appUcation.
; ;
What is Excessive interest on a loan may by itself be sufficient to

harsh and
unconscion- render the agreement harsh and unconscionable {3). What
able amounts to excessive
?
interest is to be determined by the tribunal
in each case, and the question of risk is the most important factor
in the decision (d). If the interest is shown to be excessive the
onus is then on the money-lender to show it was not harsh and
unconscionable {d). An interest at the rate of seventy-five per
cent, per annum is not necessarily harsh and unconscionable,
and in a case where the borrower was a man of business and
understood the transaction and had reason for not disclosing his
temporary embarrassment to solicitor, banker, or friends, the

Court refused to reopen the transaction and reduce the interest (e).
When the borrower is an intelligent person not under utidue

influence the amount to which he has in fact agreed is very good
prima facie evidence of what is reasonable under all the circum-
stances (J).
Illegal tran- But an assignment of a policy to a money-lender may be not
sactions void
ah initio.
only voidable on the grounds already discussed, but may be
absolutely void ab initio as part of an illegal transaction. Trans-
actions with money-lenders are illegal and absolutely void
(a) if the money-lender is unregistered (g)
(b) if the money-lender entered into the transaction in a name
other than his registered name (h)
(c) if the money-lender was carrying on business at a place

other than his registered address (i).
and against When a transaction with a money-lender is void upon one of

purchaser for
those grounds the assignment of a policy to him in security is
value.
id) Samuel v. Newbold, [1906] (h) Means the name in which in

A. C. 461 ; Harris v.Clarson (1910), fact the money-lender has been
27 T. L. B. 30. registered by the Commissioners of
(e) Carringtons v. Smith, [1906T 1 Inland Revenue. Even if the name
K. B. 79. registered was not the name in which
(/) Fieldings v. Pawson, [1907] the money-lender ought to have been
W. N. 231. registered, all transactions in the
(g) Bonnard v. Dott, [1906] 1 Ch. name actually on the register at the
740. Where a firm of money-lenders time are valid { Whiteman v. Sadler,
carry on business in a firm name the [1910] A. C. 514).
persons who are in fact partners must (i) Staffordshire Financial Co. v.
be so registered. If the persons Valentine, [1910] 2 K. B. 233. If the
registered in the firm name are not in business is bond fide carried on at the
fact the actual partners in the firm registered address, the conclusion of
then the firm is unregistered and all a single transaction at the address of
transactions with the firm are void the borrower is not a violation of tho
even although carried out in the Act (Kirkwood v. Oadd, [1910] A. C.
name which appears on the register 422).
(Robinson, in re, [1911] 1 Ch. 230).
equally void, even although such assignment is ex jade uncon-
and no person claiming through the money-lender

ditional (j),
has any title to the policy moneys or can give a good discharge
even although he is a purchaser for value without notice of the
illegahty (fc). The result is that the payment of policy moneys to
a money-lender or to any person claiming title through a money-
lender must always be attended with the risk that the assignment
may afterwards be declared void, and the company be held liable
to pay the assignor. The company therefore is not safe unless a
discharge be obtained from the assignor or his personal repre-
sentatives as well as from the money-lender or person claiming
through him.
When the transaction with a money-lender is void the debtor Right of
is entitled to come
to the Court for a declaration to that effect declaration
without offering to return the money advanced to him (l). Where and return of
the debtor asked the Court to exercise its equitable jurisdiction

and order a return of the securities the Court refused to do so
unless the debtor himself was prepared to do equity by returning
the money advanced (m). But probably a common law action
in detinue would lie to recover the securities although no such
offer was made, and in the case of policies of insurance assigned
to a money-lender in security it is submitted that the assignor on

proof that the transaction was illegal would be entitled without
repaying the money advanced to a declaration that the assignment
was void, and to -the usual judgment in an action for detinue for
the delivery up of the policies or damages for their detention.
Sometimes a policy of insurance is found in the schedule to a Policy in
bill of sale. A bill of sale is an instrument whereby subject to i,iii o( gale,
the provision of the Bills of Sale Acts, 1878 and 1882, the pro-
perty in goods and chattels may be effectively assigned either
absolutely or by way of security. The bill of sale must be regis-
tered, and it must be in the form provided by the Acts. The
goods and chattels assigned must be specified in the schedule to
the bill of sale, and if a bill of sale purports to assign any right
or interest in property other than a chattel interest in goods it is
void. A policy of insurance cannot therefore so far as the right
{j) Robinson, in re (No. 1) (1910), (I) Chapman v. MichaeUon, [1909]
27 T. L. R. 441. I Ch. 238.

(k) Robinson, In re (No. 2), [1911] (m) Lodgev. National J7mon,[1907]
1 Ch. 230. 1 Ch. 301.
— —
to the policy moneys is concerned, be assigned by a bill of sale (w).
If a policy is included in the schedule then if it appears from the

whole instrument that the intention of the parties was to assign
the chose in action or give a charge upon the policy moneys the
bill of sale is entirely void, but if it appears that the intention
was simply to assign the policy as a chattel then the bill of sale
is not invalidated by the fact that the policy is included in it
and will operate to pass the property in the document but will
not affect the right to the policy moneys (n).
Assignment An assignment of a policy may be effected by a deed of arrange-

by deed of
arrangement.
ment made by the grantor for the benefit of his creditors. A deed
of arrangement for the benefit of creditors generally is an act
of bankruptcy and may become void as against the trustee upon
the subsequent bankruptcy of the grantor.
Under the Deeds of Arrangement Act, 1887, a deed of arrange-
ment for the benefit of creditors generally is absolutely void,
whether the grantor become bankrupt or not, if it is not regis-
tered within the time limited in the Act. The fact that a deed
is void under the statute for want of registration does not make
its execution any less an act of bankruptcy available under the
Bankruptcy Act. A deed for the benefit of certain named

creditors without any provision enabling the general body of
creditors to come in and take the benefit of it is not a deed of
arrangement within the Act, and is therefore valid, and con-
stitutes an effective assignment although not registered (o).
Deeds of Arrangement Act, 1887, sees. 2, 4, 5, 6, 7, 8, 17
Extent of 2. This Act shall not extend to Scotland.

Act.
Application 4. — (1) This Act shall apply to every Deed of Arrangement, as defined in
of Act. this section, made after the commencement of this Act.
(2) A Deed of Arrangement to which this Act applies shall include any
of the following instruments, whether under seal or not, made by, for, in
respect of the affairs of a debtor for the benefit of his creditors generally
(otherwise than in pursuance of the law for the time being in force relating
to bankruptcy), that is to say :
(a) An assignment of property ;

(6) A deed of or agreement for a composition ;
And in cases where creditors of a debtor obtain any control over his property
or business :
{n) Swanley Coal Co, v. Denton, (o) Saumarez, In re, [1907] 2 K. B.

[1906] 2 K. B. 873. 170.
— —
(c) A deed of inspectorship entered into for the purpose of carrying on

or winding up a business ;
{d) A letter of licence authorising the debtor or any other person to

manage, carry on, realise, or dispose of a business, with a view to the
payment of debts ; and
(e) Any agreement ot instrument entered into for the purpose of carrying
on or winding up the debtor's business, or authorising the debtor
or any other person to manage, carry on, realise, or dispose of the
debtor's business, with a view to the payment of his debts.
5. From and after the commencement of this Act a Deed of Arrangement Avoidance of
unregistered
to which this Act applies shall be void unless the same shall have been registered
deeds of
under this Act within seven clear days after the first execution thereof by the arrangement.
debtor or any creditor, or if it is executed in any place out of England or
Ireland respectively, tlien within seven clear days after the time at which it
would, in the ordinary course of post, arrive in England or Ireland respectively,
if posted within one week after the execution thereof, and unless the same
shall bear such ordinary and ad valorem stamp as is under this Act provided.
6. The registration of a Deed of Arrangement under this Act shall be Mode of regis-
tration.
effected in the following manner :
(1) A true copy of the deed, and of every schedule or inventory thereto
annexed, or therein referred to, shall be presented to and filed with
the registrar within seven clear days after the execution of the said
deed (in like manner as a bill of sale given by way of security for
the payment of money is now required to be filed), together with an
affidavit verifying the time of execution, and containing a description
of the residence and occupation of the debtor, and of the place or places
where his business in carried on, and an affidavit by the debtor
stating the total estimated amount of property and liabilities in-
cluded under the deed, the total amount of the composition (if any)
payable thereunder, and the names and addresses of his creditors :
(2) No deed be registered under this Act unless the original of such
shall
deed, duly stamped with the proper inland revenue duty, and in
addition to such duty a stamp denoting a duty computed at the
hundred pounds or fraction of a hundred
rate of one shilling for every
pounds of the sworn value of the property passing, or (where no
property passes under the deed) the amount of composition payable
under the deed, is produced to the registrar at the time of such
registration.
7. The keep a register wherein shall be entered, as soon as Torm of
registrar shall
conveniently may
be after the presentation of a deed for registration, an register.
abstract of the contents of every Deed of Arrangement registered under this
Act, containing the following and any other prescribed particulars :
(a) The date of the deed :
(6) The name, address, and description of the debtor, and the place or
places where his business is carried on, and the title of the firm or
firms under which the debtor carries on business, and the name and
address of the trustee (if any) under the deed :
(c) A short statement of the nature and effect of the deed, and of the
composition in the pound payable thereunder :
{d) The date of registration :

(e) The amount of property and liabilities included under the deed, as
estimated by the debtor.
Registrar and
office for
8. — (1) The Registrar of Bills of Sale in England and Ireland respectively
shallbe the registrar for the purposes of this Act.
registration.
(2) In England the Bills of Sale Department of the Central Office of the
Supreme Court of Judicature, and in Ireland the Bills of Sale Office of the
Queen's Bench Division of the High Court of Justice, shall be the office for
the registration of Deeds of Arrangement.
Saving as to Nothing contained in this Act shall be construed to repeal or shall

17.
Bankruptcy affectany provision of the law for the time being in force in relation to bank-
Acts.
ruptcy, or shall give validity to any deed or instrument which by law is an
act of bankruptcy, or void or voidable.
Section VII. —Mortgages

Definition of A mortgage of a policy is an assignment of the assured's right
mortgage.
to recover the policy moneys, but an assignment by way only of
security to the assignee for a debt due to him from the assignor.
No formality No formality is necessary to create a mortgage of a chose in
necessary.
action, and subject to difficulties of proof and questions of priority
it may be created by an oral agreement between the parties
without writing, deposit of the policy, or notice to the company.

Usual, form. The most formal way of creating a mortgage is by deed of mort-
gage assigning the policy in security with the usual conditions
for redemption and powers of sale ; but a policy is frequently
mortgaged by depositing the policy with the creditor together

with a memorandum of deposit or letter specifying the extent
and conditions of the charge which it is intended to create.
Mortgage by A policy may be mortgaged by mere deposit of the policy

deposit.
without notice, without writing, without even word of mouth
passing between the depositor and depositee (p). The circum-
stances under which the deposit was made may be sufficient to
show that it was the intention of the parties that a charge on the
policy moneys should be created, and, if so, nothing else is neces-
sary. But mere possession of the policy by a third person is
not sufficient to support a claim by him to a charge on the pohcy
moneys (g). The deposit of a policy is by itself an equivocal
(p) Shaw V. Foster (1872), 5 H. L. (?) Chapman v. Chapman (1851),

321, 340. 13 Beav. 308.
MORTGAGES 477
act ; it may be delivered with some other intention than that

of creating a charge on the moneys which it represents. Thus
the intention may be (1) to deliver it to the depositee for safe
custody ; (2) to pledge the policy as a piece of paper, that is to
say, to give the depositee a right to retain the piece of paper
until his debt was satisfied, but without giving him any right to
receive the policy moneys (s) or (3) to deliver it to the depositee
;
for the purpose of enabling his soHcitor to draw up a formal

mortgage, but without any intention of giving him a present
charge Prima facie, however, when a debtor deposits a policy
{t).
is evidence of an intention to charge the

with his creditor that
pohcy moneys and not merely to deposit the piece of paper by
way of pledging the chattel (u).
When there is no memorandum or other writing accompanying Deposit
^'*'^°"*
the deposit
^ ° must be ascertained as well memoran-
the extent of the charge
as possible from the circumstances and parol evidence. Thus dum.
where the financial transactions between the parties are frequent
and there is a constantly varying balance of account, a deposit
of a policy may readily be construed as intended to secure not
only the balance at the date of the deposit, but also any further
balance of account (x).
When the terms upon which a deposit of a policy is made are Deposit with
"'^ô'^^'i-
contained in a memorandum or other writing, that writing cannot
be contradicted by parol evidence (y). Therefore, if it is stated in
the memorandum that the policy is deposited to secure a specified
debt, parol evidence is inadmissible to prove that the parties also
intended it to secure future advances (z). But when the memo-
randum is ambiguous, the circumstances in which the deposit was
made may be proved to show what the intention of the parties
really was (a). Thus where a was deposited by a debtor
life policy
with his creditor and was accompanied by the following letter " I :
hereby authorise and empower you to hold the policy of insurance

you hold upon my life for £600 as security in case of death or other-
wise for any notes of hand or bills of exchange you may have
(«) Garter v. Wake (1877), 4 Ch. D. L. T. (N. S.) 309 ; Langston, Ex parte
605; Gibson v. Overbury (1841), 7 (1810), 17 Ves. 227.
M. & W. 555. (y) Shaw v. Foster (1872), 5 H. L.
(«) Norris v. Wilkinson (1806), 12 321.
Ves. 192. (z) Vandezee v. Willis (1789), 3
{u) HarroU v. Plenty, [1901] 2 Bro. C. C. 21.
Ch. 314 ; Olaholm v. Rowntree, [1837] (a) Jonesw. Consolidated Investment
6 A. & E. 710. (1858), 26 Beav. 256.
(») Maugham, v. Ridley (1863), 8
;
cashed for me," evidence was admitted to show that the creditor
was in the hahit of making advances to the debtor from time to
time, and it was held that the security was intended to cover the
future balance of account and not merely the balance due at the
time the deposit was made (a).
Subsequent A deposit having originally been made to secure a specified

additions to
the charge.
debt, the charge may afterwards be enlarged so as to secure other
debts without any formality such as a surrender and redeposit of
the policy (c). And even although the nature and extent of the
charge created by the first deposit are defined in a written memo-
randum, the charge may nevertheless be enlarged by a subsequent
parol agreement (d). In the case of a legal mortgage of land it
has been held that future advances cannot be added to the charge
by parol agreement, but this decision appears to turn on the
fact that the mortgage deed conveyed the legal estate, and there
was therefore no room for an equitable charge (e). The reasoning
does not apply to a mortgage of a chose in action such as a policy,
and therefore it is conceived that even in the case of a formal

mortgage of a policy by deed subsequent advances may be added
to the charge by parol evidence. But, when there is first a deposit
of the policy upon terms orally agreed between the parties and
subsequently a formal mortgage of the policy by deed to secure
a specified debt, the original agreement must be deemed to have
merged in the subsequent agreement under seal, and the policy
can be held as security for the debt therein specified and no other
so when a solicitor first took a deposit of his client's policy under

an oral agreement that he should hold it to secure his bill of costs
then due, and subsequently took a deed of mortgage to secure

certain advances, it was held that he could no longer charge his
bill of costs on the policy (/).
Assignment An assignment of a policy ex facie absolute and unconditional

ex facie abso-
lute may be a
may be shown by parol evidence to be neither a sale nor gift but a
mortgage. This is so even where an apparent sale is by a deed
under seal purporting to transfer the policy unconditionally for
a price. But when the assignment is clearly stated in the deed to
(o) Jones V. Consolidated Investment V. & B. 79 ; Ede v. Knowles (1843),

(1858), 26 Beav. 256. 2 Y. & C. 172.
Ex parte (e) Hooper, Exparte (1815), 19 Ves.
(c) WMtbread, (1812), 19
477.
Ves. 209.
(/) Vaughan v. Vanderategen
{d) Kensington, Ex parte (1813), 2 (1854), 2 Drew. 289.
MORTGAGES 479
be a sale there is a strong presumption that the deed sets forth

the true nature of the transaction, and very cogent evidence
would be required to overcome this presumption (g).
Murphy v. Taylor (1850), 1 Ir. Ch. B. 92
A having effected a policy on tlie life of X for £999 executed a deed whereby Murphy v.
he purported to assign it to B for an expressed consideration of £144, a receipt Taylor.

for which was endorsed on the deed. Evidence disclosed a contemporaneous
deed whereby A executed a bond for £144 in favour of B. At the time the
deeds were executed A was liable to B on bills of exchange due or about to
become due amounting to £119, and the only consideration for the execution
of the deeds was this liability and £25 in cash then paid to A. After the
assignment, B tendered the premium to the insurance office, but they declared
that the policy was void, and refused to acceptit. Thereupon B brought an
was compromised by payment to him of £600.
action against the office, which
A sued B for the balance after deducting his debt. The Court held that the
policy was mortgaged and not sold, and that A was therefore entitled to
redeem.
upon the whole evidence the Court comes to the conclusion

If Equity of
"^^ ^^^ '°"'
that the transaction was in fact a mortgage in security for a debt,
the mortgagee is entitled to redeem the security on payment of
the debt. The equity of redemption is an essential element of
a mortgage, and the Court will not recognise any agreement

made by the mortgagor at the time of the mortgage to forgo his
right to redeem or to postpone it for an unreasonable period (i).
The mortgagor may afterwards lose his right to redeem by selling

it or surrendering it to the mortgagee or by being foreclosed, but
he cannot contract himself out of the right as incidental to the
original transaction.
Salt V. Marquess of Northampton, [1892] A. C. 1
A desired to borrow money on his reversionary interest in his father's Salt v. Mar-
estate. Trustees for an insurance office advanced £10,000 on a bond and ^^'^."'^
disposition in security (Scottish form of mortgage), whereby A promised to

repay the same with interest, together with an annual premium of £435 6s.
on a policy on his life as against that of his father for £34,500 to be effected in
the insurance office by the trustees in their own name, and in security he
assigned his reversionary interest with a condition for redemption. By a
minute of agreement of even date with the bond it was agreed between the
trustees and A that the trustees should effect a policy for £34,500 ; that the
interest on the loan and the annual premiums should be allowed to accumulate
for five years at compound interest at the rate of 5^ per cent. ; that in the
(g) Barton v. Bank of New South [1892] A. C. 1 ; Morgan v. Jeffreys,

Wales (1890), 15 A. C. 379. [1910] 1 Ch. 620 ; British South Africa
H) Saltv. Marquis of Northampton, Co. v. De Beers, [1910] 2 Ch. 502.
'
event of A pajdng off the loan before Ms father's death the trustees would
assign the policy to and that in the event of A predeceasing his father
him ;
without having paid ofE the loan, and all sums due under the bond the policy
should belong absolutely to the trustees. The trustees effected a policy of
insurance in their own name as agreed. A predeceased his father without
having paid anything. was held that his representatives were entitled
It
to the policy moneys less the amount due under the bond. As the debtor
agreed to pay the premiums the policy belonged to him and must be treated
as being in the hands of the trustees only as a security. The majority of the
House of Lords felt that they were bound by the old equity doctrine that a
debtor must be permitted to redeem notwithstanding his own express agree-
ment to the contrary. Lord Bramwell said, " I regret to have to come to
this decision. I think the equitable rule unreasonable, and I regret to have to
disregard the express agreement of a man perfectly competent and advised
by competent advisers. If, however, the trustees have insured in another
oflSce, they really have no claim in fairness on the whole proceeds of the policy.
And if they have not insured their claim seems hardly better."
Who may Those entitled to redeem a mortgaged policy are the mort-
redeem.
gagor or any person interested in the equity of redemption in-
cluding subsequent mortgagees, each mortgagee being entitled

to redeem from other mortgagees who have a prior charge.
Redeem up A mortgagee can only redeem from prior mortgagees in the
in order of
priority. order of their priorities, beginning with the mortgagee immedi-
ately prior to himself.
What is They redeem on payment of the debt and
are entitled to
payable on
redemption. interest due to the mortgagee and charged on the policy, and of
any expenses and other debts which the mortgagee is entitled
in equity to add to his charge.

Time for The right of redemption may be exercised even after the
redemption.
policy moneys have become due, notwithstanding that the mort-
gagor has not fulfilled his covenant to pay the premiums and all
the premiums have been paid by the mortgagee.
When a mortgage made by formal deed the money secured
is
is usually made payable on a future named day, and there is a

proviso for redemption of the security on payment. The mort-
gagor cannot redeem before the day named and on that day he
has a legal right to redeem. After that day he has only an equit-
able right to redeem, and the rule has long been established that
if he wishes to redeem he must give the mortgagee six months'
notice or six months' interest in lieu of notice (Z). The rule applies
to the mortgage of an equitable interest such as a reversionary
interest in a trust fund, and even although the parties may
(I) Broume v. Lockhart (1840), 10 Sim. 420,

MORTGAGES 481
naturally contemplate repayment upon the falling in of the

reversion the mortgagor must nevertheless give the mortgagee
the customary notice (m). The same is no doubt applicable to
the mortgage of a life policy when no express provision is made
for repayment upon the life falling in. Thus, where on the death
of the assured the policy moneys are paid into Court and the re-
presentatives of the assured petition for it to be applied in payment
mortgage debt, the creditor is entitled to six months' interest
of the
from the date on which the petition was served on him {n). If,
however, the creditor applies for payment in the first instance,
he is not entitled to interest beyond the day of payment (o). The
rule requiring six months' notice or interest applies only to formal
mortgages where the money is made repayable at a future date (p).
That is to say, where the just inference from the transaction is
that the loan on mortgage is intended to be of a permanent cha-

racter it is reasonable to infer that the parties intended that
after default the mortgagee should be entitled to six months'
notice ; but when the just inference from the transaction is that
the loan on mortgage is temporary, as is the case when the mort-
gage is by deposit of the policy merely, then it is not reasonable
to infer that the parties intended that such long notice should
be given {q). In the case of mortgage by deposit and other
temporary transactions the mortgagor is only required to give the
mortgagee a reasonable time to get the policy and deliver it up (g).
The mortgagor's equity of redemption in a chose in action is Equity of
not barred by any Statutes of Limitations, and therefore when a Ind^Stetutes

ofLimitations.
pohcy is mortgaged as the only security for a debt, or is mort-
gaged along with other choses in action, the mortgagor's right
to pay off the mortgage and have a reassignment of the policy
does not lapse through the non-recognition of the mortgagor's
title for any specific period. Possibly the .Court might under
certain circumstances exercise its discretion to refuse the equitable
right of redemption on the ground of laches or the staleness of
the claim.
Where a policy is mortgaged along with real estate to secure Policy
one indivisible sum the mortgagor's right to redeem the real ^^^^l\
estate becomes barred under section 7 of the Eeal Property property.
(m) Smith v. Smith, [1891] 3 Ch. (p) Fitzgerald's Trustee v. Mellersh,

550. [1892] 1 Ch. 385.
(m) Smithv. Smith.llSQl^S Ch.550. {q) Fitzgerald's Trustee v. MelUrgh,
Hutchins (1871), L, R,
(o) Letts V. [1892] 1 Ch. 385,
13 Eq. 176.
I,L, 31
Limitation Act, 1874, after twelve years without any acknow-

ledgment of the mortgagor'i3 title, and it has been held by
Kekewich, J., that his right to redeem the policy is also barred
because, it having become impossible for the mortgagor to require

a reconveyance of the real estate, it has become equally impossible
according to the rules regulating the administration of mortgages
in a Court of equity for him to require a reassignment of the policy,
the real estate and the policy together constituting one security
for the debt (r).
Premiums on Prima facie when a policy of life insurance is mortgaged there

mortgaged
policy. is an implied agreement that the mortgagor shall keep the policy
alive by paying the premiums, and that in default the mort-
gagee may pay the premiums and add them with interest from
the date of payment to the amount chargeable on the policy on
Damages for redemption (s). It has been doubted whether the mortgagee,
non-pay-
ment.
having paid the premiums, could in the absence of an express
agreement by the mortgagor to repay them recover the amount
as damages for the breach of the mortgagor's express or implied
agreement to pay the premiums to the insurers, or whether the
only amount which the mortgagee could recover by way of damages
is damages for the loss of the security if the policy were allowed
to drop (i). Clearly if the mortgagee did not in fact pay the pre-
miums to the insurers the amount of the premiums could not be the
measure of damages suffered by reason of the mortgagor's breach.
National Assurance v. Best (1857), 2 H. & N. 605
National Trustees lent money on behalf of an insurance company and the debtor
Assurance v. having insured his life in the office assigned the policy to the trustees by way
Beat.
of security, and covenanted to repay the loan with interest, and to pay the
annual premiums on the policy. The debtor made no pajrments and after
three years thecompany sued for the debt and interest, and the amount of
three years' premium. The Court of Exchequer gave judgment for the
company for the amount of the debt and interest. The Court held that on
the claim for premiums the company were only entitled to nominal damages
for breach of the debtor's covenant topay them. If the insurance had been
in another company and they had paid the premiums, they might have been
entitled to substantial damages, but the policy had dropped, no premiums
were paid, and there was nothing but the loss of the security and in respect
of that the company had not proved any damage.
{r)Gharterv.Watson,[1899]\Ch IV5. (t) National Assurance Best

Is) Hodgson v. Hodgson (1837), 2 (1857), 2 HI. * N. 605,
JCe'en, 704.
MORTGAGES 483
If the terms of a mortgage deed give the mortgagee express Epxress
power to pay the premiums and add the amount to the charge premiums to
the express remedy may exclude the remedy of an action for

<=*i^^g®-
repayment of the premiums.

Brown v. Price (1858), 4 C. B. TT. S. 598
In order to secure a loan made by trustees on behalf
an insurance com- Broum
of v.
"''"'^'
pany the borrower assigned to them (1) a life interest in
certain property and
a reversion to which he would become entitled in the event of his dying without
male issue by liis then wife, and (2) a policy on his life in the same office
payable in the event of his dying leaving male issue by his then wife. He
covenanted to keep the policy on foot and pay the premiums, and in default the
trustees had power to pay them and charge them on the mortgaged property.
The debtor paid the premiums until his wife was fifty-six, and possibility
of issue was extinct, and thereafter the annual premiums were placed by the
office to the credit of their Policy Premium Account, and debited against
the mortgage account of the debtor. The trustees brought this action against
the debtor for the amount of these premiums. The Court of Common Pleas
held that as there was no covenant to pay the premiums to the trustees they
could not sue directly on the covenant for the specific amounts, but only for
damages resulting to them as mortgagees from the non-payment of the pre-
miums to the company. Treating them as independent of the company, and
assuming that the entries in the books amounted to payment of the premiums
by them to the company, which was considered doubtful the Court held :
that they could not recover this amount as damages because the mortgage
deed gave them the express remedy of adding the amount to the charge on
the property, and by implication excluded the remedy by way of an action
for damages.
Where an insurance company makes a loan on the security of Where com-

a policy in itsown office the transaction is commonly carried mortgagee of
out in the name of trustees for the company who contract with
'*^Ycv^
the assured as if they were third persons taking the company's
policy in security for a loan by them. In such transactions the
and the company are the same contracting
fact that the trustees
party is not to be disregarded. The substance of the matter
must be considered, and the legal rights of the debtor and the
company inter se may depend more on this than on a strict inter-
pretation of the formal documents.
Fitzwilliam v. Price (1858), 4 Jur. N. S. 889
The same transaction which gave rise to the common lawaction for damages Fitzivilliam v.
Price.
in Broum v. Price (a;) was the subject of a redemption action in Chancery. It
was contended on behalf of the debtor's representatives that they were entitled
to redeem the reversionary interest without paying the unpaid premiums on
the life policy. They argued firstly that as the trustees and the company were
(k) Vide supra.

the same, there was no policy in existence because the company could not
insure themselves,and secondly that if there was a policy the premiums had
not been paid by the trustees, and therefore could not be added to the charge.
The Court held that the substance of the transaction must be regarded, and that
there was in substance an agreement between the debtor and the company
that if he did not pay the amount of the annual premiums the company
might add that amount to the charge, and it must accordingly be paid as the
price of redemption.
Where the An agreement between a debtor and an insurance company to

being credi- pay the premiums on a life policy does not bind him to pay the
tor, IS its own premiums on a policy effected
by the company in its own office
unless such a policy was contemplated at the time the agreementwas
made.
Grey v. Ellison (1856), 1 GifF. 438
Qrey v. A loan transaction with an insurance company was effected by the company
Ellison. purchasing an annuity from the debtor, the annual payment being equivalent
to the interest on the purchase money and the premiums on a
life policy. The
debtor as security assigned his lifea trust fund and covenanted that
interest in
in the event of the company insuring his life for a certain sum, and having
to pay any additional rate of insurance by reason of his going beyond seas,
such additional premium should be a further charge on the property. The
company went through the form of insuring the life of the debtor in their
own office, a policy being issued by the insurance department to the annuity
department. The debtor afterwards went abroad. On the question whether
the company were entitled to charge the additional premiums on redemption
it was held that they were not, as they never did insure the debtor's life the ;
document called a policy was an empty formality, and meant nothing.

Right of
mortgagee by
deposit to
,,
there
When
..,,„,.
m
is,
a life policy
the absence of
is deposited to secure payment of a debt
anythmg
,
to the contrary
.,,
m the memo-
miums and
randum, or in the oral agreement if there is no memorandum,
interest. an implied agreement by the debtor to pay interest and premiums,
and the creditor may without express agreement charge on the
policyany premiums paid by him to save the policy from lapsing
and legal interest on the debt and on each premium from the
date on which it was paid {y).
Where the mortgagee's solicitor had deducted a commission
from the premiums on the policy paid to the company on behalf
of his client the mortgagee was held entitled to charge the full
premiums in account with the mortgagor {z).
Capitalisation When it is desired to capitahse arrears of interest so that the
onntere^t.*"^^
company may get compound interest on such arrears this must
be done by express provision in the deed or memorandum. The
(y) Kerr's Policy, In re (1869), {z) Leete v. Wallace (1888), 58

L. R. 8 Eq. 331 ; Bellamy v. Brichen- L, T, 577,
den (1861), 2 John & H. 137.
MORTGAGES 485
capitalisation of all interest in arrear should be made part of the

original bargain, that is to say, the company should not merely
reserve an option to capitalise interest but the primary agree-
ment should be that should be capitalised and charged
all interest
on the security. A
mere option to capitalise interest might be
held void as a clog on the equity of redemption {zz).
A mortgagee is entitled to the ordinary charges and expenses Costs and
connected with the security. He is also entitled as of right to ÔTtgagêe.

the costs as between solicitor and client incurred by him and pro-
perly incident to an action for foreclosure and redemption, though
he may forfeit those costs by misconduct, and may have to pay
the costs of such an action in a case where he has acted vexatiously
or unreasonably (a).
In an Irish case (b) where the assignee of a policy had sued
the insurance and afterwards in a redemption action brought
office,
by his assignor, had contended that he was entitled as uncon-

ditional assignee to the whole proceeds of the policy, the Court,
although finding that the transaction was a mortgage and that
the assignor was entitled to redeem, held that the assignee as
mortgagee was entitled to his costs of the proceedings against
the office, and his costs of the redemption suit.
In the case last cited a large part of the costs incurred must Present prao-
have been occasioned by the mortgagee denying the mortgagor's costs of

^°*'^°^-
right to redeem, and notwithstanding this he was apparently
allowed his whole costs. The present practice in England in a
case of this kind when the mortgagee's contention has not been
vexatious or frivolous is to allow him the ordinary costs of a re-
demption action in which the only question would be the taking

of an account between the parties, but to disallow such costs as
are fairly attributable to the mortgagee having put forward a case
which has failed (c).
The general rules dealing with priority among equitable Priority of
assignees have already been dealt with {d) . Briefly incumbrancers cers.
take in the order of the dates when the charges have been created,
{zz) Noakes v. Rice, [1902] A. C. (6) Murphy v. Taylor (1850), 1
24 ; Jarrah Timber, etc. v. Samuel, It. Ch. R. 92.

[1903] 2 Ch. 1. (c) Kinnaird v. Trollope (1889), 42
(a) Bank of New South Wales v. Ch. D. 610.
O'Connor (1889), 14 A. C. 273, 278. (d) Ante, p. 440.
but a puisne incumbrancer may acquire priority over an earlier

incumbrancer if he first gives formal notice to the office, and if
he had at the time he advanced his money no actual or con-

structive notice of the earlier charge (e). The fact that the pohcy
is not in the hands of the assured is sufficient to put a lender on

inquiry, and if he advances his money without making inquiry
he deemed to have constructive notice of all charges which
is
a reasonable inquiry would have revealed (/). Where a charge

is created to cover a present advance only, and a further advance
is afterwards made by the same incumbrancer, such further advance
cannot be added to his charge so as to give him priority over mesne

incumbrancers, and the mesne incumbrancers, even although
they took with knowledge of the first charge, owed no duty to the
first incumbrancer to give him notice of their puisne charges (g).
When a charge is created to cover present and future advances, and

a further advance is made by the same incumbrancer without notice
of a mesne incumbrance, it takes priority over such mesne in-
cumbrance {h), but a further advance made with knowledge of
a mesne incumbrance is postponed to such mesne incumbrance (i).
Tacking. lacking is the right whereby an incumbrancer who has the

legal estate in the property mortgaged may acquire priority in
respect of debts charged upon the property over all other in-
cumbrancers of whose charge he had no notice at the time his
debt was incurred. If a mortgagee has the legal estate and
afterwards makes further advances on the security of the same
property he acquires priority over mesne incumbrances of which
he had no notice. Or a puisne incumbrancer by paying off the
first mortgagee and taking a transfer from him of the legal estate
may acquire priority over mesne incumbrances of which he had

no notice. Notice at the time the legal estate is acquired is not
material. Although a mortgagee had no notice of a prior incum-

brance when he advanced his money he may afterwards acquire
priority by getting in the legal estate, even although he has then
full notice of the other incumbrance (k). When a mortgagee has
(e) Weniger's Policy, In re, [1910] (h) Calisher v. Forbes (Wll),1:'R.

2 Ch. 291 Newman v.
; Newman 7 Ch. 109.
(1885 28Ch. D. 674. t /iqch
,
If) Spencer v. Clarke (1878), 9 W

,-\-a
HopUmon v. t, it
Eolt (1861),
q
9
Ch. D. 137.
"- ^- ^- ^^*-
(g) Weniger's Policy, In re, [1910] (k) Sharpev. Fay (1868), 4 Ch. 35.
2 Ch. 291.
MORTGAGES 487
not actually the legal estate, but has by a declaration of trust in

his favom- or by possession of the documents of title the best right
to call for a transfer of the legal estate he acquires except as
against those who have in fact obtained such transfer the same
priorities as if the legal estate had vested in him (l).
There can be no tacking against an incumbrance of which the Notice of
mortgagee desiring to tack had notice at the time his own charge i"oumtranê.
was created. And therefore a first mortgagee cannot claim the
benefit of his security for further advances in priority to a second
mortgagee of whose mortgage he had notice before the further
advances were made(m). And this is so even although the first
mortgagee agreed to make further advances when th e first mort-
gage was executed (n).
The doctrine of tacking has very little application to mort- Tacking
gages of insurance policies because the titles of contending in- ÔTtgages of

cumbrancers must policies,
all rank as purely equitable titles notwith-
standing that the legal right to sue has vested in one of them by
virtue of the Policies of Assurance Act, 1867, or the Judicature
Act, 1873. A mortgagee is therefore not in the position of a legal
mortgagee until he has got the insurance moneys into his own
hands. When he has done so he is probably entitled to tack,
but not until then.
A debt which has not been specifically charged on the property Right of
cannot be tacked against the mortgagor, but remains in the position 3k uMe^
"^'^^^ debts,
of an unsecured debt. It has, however, been said that on the
death of the mortgagor the mortgagee may as against the executors
tack all his unsecured debts to the security. In the case of
Haselfoot's Estate (o). Lord Eomilly, M.E., following a previous
decision of his own (p), held that when the mortgagee of a life
policy received the insurance moneys on the death of the mort-
gagor he was entitled as against other creditors to retain not only
the debt charged on the policy, but also other unsecured debts
due to him by the deceased. In Beyer v. Adams (g), Stuart, V.O.,
held that when the form of a mortgage of a life policy was an
assignment in trust, firstly to indemnify the mortgagees against
their hability as sureties and after payment thereof in trust for
[1) Maundrell v. Maundrell (1804), (n) West v. Williams, [1899] 1

10 Ves. 246, 271. Ch. 132.
(to) HopUnson v. Bolt (1861), 9 (o) (1872), L. R. 13 Eq. 327.
H. L. C. 514; and notice to one of (p) Spalding v. Thompson (1858),
several trustees who were joint mort- 26 Beav. 637.
gagees was held notice to all (^reemare (q) (1857), 3 Jur. (N. S.) 710.
V. Lam5r,[189912Ch. 355).
the mortgagor his executors, administrators, and assigns, the

mortgagees were not entitled as against other creditors to satisfy
from the proceeds of the poUcy.

their unsecured debts The money
was received under and must be appUed in accordance with the
trusts of the deed. In Talbot v. Frere (r), Jessel, M.E. refused
to follow the decision of Lord Eomilly in Haseljoot's Estate, and
held that in the case of a mortgage, in ordinary form, of a life poUoy
to solicitors to secure a bill of costs, the solicitors, having on the
death of their client insolvent received the policy moneys, and
discharged their bill of costs, were not entitled as against other
payment of an unsecured debt.
creditors to retain the balance in
The mortgagee was in the position of a trustee of the policy
moneys for the estate. His right to retain the balance of the
moneys after paying his secured debt was a right merely against
the executors to avoid circuity of action if the estate was solvent.
There was no such right against other creditors. This seems to
be now acknowledged to be the correct view of the matter, and
there is therefore no right in a mortgagee on the death of the
mortgagor to tack his unsecured debts to the security to the

prejudice of either subsequent mortgagees or general creditors.
Consolida- The right of consolidation in its simplest form is the right of

tion.
a mortgagee who holds separate securities for separate debts of
the same mortgagor to refuse to be redeemed in respect of any
one mortgage unless all the mortgages are redeemed. That is
to say, the mortgagee is entitled to be put in the same position
as if the several mortgages were one mortgage of all the pro-

perties for the total amount of the indebtedness.
Application This right applies to equitable as well as legal mortgages, and
to mortgages
of policies.
is therefore applicable to mortgages of a chose in action such as
a policy of insurance (s).
Statutory The right of consolidation is now restricted by statute.

restriction of
right to con-
solidate.
Conveyancing Act, 1881, sec. 17.
44 & 45 Vict. 17. — (1) A

mortgagor seeking to redeem any one mortgage, shall, hy
0. 41, sec. 17. virtue of this Act, be entitled to do so, without paying any money due under
Restriction on any separate mortgage made by him, or by any person through whom he
consolidation claims, on property other than that comprised in the mortgage which he
of mortgages.
seeks to redeem.
(r) (1878), 9 Ch. D. 568. 187, 192 ; Tassell v. Smith (1858), 2

(«) Pledge v. White, [1896] A. C. De G. & J. 713.
MORTGAGES 489
(2) This section applies only if and as far as a contrary intention is not
expressed in the mortgage deeds or one of them.
(3) This section applies only where the mortgages or one of them are or
is made after the commencement of this Act.
As it is not uncommon for mortgage deeds to contain a clause Express
expressly reserving the right of consolidation the rules of equity ^f ^j jj^.
relating theretomust still be considered.

In cases where the right to consolidate exists the mortgagee Notice to
does not lose his right by giving notice to the mortgagor, under to°pay*ofi^
section 20 of the Conveyancing Act, to pay off one only of the °"^ mortgage
mortgages, for the doctrine of election has no application, and

even when the mortgagor has tendered the money in pursuance
of such notice the mortgagee can still insist that all the mortgages
shall be paid off as the price of redemption (u).
The right of consolidation may be exercised not only against Right to con-
-the mortgagor, but against subsequent mortgagees and other against

assignees of the equities of redemption (x). Thus if A mortgages ^^g|"„^;j °Qf
to X first policy M
and then policy N and afterwards grants redemption,
second mortgages on M and N to Y and Z respectively, X
cannot be redeemed either by A or Y or Z without payment of
the total sum charged on M and N.
But the assignee of an equity of redemption takes subject Where equity
only to such equities as his assignor was liable to at the time of before second
the assignment, and therefore if the mortgagor has assigned his ™g^j^®
equity of redemption in one mortgage before he created the other
mortgage the mortgagee cannot consolidate these two mortgages
as against the assignee of the equity of redemption. Thus if A
mortgages to X policy M
and then grants a second mortgage of
policy M to Y and subsequently mortgages policy N to X, and then
grants a second mortgage of policy N to Z, X can be redeemed by
Y by payment only of the sum charged on M, but he cannot be
redeemed by A or Z without payment of the total sum charged
on M and N. And even although the mortgage of M to X ex-
pressly provides that the mortgagor shall not be entitled to redeem

without first moneys that might be secured to the
paying all
mortgagees by any other mortgage executed by the mortgagor

that does not disentitle Y to redeem M upon payment only of
what is charged on M if at the time of the subsequent mortgage
of N, X had notice of Y's second mortgage on M. Apparently
{u) Griffith V. Pound (1890), 45 (a;) Pledge v. White, [1896] A. C.

Ch. D. 553. 187.
if X
had not such notice the express provision in the mortgage
deed would entitle him to consolidate even as against Y.
Right of The right of consolidation may be exercised by the transferee of
transferee of
mortgage to a mortgage as well as by the original mortgagee, and when several
consolidate properties have in the first instance been mortgaged by one mort-
gagor to several mortgagees, but are ultimately united in the hands
of one mortgagee or transferee, he raaj prima facie consolidate {y).
as against Such a mortgagee or transferee may consolidate against an
assignees of
the equities. assignee of all the equities of redemption without regard to whether
the union of his titles took place before or after the assignment
of the equities (2) ; but he cannot consolidate against an assignee
of one equity of redemption if the equities were separated before
the union of the transferee's titles (a). Thus, if A mortgages
policy M to X and policy N to Y, and subsequently grants a
second mortgage on M to Z, W having obtained a transfer of

both' the first mortgages from X and Y can only consoHdate
against Z if he acquired the right to both mortgages before the

date upon which A granted the second mortgage on M to Z.
There is no right to consolidate where the mortgages were
originally granted by separate mortgagors and the equities have
afterwards become united in the same hands (afl).
No consolida- The right of a mortgagee to consolidate is part of the price
tion before
default in which a mortgagor has to pay for being in default and having to
payment.
resort to a Court of equity to redeem his property. It follows
that a mortgage is only subject to consolidation if the mortgagor

is in default, and therefore when the time of payment expressed
in the mortgage deed has not arrived and the mortgagor's right to
redeem is still legal, that mortgage cannot be consolidated with

other mortgages (6).
Marshalling. The right of marshalling is the right of a puisne incumbrancer

or other assignee for value of an equity of redemption to insist
that a prior mortgagee who has got other available security shall
be first satisfied from that other security before resorting to the
property in respect of which they have a common interest (c).
(?/) Jennings v. Jordan (1881), 6 (6) Cummins v. Fletcher (1880), U

A. C. 698. Ch. D. 699.
(z) Pledgev. White, [1896] A.C. 187. fc) Gibson v. Seagrim (1855), 20
(a) Minterv. Can; [1894] 3 Ch. 498. Beav. 614 ; Lanoy v. Athol (1742),
{aa) Sharp v. Richards, [1909] 1 Ch. 2 Atk. 444, 446.
109.
MORTGAGES 491
Lawrence v. Galsworthy (1857), 3 Jur. W. S. .1049

A on his own life, and mortgaged it to B, together with all Lawrence v.
oileoted a policy
his household effects. Subsequently A mortgaged to C " all personal estate <^'»'*'«""'"»2/-
and effects whatsoever and wheresoever in possession reversion expectancy
or otherwise excepting allbook debts and securities for money." It was
held that the mortgage to C did not include the policy being " security for
money " and that C could compel B to satisfy his debt out of the poUcy
before resorting to the household effects.
Ford V. Tynte (1872), 41 L. J. Ch. 758

A mortgaged a life estate, and policies of insurance on his life to X, and then Ford v. Tynte.
mortgaged the life estate only to Y. Subsequently obtained judgments X
against A, which being registered became charges on the life estate under
1 & 2 Vict. c. 110. In a suit to realise the securities X's first mortgage having
been discharged out of the life estate it was held that Y was entitled to be paid
out of the policies. Y had a right to marshal X's securities, and insist that
X's first mortgage be discharged as far as possible from the policies. But as
it had been paid out of the life estate Y was entitled to be satisfied out of the
policies, and X could not by consolidating his subsequent charges with his
first mortgage defeat Y's right.
A puisne incumbrancer can insist on ttie prior incumbrancer Notice of

'^'^'°'^ charge,
marshalling his securities notwithstanding that at the time he took
his charge upon the property he had notice that it was subject
to the prior charge {d).
The right to marshal the securities of a prior incumbrancer Where there
cannot be enforced against third parties who have a charge upon fncu^mbran"^
the property out of which it is sought to satisfy such prior cers on other
^ security.
\_
mcumbrancer
,
(e).
.
Thus where properties A and B are mortgaged to X, and sub- Equity
sequently A is mortgaged to Y and B is mortgaged to Z, neither sequent in-
Y nor Z can insist as against

° the other on having
° the whole of
cumbrancers
to have debt
X's debt paid out of the property in which the other is interested, of common
and the priority of Iheir charges or the question whether each j^ran'oerT^'
has or had notice of the other's charge is not material. The portioned.
equity between Y and Z is to have X's debt apportioned between

A and B according to the respective values of the properties (/).
When a mortgagee redeems a prior mortgagee by paying off his Right to
debt he is entitled to a transfer of his security, and thus succeeds ^'^."0^111^°-
to his priority in respect of the debt paid off. gagee on

redemption.
Where a prior mortgagee compels a subsequent mortgagee as
the price of redemption to pay off debts other than those originally
(d) Flint V. Howard, [1893] 2 Ch. (18i3), 2 Y. & C. Ch. 377 ; Moxon v.
54, 73. Berkeley Mutual (1890), 59 L. J. Ch.
(e) Barnes v. Racster (1842), 1 524.
Y. & C. Ch. 401 ; Bugden v. Bignold (f ) Flint v. Howard. [1893] 2 Ch. 54.
—
constituting a prior charge on the property over which the subse-

quent mortgagee has got a puisne charge the subsequent
mortgagee is entitled to a transfer of all the securities for
the debt which he has paid off, and he may then in his turn by
consolidation, subject to the limitations already stated, compel
the mortgagor or other mortgagees subsequent to him to pay off
as the price of redeeming any one security what he has been
compelled to pay to the prior mortgagee as well as what was
due to him on the mortgage originally made to himself (/).
The following cases illustrate some of the principles governing

priorities in the redemption of mortgages.
Mutual Life v. Langley (1886), 32 Ch. D. 460
Mutual Life The mortgagor was entitled to A (a reversionary interest under a will)
V. Langley. and B (a life interest under a marriage settlement). He granted the following
mortgages on these properties :
(1) both properties to X, who gave notice to the trustees,

(2) A to L (who gave notice to the trustees of the fund, but part only of
the fund was in the hands of the trustees, the other part being de-
posited in Court, and L did not obtain a stop order),
(3) both properties to Y (who took without notice of L's mortgage on A,
and gave notice to the trustees),
(4) A to L, in respect of further advances (no notice being given to the
trustees or stop order obtained),
(5) B to M, who gave notice to the trustees.
M bought in the mortgages (1) and (3), and subsequently receiving notice
of mortgage (2) obtained a stop order. In an action by M
to foreclose the
securities L claimed the right to redeem M on paying off (1), and to a transfer
of both securities, without being first obliged to pay off (3) and (5), M con-
tended that L was not entitled to a transfer of B, upon which L had no mortgage
until he paid off all M's mortgages upon it, and that in any case L was bound
to pay off (3), as by reason of the stop order it took priority over (2). The
Coui-t of Appeal held, firstly, that (2) had priority over (3) in respect of the
funds in the hands of the trustees by reason of the prior notice to them, but
that (3) had priority over (2) in respect of the funds in Court by reason of the
stop order. Secondly, that upon L waiving his partial priority of (2) over (3)
and paying off (1) and (3) he was entitled to a transfer of both securities from
M without paying off (5). The reason given for this part of the decision was
that, as at the time A
was mortgaged to L he had the right to redeem
and obtain a two securities on the payment of the prior charges
transfer of the
then existing upon them, the mortgagor could not subsequently by deaUng
with the equity of redemption on B do anything to prejudice L's rights, and
M could not by taking a charge on the equity of redemption on B prejudice
the position of a previous mortgagee on A. In other words could only get M
priority in respect of (5) by tacking to or consolidating with ( 1 ) or (3). Tacking
(/ ) Titlexj V. Dames (1743), 2 Y. & C. Ch. 399,

• — —
MORTGAGES 493
was out of the question because there was no legal estate, the properties
mortgaged being purely equitable interests. M
could not consolidate (5) with
(1) or (3) because the mortgagor had assigned the equity of redemption on (1)
and (3) in so far as it related to A before mortgage (5) was created. Thirdly,
the Court held that as between (4) and (5) L was entitled to priority in respect
of (4) notwithstanding the absence of notice to the trustees because M had
no subsequent charge upon A which by priority of notice could gain priority
over and the doctrine of
(5), priority by notice would not be extended so as
to give a charge on one property priority over a charge on another. M
therefore could only in his turn redeem the two securities by paying what
L had paid to him, and the amount of L's charges upon (2) and (4).
Flint V. Howard, [1893] 2 Ch. 54.
The mortgagor was the owner of certain paper mills, and of a reversionary Flint v.
interest in personalty. He mortgaged these properties as follows : Hoionrd.
(1) both properties to H for £6000,
(2) both properties to P for £5000,
(3) paper mills to F for £2500,
(4) both properties to Mfor £1700.
Subsequently, by a deed between the mortgagor H and F
(a) F transferred mortgage (3) to H,
(6) F released the paper mills from mortgage (2),
(c) H advanced a further £4000 to the mortgagor, who charged both
properties in his favour to secure £6500.
Subsequently the mortgagor mortgaged the paper mills to R for £2500.
The incumbrances then stood —
(1) £6000 on both to H,
(2) £5000 on reversion to F,

(3) £2500 on paper mills to H,
(4) £1700 on both to M,
(5) £6500 on both to H

(which included £2500 on (3)),
(6) £2500 on paper mills to R.
F brought an action to foreclose M
and other persons interested in the
equity of redemption in the reversion, and obtained an order absolute for
foreclosure, thus becoming absolute proprietor of the reversion subject to (1).
H
F then brought this action claiming to redeem by paying off the £6000
on (1), and to have a transfer of the mortgage on the paper mills. H
resisted
this claim on the ground that it would give F a charge on the paper mills
in priority to (3) and (5), which would be contrary to the intention of the
deed to which the mortgagor, H and F were all parties. The Court held that
F was entitled to a transfer of both properties on paying off the £6000, as to
the reversion absolutely, and as to the paper mills subject to the other equities
of redemption. His duty was then to apportion the £6000 between the two
properties, and the subsequent mortgagees of the paper mills, that is to say H
or failing him M
or R would be entitled to redeem the mortgage on the paper
mills by pajdng F the proper proportion of £6000.
It was pointed out that as there was no longer any subsisting mortgage
on or equity of redemption in the reversion F could not insist on both pro-
perties being redeemed for his total debt of £11,000, nor could he insist on the
whole of the £6000 being charged on the paper mills. On the other hand the
subsequent mortgagees on the paper mills bad no right of marshaJUng so as
to compel F to satisfy his debt as much as possible out of the reversion, and
the only fair and reasonable course to adopt was to apportion the £6000
between the two properties.
Foreclosure The equity of redemption may be extinguished by foreclosure

and sale by
order of the or sale. Doubt has sometimes been expressed as to whether a
Court.
chose in action such as a policy of insurance can be foreclosed,
or whether the only remedy of the mortgagee is sale. This depends
on how far the remedies of a mortgagee of land are available to
a mortgagee of a chose in action.
Question The right of a legal mortgagee of land is primarily a right to
whether
mortgagee of foreclose {g). Primarily the right of an equitable mortgagee is
policy can
to have a judicial sale, but as an equitable mortgage of land
foreclose.
implies an obligation to execute a legal mortgage the Court has
given such a mortgagee the same remedy as if he had a legal
mortgage, that is foreclosure. Where a person has an equitable

charge on land, but no right to an assignment of the legal estate,
as where there is a charge created by will, it is clear that his proper

remedy is a decree of sale, and that he has no right to a decree
of foreclosure Qi).
The above principles are equally apphcable to a mortgage or
charge upon personal property which can be the subject of a legal
mortgage, and thus the remedy of an equitable mortgagee of
shares in a limited company is held to be primarily at least fore-
closure {%).
A chose in action, however, cannot be the subject of a legal
mortgage. No legal property or estate can be assigned, and
therefore the reasons for conceding the right of foreclosure to an

equitable mortgagee of land do not apply to the case of an equit-
able mortgagee of a chose in action. Jessel, M.E., held in the case
of a deposit of mortgage bonds that the depositee had no right
to foreclose, but the case appears to have been treated as a mere
pledge of chattels rather than as a deposit giving an equitable
charge on the moneys represented by the bonds (fc). Wigram,

V.C., in one case said that the proper remedy of a mortgagee of
a policy of insurance was sale (I). On the other hand, Kekewich,

J., in the case of debentures constituting a floating security upon
(g) Owen, In re, [1894] 3 Ch. 220. {k) Garter v. Wake (1877), 4 Ch. D.
(h) Owen, In re, [1894] 3 Ch. 220. 605.
(i) Redmayne v. Forsier (1866), (I) Dyson V. Morris (1842), 1 Hare,
L. B. 2 Eq. 467 ; Wayne v. IJanhcim 413.
(185 J), 9 Hare, 62,
MOETGAGES 495
the land, chattels, goodwill, and book debts, of a company has

granted the ordinary decree of foreclosure upon the whole
security (m). If this last-mentioned decision is right, then the
mortgagee of a policy of insurance is entitled to a decree of fore-
closure subject to the statutory right of the mortgagor or other
person entitled to the equity, of redemption to require a sale (?i),
and in practice foreclosure orders are frequently made (o).
When a security upon a policy takes the form of a trust When policy
and not a mortgage the ordinary rights of a mortgagee of fore- rcTedftor in°
closure and sale are not applicable, and the terms of the trust * *° P^^
^'''f
must be strictly adhered to. Thus, where a policy was assigned

by a debtor to his creditor in trust to retain the policy and receive
the policy moneys, and to apply the same first in payment of
expenses, secondly in paying off the debt and other advances,
and thirdly as to the balance to the use of the debtor, it was
held that the creditor had no power to enforce his security by
sale or foreclosure of the policy (g). But in another case, where
the trust was for the creditor to stand possessed of the policies,
and all moneys which should come hands in respect thereof,
to his
upon trust to discharge the debt and expenses, and hold the
balance to the use of the debtor, the Court thought that the
creditor had the right to sell if there were no available funds of
the debtor out of which premiums could be paid, and was pre-
pared to order a sale (r).
Where a security is partly by way of mortgage and partly by

an assignment in trust which does not permit of an immediate
sale, as where real property is mortgaged and a policy assigned in
trust to retain and pay the debt out of the policy moneys, the
position in an action to foreclose is not very satisfactory. The
Court will not order foreclosure or sale in respect of the policy,
and if a decree of foreclosure is made as to the real estate the
security of the pohcy is practically lost because, if the creditor
afterwards resorts to it for payment of any part of his debt the
foreclosure must be opened up, and if the mortgagee has in the
meantime sold the estate his right to any of the policy moneys
is absolutely barred because he cannot open up the foreclosure (s).
(to) Sadler v. Worley, [1894] 2 Ch. (1862), 8 Jur. (N. S.) 420 ; Jenkins v.
170 ; Oldrey v. Union Works, [1895] Row (1851), 5 De G. & Sm. 107.
W. N. 77. (r)Fordw. Tynte (1872), 41 L. J. Ch.
{n) Infra, p. 497. 758.
o) Beaton V. Boulton, [1891] W. N. («) Dyson v. ilfom« (1842), 1 Hare,
30. 413.
iq) Stamford Banhinc/ Co. v. Ball
The proper course in such a case would be for the mortgagee

to request a judicial sale of the real estate so that his debt might
be discharged pro tanto out of the proceeds without prejudice to
his security on the policy as to the balance (i).
Proceedings A foreclosure or judicial sale is effected by a foreclosure action
foreclosure or
^r Originating summons brought by the mortgagee. The mort-
aale. gagor and subsequent mortgagees or other assignees of the equity
of redemption must be made parties to the action or served with
the summons. An account of what is due and chargeable on the

security is ordered to be taken, and if the proper decree is fore-
closure, then an order is made for payment of what may be found

due within six months (or, where there are subsequent mortgagees,
within successive periods, giving each mortgagee in turn a definite
period, usually three months, to redeem), and in default of pay-
ment that the mortgagor and other persons interested in the
equity of redemption be foreclosed. On default of payment
before the expiration of the specified period or periods the decree
of foreclosure is made absolute on the application of the mort-
gagee, who thereby becomes owner of the property subject only
to any prior charges upon it. If he finds that the property is not
sufficient to satisfy his debt he may still sue on the personal
covenant or realise other securities which, from their nature, could
not be sold or foreclosed, but if he does so he must open up the
foreclosure and the mortgagor's equity of redemption revives (m).
If having foreclosed he sells the property he can no longer sue on
the covenant or realise any other security, because it is too late
to open up the foreclosure, and the mortgagee must be satisfied
with what the sale realised (u). When the proper order is sale
the Court will order the property to be sold under the approbation
of the Court to the best purchaser that can be got, and the proceeds
will be paid into Court and apphed in whole or part discharge of
the mortgagee's debt, or otherwise in accordance with the priority

of the equities of those having an interest in the property. Where
the proper order as to part of the security is foreclosure and as
to another part sale, the Court will order a sale of the property
which ought to be sold, in the first instance, and make a decree
of foreclosure as to the other property in respect of the balance

of the debt left undischarged (a;).
(«) Infra, p. 497. (x) Dyson v. Morris (1842), 1 Hare,

(m)Huntington v. Commissioners of 413,
Inland Revenue, [1896] I Q. B. 422.
MOHTGAGES 497
The mortgagor's right of redemption is not absolutely barred Foreclosure
even by an order of foreclosure absolute. The Court has still a aFter'^deoiê
discretion to open up the foreclosure order, and, where it is fair and absolute,
equitable that it should be opened up, will do so at the instance

of the mortgagor or other person entitled to redeem (y). In a
proper case may even be opened up as against a purchaser from
it
the mortgagee. No definite rules can be laid down as to when

the Court will open up a foreclosure absolute. The nature of the
estate, the possibility of placing the mortgagee or a purchaser
from him in statu quo ante, the amount of the debt and the dili-
gence of the mortgagor in attempting to raise the money, and
the value of the property in excess of the debt are all vital con-
siderations. The case of a policy becoming payable immediately
after the order for foreclosure absolute is a good example of the
kind of case where the Court ought to open up the foreclosure,
particularly if the policy moneys are considerably in excess of
the debt and the debtor was unable to raise the money for re-
demption.
Beaton v. Boulton (1891), W. N. 30

In December, 1889, the first mortgagees of a policy of insurance for £4000 Beaton v.
obtained a foreclosure order. In March, 1890, the chief clerk made his certi- Boulton.
ficate, fixing September 17, 1890, as the date of payment. The time was
afterwards extended to December 22, 1890. On December 29, 1890, the life
dropped, and the policy moneys became payable. On December 31, 1890,
the first mortgagees applied ex parte for foreclosure absolute, and the chief
clerk made the order, although he was informed of the death of the assured.
The amount of the policy moneys exceeded the amount of the first mortgagee's
debt, but the report does not state the amount of the excess. On the appli.
cation of the mortgagor's trustee in bankruptcy, supported by the second
mortgagees, the Court reopened the foreclosure, and ordered a subsequent
account, and a further period of one month for redemption.
The mortgagor or mortgagee to require an order

right of a statutory
for sale of the mortgaged property instead of an order for re- requke°sale
instead of
demption
' or foreclosure is now defined by the Conveyancing Act.
foreclosure.
Conveyancing Act, 1881, sec. 25

25. —(1) Any person entitled to redeem mortgaged property may have a 44 & 45
Vict,
sec. 25.
judgment or order for sale instead of for redemption in an action brought by «• 41,
him either for redemption alone, or for sale alone, or for sale or redemption
in the alternative.
(2/) Campbell v. Holyland (1877), 7 Ch. D. 166.

I.L.
^2
—
(2) In any action, whether for foreclosure, or for redemption, or for sale,
or for the raising and payment in any manner of mortgage money, the Court,
on the request of the mortgagee, or of any person interested either in the mort-
gage money or in the right of redemption, and, notwithstanding the dissent
of any other person, and notwithstanding that the mortgagee or any person
so interested does not appear in the action, and without allowing any time
for redemption or for payment of any mortgage money, may, if it thinks fit,
direct a sale of the mortgaged property, on such terms as it thinks fit, including,
if it thinks fit, the deposit in Court of a reasonable sum fixed by the Court,
to meet the expenses of sale and to secure performance of the terms.

(3) But, in an action brought by a person interested in the right of redemp-
tion and seeking a sale, the Court may, on the application of any defendant,
direct the plaintiff to give such security for costs as the Court thinks fit,
and may give the conduct of the sale to any defendant, and may give such
directions as it thinks fit respecting the costs of the defendants or any of them.
In any case within this section the Court may, if it thinks fit, direct a
(4)
sale without previously determining the priorities of incumbrances.
(5) This section applies to actions brought either before or after the com-
mencement of this Act.
(6) The enactment described in Part II. of the Second Schedule to this
Act is hereby repealed (a).

(7) This section does not extend to Ireland.
An equitable mortgagee by deposit is entitled to require a sale
under this section (a). Any mortgagor or mortgagee may, if the
Court thinks fit, obtain an order for sale at any time before fore-
closure absolute (b). When the mortgagee demands foreclosure

and a sale is requested by a person interested in the equity of
redemption, the order for sale will be subject to a deposit to meet

the expenses of the sale, and, if the sale is by auction, subject to
a reserve price sufficient to cover the mortgagee's debt (c).
Mortgagee's Besides the right of foreclosure and judicial sale a mortgagee
Sout^the'^ may have the right to sell the mortgaged property without re-
authority of sorting to the Court. This right is derived either from the express
the Court.
terms of the mortgage or from the provisions of the Conveyancing
Act, 1881 (d).
Conveyancing Act, 1881, sees. 2 (vi), 19, 20, 21

2. In this Act
44 & 45 Vict, :« * Hi * * *
c. 41, sees. 2,
19, 20, 21. Mortgage includes any charge on any property for securing money
(vi)
or money's worth and mortgage money means money, or money's worth.

;
(2) 15 & 16 Vict. c. 86, sec. 48. (c) Whitfield V. BobeHa (1859), 5
{a) Oldham v. Stringer (1884), 51 Jur. (N. S.) 113.
L. T. 895.
(b) Union Bank v. Ingram (1882), (d) 44&45 Vict. c. 41.
20 Ch. D. 463.
— ;
MORTGAGES J99
secured by a mortgage and mortgagor includes any person from time to

;
time deriving title under the original mortgagor, or entitled to redeem a

mortgage, according to his estate, interest, or right, in the mortgaged property ;
and mortgagee includes any person from time to time deriving title under
******
the original mortgagee and mortgagee in possession is, for the purposes of
;
this Act, a mortgagee who, in right of the mortgage, has entered into and is
in possession of the mortgaged property :
19.— (1) A mortgagee, where the mortgage

is made by deed, shall, by Powers iiioi-
vh'tue of this Act,have the following powers, to the like extent as if they had dent to estate
been in terms conferred by the mortgage deed, but not further (namely) or interest of
:
mortgagee.
(i) A power, when the mortgage money has become due, to sell, or to
concur with any other person in selling, the mortgaged property, or

any part thereof, either subject to prior charges, or not, and either
together or in lots, by public auction or by private contract, subject
to such conditions respecting title, or evidence of title, or other
matter, as he (the mortgagee) thinks fit, with power to vary any
******
contract for sale, and to buy in at an auction, or to rescind any
contract for sale, and to re-sell, without being answerable for any
loss occasioned thereby
(2) The provisions Act relating to the foregoing powers, comprised

of this
cither in this section, or in any subsequent section regulating the exercise of
those powers, may be varied or extended by the mortgage deed, and, as so
varied or extended, shall, as far as may be, operate in the like manner and with
all the like incidents, effects, and consequences, as if such variations or ex-
tensions were contained in this Act.

expressed in the mortgage deed, and shall have effect subject to the terms of
the mortgage deed, and to the provisions therein contained.
(4) This section applies only where the mortgage deed is executed after
the commencement of this Act.
20. A mortgagee shall not exercise the power of sale conferred by this Regulation
Act unless and until of exercise
(i) Notice requiring payment of the mortgage money has been served on i^
the mortgagor or one of several mortgagors, and default has been

made in payment of the mortgage money, or of part thereof, for three
months after such service ; or
(ii) Some interest under the mortgage is in arrear and unpaid for two
months after becoming due ; or
(iii) There has been a breach of some provision contained in the mortgage
deed or in this Act, and on the part of the mortgagor, or of some person
concurring in making the mortgage, to be observed or performed,
other than and besides a covenant for payment of the mortgage
money or interest thereon.
21. —
(1) A mortgagee exercising the power of sale conferred by this Act Conveyance,
shall have power, by deed, to convey the property sold, for such estate and receipt, &o.,
interest therein as is the subject of the mortgage, freed from all estates, interests,
and rights to which the mortgage has priority, but subject to all estates,
interests, and rights which have priority to the mortgage except that, in ;
the case of copyhold or customary land, the legal right to admittance shall not
pass by a deed under this section, unless the deed is sufficient otherwise by
law, oris sufficient by custom, in that behalf.
Where a conveyance is made in professed exercise of the power of sale

(2)
conferred by this Act, the title of the purchaser shall not be impeachable on
the ground that no case has arisen to authorise the sale, or that due notice was
not given, or that the power was otherwise improperly or irregularly exercised 5
but any person damnified by an unauthorised, or improper, or irregular
exercise of the power shall have his remedy in damages against the person exer-
cising the power.
(3) The money which is received by the mortgagee, arising from the sale,
after discharge of priorincumbrances to which the sale is not made subject,

if any, or after payment into Court under this Act of a sum to meet any prior
incumbrance, shall be held by him in trust to be applied by him, first, in pay-

ment and expenses, properly incurred by him, as incident
of all costs, charges,
to the sale or any attempted sale, or otherwise and secondly, in discharge
;
of the mortgage money, interest, and costs, and other money, if any, due under
the mortgage and the residue of the money so received shall be paid to the
;
person entitled to the mortgaged property, or authorised to give receipts for

the proceeds of the sale thereof.
(4) The power of sale conferred by this Act may be exercised by any person
for the time being entitled to receive and give a discharge for the mortgage
money.
(5) The power of sale conferred by this Act shall not affect the right of
foreclosure.
(6) The mortgagee, his executors, administrators, or assigns, shall not be
answerable for any involuntary Ibss happening in or about the exercise or
execution of the power of sale conferred by this Act or of any trust connected
therewith.
(7) At any time after the power of sale conferred by this Act has become
exercisable, the person entitled to exercise the same may demand and recover
from any person, other than a person having in the mortgaged property an
estate, interest, or right in priority to the mortgage, all the deeds and docu-
ments relating to the property, or to the title thereto, which a purchaser
under the power of sale would be entitled to demand and recover from him.
Notice to The power of sale under the Conveyancing Act, section 19,
mortgagor
required by arises when default has been made in payment of the capital
statute. according to the tenor of the deed. Section 20, however, hmits
the exercise of the power by providing that where the only default
is the failure to repay the capital the power of sale shall not be
exercised until notice is given requiring payment, and there is a
further default for three months after service of the notice. A
notice requiring repayment before the capital has become due
under the mortgage deed is an insufficient notice (e). A notice
given after the capital has become due and requiring the mort-
(e) Selwyn v. Garfit (1888), 38 Ch. D. 273.

MORTGAGES 501
gagor to pay within three calendar months is a sufficient notice,

and does not operate to enlarge the time given by the statute.
The mortgagor continues to be in default notwithstanding the
terms of the notice and the power of sale can be exercised at the
end of the three months (J).
Where the mortgage deed imposes conditions on the exercise Conditions in
of the power of sale the power will be subject to the conditions

deed^ê^fi^ning
named in the deed, and not the conditions prescribed by the power of sale,
statute. Conditions will be construed liberally in favour of the

power of sale.
Berry v. Halifax Commercial Banking Co., [1901] 1 Ch. 188

A
customer of a bank mortgaged to the bank a life policy to secure any Berry v.
overdraft on his current account,and the mortgage provided that the statutory Halifax Com-
power of sale should be exercisable by the bank if default should be made in Banh-
^^J''^^
ing Co.
payment owing on the said current account or other moneys
of the balance
due from the mortgagor or some part thereof for the space of one calendar
month after the said account currenthad been closed, or after notice in
writing demanding such payment should have been given by or on behalf of
the bank to the mortgagor, or left for him at his usual or last known place
of abode. The account current became much overdrawn, and the bank wrote
to the customer pointing out the position, and sajdng, " I must request your
immediate attention to this, and hope to receive a good amount during the
week in absolute reduction. When may I expect a settlement of the accounts
as promised ? " Shortly afterwards the customer called a meeting of his
creditors, and on November 9 he wrote to the bank, " There was a meeting
of creditors yesterday. I was not aware but you had a circular calling the
meeting. They agreed to accept all the assets I had. I gave them to under-
stand that I was insured in the Royal, and that you held the policy and £300
worth of shares as security for your account. . . . There was a trustee appointed
yesterday." On November 17 the customer assigned
all his property to a
trustee under a deed of arrangement for the benefit of his creditors. The
bank had notice of this deed on November 28, and on December 18, purporting
to act under their power of sale, sold the policy. On the question whether
the power of sale had arisen, Kekewich, J., held that it had. The deed of
arrangement would not amount to the closing of the account until notice had
been given to the bank, but the letter of November 9 amounted to a closing
of the account, and therefore the power of sale was properly exercised.
When the mortgage gives the mortgagee an express power of Express

"
sale without defining the length of notice or other conditions upon subjMt°to^^
reasonable
which the power may be exercised the mortgagee can any sell at
time after, but not before default (g) upon giving the mortgagor
(/) Barker v. Illingworth. [1908] (g) Brougham v. Squire (1852), 1

2 Ch. 20. Drew. 151.
notice, and a reasonable time to find and pay the money

due (h).
Obligation on A mortgagee in exercising his power of sale must take reason-

° ^^le precautions to obtain a proper price (i). If he does so the
obtaifTa^^
proper price, mortgagor has no redress on the ground that he did not obtain
the best price, or that by postponing the sale he might have
obtained more. A mortgagee is not a trustee of a power of sale
for the mortgagor (i). The mortgagee's right is to look after
his own interests first, but he must not wholly neglect the interests
of themortgagor and others entitled to the equity of redemption,
and therefore he is not at liberty fraudulently or wilfully or
recklessly to sacrifice the property of the mortgagor (i). The
mortgagee must bond fide sell to a third party, and neither the
mortgagee nor his solicitor or agent acting for him in the matter
of the sale can purchase the property on his own account (j).
Whether In the case of a policy of insurance the mortgagee's power of
policy is a Sale is usually most conveniently exercised by surrendering the

ofpowCT oT^
policy to the company. The question has been raised whether
sale. a surrender of the policy to the company is legally within the
power of sale, and consequently whether the mortgagee can
give the company a sufficient discharge from further liabihty
on the policy. Strictly speaking, a surrender is perhaps not a
sale. It is a release of the obligor upon a chose in action, and
differs from a sale in that the obligation is extinguished instead
of the right being transferred to another person. From the point
of view of the mortgagor, however, there is no practical distinction.
In either case he is deprived of all further interest in the policy,

and the surrender value is equivalent to the purchase price. It
may not be the best price obtainable, but as we have seen the
mortgagor cannot object to the transaction solely on that account.
In substance, therefore, the surrender is a sale, and if it were made
technically in the form of a sale by assignment to trustees on
behalf of the company, and then surrendered to the company by
the trustees it would be absolutely unimpeachable. It is sub-
mitted that even although the assignment to trustees is omitted
and the surrender is made directly by the mortgagee to the com-
pany it is a vahd exercise of the power of sale, and gives the
{h) JEJx parte Official Receiver (1886), (j) Martinson v. Clowes (1882), 21
18 Q. B. D. 222. Ch. D. 857 ; Nutt v. Easton, [1899]
(i) Farrar v. Farrars, Limited I Ch. 873 ; Hodson v. Deans, f 1903]
a888), 40 Ch. D. 395, 411 Kennedy ; 2 Ch. 647
V.De Trafford, [1897] A. C. 180.
MORTGAGES 503
»
company a good discharge. When the mortgage is by deed and

the mortgagee is exercising his statutory power of sale under the
Conveyancing Act the company would obtain the most satis-
factory discharge by taking a conveyance to trustees for the com-

pany. They would thus obtain the protection of section 21 (2)
of the Act against the consequences of an improper or irregular
exercise of the power of sale. In practice, however, most com-
panies do not insist upon such a conveyance, but are content to
accept the mortgagee's receipt for the surrender value and a
statutory declaration from him that the conditions precedent
to the exercise of the power of sale have been fulfilled as required
by section 20 (k).
Notwithstanding the provisions of the above section 21 (2) a when title of
purchaser's title may be impeached if he had notice that the Purchaser

'
.
from mort-
mortgagee exceeded his power of sale, or exercised it irregularly (m). gagee may be
™^'^^'' ^
Further, the section only makes a bond fide purchaser's title unim-
peachable after conveyance, and if having contracted to purchase
he afterwards discovers that the mortgagee had no power of sale,
or acted irregularly, he may decline to complete on the ground of
want of title in his vendor (n). The provisions relating to an
express power of sale in a mortgage deed may, however, be wider
than the provisions of the Act, as where the deed provided that
" notwithstanding any impropriety or irregularity in the sale the
same shall, so far as regards the safety and protection of the
purchaser, be deemed to be within the foresaid power, and to be
vahd and effectual accordingly." This was held to enlarge the
power of sale where the purchaser had acted in good faith, and such
purchaser would probably have been protected and bound to
complete whether the original power of sale was exceeded or not (o).
The statutory power of sale is given in the case of all mortgages Whether a
by deed. An instrument under seal creating a charge on the policy ™i^houf legal
is a mortgage, although it does not purport to assign the chose in title to chose
action. The question arises whether a mortgagee under such a give good
*'*'® *° P""^'
deed can, by exercising his power of sale, give a complete legal
title to a purchaser or a legal discharge to the office in the case
(k) It has been held in Canada that 1 Ch. 25, 30 As to what is notice,
a mortgagee of a life policy has no see Conveyancing Act, 1882, s. 3,
right as against the company to ante, pp. 441, 486.
exercise the assured's election to take (n) Life Interest v. Hand-in-Hand,
the surrender value {Fisken v. Mar- [1898] 2 Ch. 230.
shall (1905), 10 Ont. L. B. 552). (o) Dicker v. Angerstein (1870), 3
(m) Selwyn v. Qarfit (1888), 38 Ch. D. 600.
Ch, D. 273 ; Bailey v. Barnes, [1894]
of a surrender. It is The legal

submitted that he cannot. chose
in action still remains in the mortgagor, and was never " the
subject of the mortgage." The subject of the mortgage is an

equitable interest in the chose in action equivalent to the amount
charged on the policy. Section 21 gives the mortgagee exercising
the power of sale power " to convey the property sold for such
estate and interest therein as is the subject of the mortgage."
This does not seem to give the mortgagee power to transfer the
legal chose in action when it has never vested in him.
Power of sale The mortgagee's power of sale may be exercised under a pro-
exercised by
perly framed power of attorney, but where a principal granted a
mortgagee's
agent under power of attorney to his agent and thereby authorised the agent
power of
attorney. to sell any real or personal property then or thereafter belonging
to the principal, and to receive and give a discharge for any
moneys then or thereafter owing to the principal by virtue of
any security, it was held that the agent had no authority to sell
property held by his principal as mortgagee (p). Section 21 (4)
of the Conveyancing Act, which provides that the power of sale
conferred by that Act upon mortgagees may be exercised by any

person for the time being entitled to give a discharge for the
mortgage money and assigns
refers to the administrators executors
of the mortgagee, and does not extend to a person entitled

generally to give a discharge as agent (p).
Purchaser The purchaser from a mortgagee exercising his power of sale
from mort-
gagee entitled
is entitled to demand delivery of the policy and the mortgage as
to policy and documents of title. And where a mortgagee under a mortgage,
mortgage
deed. which comprised real estate and policies of insurance, sold the
real estate and retained the policies, it was held that in the absence
of any stipulation in the contract that he might retain the mortgage
deed he was bound to deliver it to the purchaser of the real estate (g).
Rule 5 Vendor and Purchaser Act, 1874, that

in section 2 of the
" when the vendor retains any part of an estate to which any
documents of title relate he shall be entitled to retain such docu-
ments," applies only to land(g).
Mortgagee's The following section of the Conveyancing Act, 1881, provides
dischMges! ^^^^ i^ certain cases the receipt in writing of a mortgagee shall be
(p) Dowson'a and Jenkin's Con- castle's Contract, In re, [1897] 2 Ch.
tract, In re, [1904] 2 Ch. 219. 144.
(q) Williams' and Dticheea of New-
MORTGAGES 505
a sufficient discharge for moneys payable in respect of the mort-

gaged property.
Conveyancing Aet, 1881, see. 22 (r)
22. —The receipt in writing of a mortgagee shall be a sufficient dis- 44 & 45 Vict,
(1)
charge for any money arising under the power of sale conferred by this Act, "• *^' "'"'• ^^'
or for any money or securities comprised in his mortgage, or arising thereunder ;
and a person paying or transferring the same to the mortgagee shall not be
concerned to inquire whether any money remains due under the mortgage.
(2) Money received by a mortgagee under his mortgage or from the
proceeds of securities comprised in his mortgage shall be applied in like
manner as in this Act directed respecting money received by him arising from
a sale under the power of sale conferred by this Act ; but with this variation,
that the costs, charges, and expenses payable shall include the costs, charges,
and expenses properly incurred of recovering and receiving the money or
securities, and of conversion of securities into money, instead of those incident
to sale.
Before this statutory provision was made it is probable that Before Con-
.. , , , _
, , T veyancing
/
a company pay moneys under a mortgaged poncy (or

liable to Act and in
Î'senoe of
any other debtor liable in respect of a mortgaged chose in action)
was, where the mortgage contained no receipt clause (s), under
some obligation to inquire as to what sum, if any, remained due
on the mortgage, and was bound to pay to mortgagor and mortgagee
the exact amount of their respective interests, or, in the event of
any dispute, to interplead or pay the moneys into Court.
Since the Conveyancing Act was passed it has become the Practice of
practice of the principal insurance companies to rely on section 22, since the
and if satisfied that the original mortgage is valid, to pay the Conveyancing
policy moneys on the sole receipt of a mortgagee, without inquiring

as to the state of account between mortgagor and mortgagee (f)
and disregarding any dispute between mortgagor and mortgagee

as to whether the whole or what part of the debt has been paid oft'.
This practice
^
appears
'
to be fully justified. Until there has Receipt of
'^
. .
mortgagee a
been a formal reconveyance of the policy to the mortgagor, the good dis-
charge.
This section should be compared

(r) discharge without any obligation on
with section 36 of the same Act relat- the party paying the same to see to
ing to the receipt of trustees now re- the application thereof, and was
pealed but re-enacted in the Trustee probably sufficient to enable an
Act, 1893 (56 & 67 Vict. c. 53, s. 20). insurance company to get a, corn-
See also Lord St. Leonards' Act plete discharge from the mortgagee
(22 & 23 Vict. c. 35, s. 23), which (Brasier v. Hudson (1837), 9 Sim. 1 ;
stands unrepealed. Ottley v. Gray (ISil), 16 L. J. Ch. 512).
(«) The receipt clause expressly (*) Article by Mr. A. B. Barrand in
empowers the mortgagee to receive Journal of the Institute of Actuaries,

the money and to give an efieotual vol. xxxiii. p. 211.
receipt of the mortgagee is a good discharge in respect of any

claim which is or may be made by the mortgagor or by any
person claiming through him or deriving title from him after the
Mortgage not date of the mortgage. The section of the Conveyancing Act in
under seal.
question is not confined in
application to mortgages by deed,
its
and it is submitted that it is equally applicable to a mortgage by

Mortgage by an instrument under hand only (u). It has also been suggested
deposit.
that it is applicable to mortgages by deposit (x). It is submitted,
however, that in the case of mortgages by deposit and any
other purely equitable mortgage that is where, owing to the
want of a written assignment or otherwise, the right to sue
in law has not passed to the mortgagee under the PoUcies of
Assurance Act, 1867, it would not be safe for an insurance
company to pay the mortgagee on his sole receipt. The practice
of making such payments would be contrary to the general rule
that a discharge from the person entitled to sue in law should
always be obtained, and it is submitted that the Conveyancing
Act is not so clear in its terms as to justify the grave course of
departing from that rule. It may well be open to question

whether a merely equitable mortgagee would ever be able to give
a valid discharge beyond the amount of the debt owing to him

and charged on the policy at the time of payment. He is only an
equitable assignee of the chose in action to that amount. If the
whole debt has been paid off he no longer holds the policy as mort-
gagee, but is merely in possession of the document as bailee, and
has no claim either legal or equitable to the chose in action, and it
is difficult to conceive that the effect of the Conveyancing Act

is
to enable such a person to give a complete discharge for the whole

policy moneys.
Mortgage to Where property has been mortgaged to more than one person
two or more jointly or to secure a sum expressed to be advanced from money
mortgagees
on joint belonging to them on a joint account, a good discharge may be
account.
obtained from the survivor or survivors alone in the event of one
or more having and there is no necessity to obtain any

died,
receipt or discharge from the representatives of those who have

predeceased.
(u) This, however, has been (a;) Article by Mr. A. R. Barrand,

doubted Wolstenholme's Conveyanc-
; supra.
ing and Settled Land Act {9th edi-
tion, p. 81).
MORTGAGES 507
Conveyancing and Law of Property Act, 1881, sec. 61

61. — (1) Where in a mortgage, or payment of money, 44 & 45 Vict,
an obligation for
or a transfer of a mortgage or of such an obligation, the sum, or
any part of the ^^' ^^"^ ''•
sum, advanced or owing is expressed to be advanced by or owing to more

persons than one out of money, or as money, belonging to them on a joint
account, or a mortgage, or such an obligation, or such a transfer is made to
more persons than one, jointly, and not in shares, the mortgage money, or
other money, or money's worth for the time being duo to those persons on the
mortgage or obligation, shall be deemed to be and remain money or money's
worth belonging to those persons on a joint account, as between them and the
mortgagor or obligor and the receipt in writing of the survivors or last
;
survivor of them, or of the personal representatives of the last survivor, shall

be a complete discharge for all money or money's worth for the time being
due, notwithstanding any notice to the payer of a severance of the joint

account.
expressed in the mortgage, or obligation, or transfer, and shall have effect
subject to the terms of the mortgage, or obligation, or transfer, and to the pro-
visions therein contained.
(3) This section applies only to a mortgage, or obligation, or transfer
made after the commencement of this Act.
When a mortgage is expressed as indicated in section 61 (1) pay-

ment of the mortgage money to one of the mortgagees during the
life of the others is a good discharge of the debt at law, but it only
discharges the security to the extent of the payee's beneficial interest
even although the payee ultimately becomes the survivor on the j oint
account (y). It follows that during the lifetime of several joint
mortgagees an insurance company can only get a good discharge

for the policy moneys upon the receipt of all of them.
When a mortgage to two or more persons is not expressed as
indicated in section 61 (1) the mortgagees are entitled to the pohcy
moneys as tenants in common and not jointly [z). It is therefore
necessary to get a discharge from each mortgagee and from the

representatives of any who have died.
Whether or not the receipt of a mortgagee would in law be Company not
X bound to j_i
a sufficient discharge to an insurance company, they are not pay mort-
necessarily bound to pay the whole insurance moneys to him, and
f^f^\™°u°„t
when they have notice that the mortgagor or persons claiming of his debt.
through him are in equity entitled to the whole or any part of the
insurance moneys they are entitled to distribute it among them
according to their equitable rights. In a case where a mortgage
{y) Powell V. Brodhurst, [1901] 2 (z) Jackson, In re (1881), Si Ch.D.

Ch. 160. 732.
of a share in certain trust moneys contained a receipt clause,

giving the mortgagee the fullest power of receiving the money
and giving was held by the Court of Appeal that the
discharges, it
trustees were not bound to pay the whole fund to the mortgagee,
but were entitled to distribute it among the persons equitably
entitled to it (a).
Where there If there is any reasonable doubt at all as to the ultimate

is doubt as to
the equitable
distribution in equity of policy moneys between the mortgagee and
claims com- the mortgagor, or persons interested in the equity of redemption
pany may
pay into as second mortgagees or otherwise, the company may pay it into
Court.
Court, and notwithstanding the fact that the mortgagee could
have given a complete discharge under the Conveyancing Act, the
company will not be rendered liable to the costs of subsequent
proceedings (b), although if a mortgagor or other person was to
make a claim adverse to the mortgagee which, on the face of it
was absolutely untenable and nevertheless the company paid into
Court, they might be rendered liable in costs (c).

In action by Where the mortgagee has not the right to sue in law and it is
mortgagee
Court may therefore necessary or at least advisable for the company to
with obtain a legal discharge from the mortgagor or his representatives
i
appointment
of legal repre- and the mortgagor is dead and no personal representatives have
sentatives of
mortgagor.
been appointed, the company may either pay into Court or retain
the money. If they take the latter course and an action is brought
against them by the mortgagee, the Court may, if satisfied that
the mortgagee's debt exceeds the amount of the insurance money,

order that the appointment of personal representatives be dis-
pensed with, and give the mortgagee judgment against the company
for the money without interest, and subject to the deduction by
the company of their taxed costs in the action {d).
Mortgagee's Where a bonus declared on a mortgaged policy is payable in
right to
receive and cash, the mortgagee's right to receive it and ability to give a
give discharge
complete discharge is the same as his right to receive and give a
for bonus.
discharge for the principal policy moneys, that is to say he cannot
compel payment except to the amount of his debt charged on the
policy, but he can give a complete discharge for the whole bonus
if the mortgage was constituted by an assignment passing the right
(o) Bell, In re, Jeffery v. Sayles, (d) Curtius v. Caledonian Fire and
[1896] 1 Ch. 1. Life (1881), 19 Ch. D. 534 Crosshyv.
;
(5) Hockey V. Western, [18981 1 Ch. City of Glasgow Life (1876), 4 Ch. D.
350. 421 ; Webster v. British Empire
(c) Desborough v. Harris (1855), 5 Mutual (1880), 15 Ch. D. 169.
De G. M. & G. 439.
MORTGAGES 509
to sue at law under the Act of 1867. Where a bonus is declared

as an addition to the principal poHcy moneys payment can only
be obtained, before the poUcy falls in, by surrendering it to the
company for its surrender value. This is in effect a sale of part
of the policy and the mortgagee can only surrender the bonus
if he has a power of sale(e). In practice the companies usually
insistupon the mortgagor's consent.
Where a security is in the form of a trust, and a policy is as- When mort-
signed by a debtor to his creditor in trust to receive the policy declared a
moneys and to pay off the debt and expenses, and as to the balance ^he^ôrt'-'^
in trust for the debtor, a company liable on the policy may, gagor.
subject to any question as to the validity of the document creating
the trust, pay the creditor without regard to any question between
him and the debtor, or to any claims by persons having assignments
or charges on the policy created subsequently to the creation of
the trust. AU these must come in as beneficiaries under the trust,
and the company has no concern with them (J). Probably in a

clear case of a trust created in favour of a creditor the company
would not be entitled to pay into Court, and if they did so the
creditor would be entitled to costs against them on an application
by him for payment out.
Asubmorteaeee or transferee of a mortgage takes subject to Transferee of

° ° ° ° *
mortgage
the actual state of account between mortgagor and mortgagee at takes subject
the date of the submortgage or transfer, and therefore if as between ^°têeii°*
mortgagor and mortgagee the mortgage has been paid off the mortgagor
submortgagee or transferee has no right to the property against gee.
the mortgagor notwithstanding he took for value and without

notice that the debt had been discharged (g). Similarly, if the
mortgage has been paid off in part he can only hold the property
against the mortgagor as security for the balance (h).
deed acknowledges Where mort-

But if a mortgage
c5 o o the receipt
X of a certain
^ gagor never
sum by the mortgagor in respect of which the property is mort- received
gaged, the mortgagor cannot afterwards allege as against a trans- ^^^-
feree for value and without notice that he, in fact, received only ledged.
(e) Article by Mr. A. R. Barrand in {g) Turner v. Smith, [1901] 1 Ch.

Journal of the Institute of Actuaries, 213.
vol. xxxiii. p. 214. Fiie «Mpm, p. 502. {h) Matthews v. Wallwyn (1798),
(/) Curtin v. Jellicoe (1863), 13 4 Ves. 118.
Ir. Ch. R. 180. Vide supra, p. 410.
a smaller sum and that he is entitled to redeem on payment of

that smaller sum (i).
Notice of A submortgagee or transferee ought to give notice to the
transfer to
mortgagor
company in order to acquire or preserve priority, but he ought also
and company. to give notice to the mortgagor because if he does not, and the
mortgagor, without notice, pays off the whole or part of the debt
due to the mortgagee, 'the submortgagee or transferee cannot hold
the security against him for more than the balance, if any (k).
The mortgagee was no longer in possession of the
fact that the
policy or mortgage deed might be constructive notice to the mort-
gagor of the submortgage, but the mortgagor might, under certain
circumstances, be justified in paying off the whole or part of the
debt without calUng for production of the documents, and therefore
express notice ought always to be given.
Right of A transferee of a mortgage is a mortgagee within the meaning

transferee to of section 2 (vi) of the Conveyancing Act, 1881, and is therefore
exercise
power of sale. entitled to exercise the statutory power of sale where the mortgage
is by deed.But a transferee of a mortgage cannot exercise an
express power of sale contained in the mortgage where the power
is reserved to the mortgagee and no mention is made of his
assigns (T).
Title of mort- When the whole debt upon a mortgage has been discharged,
the question arises whether it is safe for an insurance company to
ThT^^^^^
charged. pay the mortgagor Avithout insisting upon a formal reconveyance
of the policy from the mortgagee. This depends on the form of
the mortgage. If the mortgage was by deposit or otherwise
purely equitable, as in the case of a second mortgage, and the right

to sue at law under the Policies of Assurance Act, 1867, never
lâssed to the mortgagee, the company can safely pay, on produc-
tion of the mortgagee's receipt or other satisfactory evidence that
the whole moneys charged on the policy have been repaid, and no
formal reconveyance or discharge from the mortgagee is necessary.
If the mortgage was formal (not necessarily by deed) and passed

the right to sue at law to the mortgagee, the right to sue at law will
not revert to the mortgagor unless there has been a reassignment

in writing to satisfy the Policies of Assurance Act. A mere receipt
(i) Bickerton v. Walker (1886), 31 (I) Rumney and Smith, In re, [1897]
Ch. D. 151. 2 Ch. 351.
{k) Jones \.Oibbons(,180i),QyeBA01.
MORTGAGES 511
for the repayment mortgage money indorsed on the mort-

of the
gage would not be There ought to be a specific
sufficient.
reconveyance of the pohcy either by indorsement on the mortgage

or by a separate instrument. If the matter is to be strictly in
order, the company should insist upon having this before paying the
mortgagor or any person claiming through him. It has been
suggested that when the mortgage is by deed a reconveyance by
deed is necessary to revest the legal chose in action in the mort-
gagor, but it is submitted that that is not so. As any written
assignment is sufficient to pass the legal right to sue and the right
in equity has already revested on repayment of the debt, it is
difficult to appreciate why in any case, a reconveyance by deed

should be necessary (m). Apparently the practice of some com-
panies is to disregard the strictly legal aspect of the case
and to
pay any mortgagor upon satisfactory evidence that the mortgage
debt has been paid off (n). It may be that experience justifies
this practice, but at the same time it should be pointed out that
a company must always run some risk in making a payment

without getting a discharge from the person entitled to sue at
law (o).
A surety is by
entitled to the benefit of all the securities held ^"^s^^ of
the principal creditor at the time when the surety is called upon securities,
to pay and pays off the debt. He is entitled to insist upon the
principal creditor retaining all securities, which he held at the
time the contract of suretyship was made, and if the creditor
releases any security without the consent of the surety, the latter
is discharged from his liability as surety. If the creditor takes
additional security after the date when the contract of suretyship
was made, the surety cannot insistupon his retaining that addi-
tional security, but if the surety pays off the debt he is entitled
(m) Mr. A. E. Barrand, inhisarticle mortgage, but the rule is not really
in the Journal of the Institute of applicable because it is not a question
Actuaries, vol. xli. p. 149, says "The : of cancelling the operation of the
general rule, at any rate of English mortgage deed, but merely of re-
law, is that where property has been vesting a legal title in the mortgagor
assigned by deed and it is desired to after the mortgage deed has fulfilled
cancel the operation of that deed a its function.
re-assignment should be executed in (n) Article by Mr. T. B. Sprague,
the same form." He suggests that Journal of the Institute of Actuaries,
in accordance with that rule a re- vol. xxxiii. p. 387.
conveyance of property mortgaged (o) Bickerton v. Walker (1885), 31
should be in the same form as the Ch, D. 151.
to the benefit of such additional security if it is still held by the

creditor (p).
Surrender by A surety can only be deprived of the benefit of the creditor's
surety of his
right. securities if he has deUberately surrendered them. Where a
surety took an express covenant from the debtor for an indemnity
and security upon certain specified property, it was held that he
did not thereby surrender his right to the benefit of a policy of
insurance which, unknown to him, the debtor had deposited as
additional security for the debt paid off by the surety (g). If,
knowing that the creditor held several securities, he elected to

take a covenant from the debtor in respect of one only, that might
be held to be a surrender of the others.
Mortgagee The creditor's duty to the surety is to preserve the securities
cannot tack
or consolidate
intact for his benefit in case he should pay off the debt, and there-
against fore he cannot, after the date on which the contract of suretyship
surety.
was made, diminish the value of the security to the surety by
consolidating or tacking other debts (r), except perhaps where
the other debt existed and was known to the surety at the time
he became surety, or where was subsequently charged upon
it the
security with the surety's knowledge and consent (s).

Mortgagee's It is obvious that an unsecured debt existing at the time the
unsecured
debts.
contract of suretyship was made, in respect of a secured debt
cannot be tacked to the security to the prejudice of the surety,
notwithstanding that he knew of the existence of the unsecured

debt (i).
Person be- When a person who undertakes the payment of another's debt
coming liable
as principal
becomes, as between himself and the creditor, a principal and not
for mort- a surety he not entitled to the rights of a surety in respect of
is
gagee's debt
not entitled the creditor's securities notwithstanding that he may, as between
to securities.
himself and the original debtor, have a right of indemnity and a
charge against his property (u). As against such a person the
creditor is entitled to tack or consolidate to the same extent as
he has that right against the original debtor (x).
Bight of A surety in respect of one of. several debts secured upon

surety to
ip) Newton V. Chorlton (1853), 10 2,3 Beav. 18 ; Nicholas v. Ridley,

Hare, 646 Nicholas v. Ridley, [1904]
; [19041 1 Ch. 192.
1 Ch. 192, 211. Jeffrey's Policy, In re (1872),
(t)
Lake v. Brutton
{q) (1856), 8 20 W. B.857.
(M) Nicholas v. Ridley, [1904] 1
De G. M. & G. 440.
Ch. 192.
(r) Forbes v. Jackson (1882), 19 (a;) Duncan, Fox and Co. v. North
Ch. D. 615. cmd South Wales Bank (1880), 6 A. C.
(s) Farebrotherv. Wodehouee{1857), 1; roojrood'«ieffaC2/(1889),6IL.T. 19.
MORTGAGES 513
different properties is entitled, upon paying the creditor, to have compel

the creditor's claims marshalled so as to throw (as far as the creditor mlrshai.*"
himself would have the right to do so) the least burden upon the
property in respect of which the surety has made his payment.
Heyman v. Dubois (1871), L. E. 13 Eq. 158
A effected three policies of insurance on his own

and mortgaged them Heyman
life v.
successively to the office as security for loans. 1, for £2000, was Dubois.
Policy
mortgaged for £1000 Policy 2 for £1000 was mortgaged for £500 and Policy 3
; ;
for £1000 was mortgaged with Policy 1 for £1500. B became surety in respect
of this last debt. A became bankrupt, and the company recovered judgment
against B for £1500, which was satisfied to the extent of about £1000. On
the death of A, Policy 3 had lapsed, and only 1 and 2 became payable. Out
of the £3000 the company satisfied the remainder of their debt and interest,
and there was a balance of £800. About one-half of this was the balance on
Policy No. 2, and the assignee in bankruptcy contended that B had no right
to a charge upon that balance as Policy No. 2 was not held as security for the
debt which he had been compelled to pay. It was held that as the company
as mortgagees would have had the right to consolidate the securities and retain
their debt out of either policy, the surety who had paid one debt was entitled
to have the securities marshalled accordingly, and to have the whole balance
applied to reimburse what he had paid. It will be noticed that the right of
the surety here depended on the right of the mortgagee to consolidate, and in
a similar case to-day if the right of consolidation was extinguished by the
Conveyancing Act, 1881, the surety would have no right as against the assignee
to marshal, but would have to be satisfied with the balance on Policy 1, and
as to the rest would have to prove in the bankruptcy.
A surety becoming entitled to the creditor's securities may Surety's
foreclose in default of payment. foreclose.
Parker v. Marquess of Anglesea (1871), 25 L. T. 482
A was indebted to B and C was surety to the extent of £2000. Parker v.

for £3000,
A insured his life and delivered the policy to B. B called upon
for £3000, Marquess of
to pay, and he paid £2000, thereby becoming entitled to the security of the "^ '^^'^'
policy to that extent. A having failed to pay the premiums, B and C agreed
that they should pay them in the proportion of two-thirds and one-third,
and should be entitled to the proceeds of the policy in the same proportion.
After some time C declined to pay further premiums, and B paid the whole.
In a foreclosure action it was held that B was entitled to foreclose against C
in default of payment of the arrears of his share of the premium and against
A's assignee in default of payment of the debt remaining due.
A general power of attorney, given by a person going abroad, Power of

"•-'•'
^ attorney gives
-^
•->
has been held to be sufficient authority to the attorney to authority to

i.L. 33
5U TITLE TO LIFE POLICIES
mortgage life raise money on behalf of such person by mortgaging his life
policies. ,. . , \
poncies (y).
Charge on Where a policy has been charged with a debt, the charge may
policy en-
forceable still be enforced and payment had out of the poHcy moneys,
although barred by the Statutes
although action on the debt itself is of
debt barred
by Statutes of Limitations (z).
Limitations.
Section VIII. — Trustees and Settled Policies
Power of Formerly a person liable to pay money to a trustee was under

trustees to
give a dis- an obligation to the cestui que trust to see that the trust was
charge for
policy
performed except (1) where the trustee had express power to give
moneys. receipts in full discharge (2) where such power might be implied
;
from the fact that the trust was for the benefit of infants or persons
unascertainable, or for a general purpose, such as the payment
of all debts. Trustees have now a statutory power to give a
complete discharge and to settle or compromise claims on behalf
of the estate.
Trustee Act, 1893, sees. 20, 21, and 50

56
0.
& 57 Vict.
53, sees. 20,
20. — (1) The receipt in writing of any trustee for any money, securities,
or other personal property or effects payable, transferable, or deliverable to

21, and 50.
him under any trust or power shall be a sufficient discharge for the same, and
Power of
shall effectually exonerate the person paying, transferring, or delivering the
trustee to
give receipts. same from seeing to the application or being answerable for any loss or mis-
application thereof.
(2) This section applies to trusts created either before or after the com-
Power for
executors and
21. — (1) An executor or administrator may pay or allow any debt or
claim on any evidence that he thinks sufficient.
trustees to
compound, (2) An executor or administrator, or two or more trustees, acting to-
&c. gether, or a sole acting trustee where by the instrument, if any, creating the
trust a sole trustee is authorised to execute the trusts and powers thereof,
may, and as he or they may think fit, accept any composition or any security,
if
real or personal, for any debt or for any property, real or personal, claimed,
and may allow any time for payment for any debt, and may compromise,
compound, abandon, submit to arbitration, or otherwise settle any debt,
account, claim, or thing whatever relating to the testator's or intestate's
estate or to the trust, and for any of those purposes may enter into, give,
execute, and do such agreements, instruments of composition or arrangement,
releases, and other things as to him or them seem expedient, vidthout being
responsible for any loss occasioned by any act or thing so done by him or
them in good faith.
iy) Perry v. Holt (1860), 6 Jur. (z) London and Midland Bank v.
(N. S.) 661. Mitchell, [1899] 2 Ch. 161.
—
TRUSTEES AND SETTLED POLICIES 515
expressed in the instrument, any, creating the trust, and shall have effect
if
subject to the terms of that instrument, and to the provisions therein contained.
* He ^: 4: :ic *
50. In this Act, unless the context otherwise requires,
Definitions
The expression " trust " does not include the duties incident to an
estate conveyed by way of mortgage ; but with this exception the
expressions " trust " and " trustee " include implied
and constructive
trusts, and cases where the trustee has a beneficial iriterest in the
trust property, and the duties incident to the office of personal repre-
sentative of a deceased person.
Where trustees appear to have acquired the legal chose in action, Payment to
that is the right to sue for the policy moneys in their own names, have tffe legal
the only obhgation of the company is to inquire into the validity "^"^^ ^
of the settlement and the title of the trustees, and if satisfied that
the settlement is unimpeachable and that the trustees making
the claim have been properly appointed and invested with the
legal chose in action, the company may safely pay the policy
moneys to them, notwithstanding objections made by beneficiaries,
or by purchasers or incumbrancers taking from the settlor after
the creation of the trust. The company would not be justified
in paying the money into Court merely on account of conflicting
claims of beneficiaries who do not dispute the validity of the

settlement or the title of the trustees.
Where there is a trust, but without a complete assignment of Payment to
the legal chose in action to the trustees, the company ought to âve only an
equitable
obtain a discharge from the trustees and also from the person or
title.
persons entitled to the legal chose in action, and if that cannot
be obtained they ought to pay into Court.
Persons paying money to trustees with knowledge that the Payment of
trustees were going to apply it in breach of trust, would not be yalue to

trustees.
discharged by the receipt of the trustees, and in the case of trustees
applying for the surrender of a policy or for the application of a
bonus in a particular way the company must, before complying
with the request, satisfy themselves that the trustees have power
under the trust, or by order of the Court, to deal with the policy
in the manner proposed (a).
Under section 17 of the Trustee Act, 1893, a company may Payment to
safely pay policy moneys to a solicitor or banker as agent for the tSees"'^
trustees upon such agent producing the policy with the receipt
(a) Article by Mr. A. R. Barrand Actuaries, vol. xxxiii. p. 220. Infra,

in the Journal of the Institute of p. 533.
of the trustees, and no further authority or mandate from the

trustees need be produced {aa).Speaking generally, trustees have
no power to authorise either one of their own number, or any
other person not being a banker or solicitor, to accept policy
moneys on their behalf (&). Payment must therefore be made
either to all the trustees personally, or in accordance with the
provisions of the Trustee Act.
Trustee Act, 1893, sec. 17
66 & 57 Vict,
(1)17. — A trustee may
appoint a solicitor to be his agent to receive and
c. 53, sec. 17.
give a discharge for any money or valuable consideration or property receivable
Power to by the trustee under the trust, by permitting the solicitor to have the custody
authorise of, and to produce, a deed containing any such receipt as is referred to in
receipt of
section fifty-six of the Conveyancing and Law of Property Act, 1881 and a
money by ;
banker or trustee shall not be chargeable with breach of trust by reason only of his
solicitor. having made or concurred in making any such appointment and the pro- ;
44 & 45 Vict. ducing of any such deed by the solicitor shall have the same validity and effect
c. 41.
under the said section as if the person appointing the solicitor had not been
a trustee.
(2) A trustee may appoint a banker or solicitor to be his agent to receive
and give a discharge any money payable to the trustee under or by virtue
for
of a policy of assurance, by permitting the banker or solicitor to have the
custody of and to produce the policy of assurance with a receipt signed by
the trustee, and a trustee shall not be chargeable with a breach of trust by
reason only of his having made or concurred in making any such appointment.
(3) Nothing in this section shall exempt a trustee from any liability which
he would have incurred if this Act had rot been passed, in case he permits
any such money, valuable consideration, or property to remain in the hands
or under the control of the banker or solicitor for a period longer than is
reasonably necessary to enable the banker or solicitor (as the case may be)
to pay or transfer the same to the trustee.
(4) This section applies only where the money or valuable consideration
or property is received after the twenty-fourth day of December one thousand
eight hundred and eighty-eight (c).
(5) Nothing in this section shall authoriss a trustee to do anjrthing which
he is in express terms forbidden to do, or to
omit anything which he is in
express terms directed to do, by the instrument creating the trust.
Payment of Even where all the beneficiaries of a trust are ascertainable

and are and otherwise sui juris, the company cannot
of full age
toeotlv'to^'''^
faeneiiciary -with safety make a direct payment on the receipt of such bene-
ficiaries without a discharge from the trustees who have the legal
(aa) See Hetting and Merton'a Con- (c) This section re-enacts Trustee
tract, In re, [1893] 3 Ch. 269. Act, 1882 (51 & 52 Vict. c. 59), sec. 2,
(6) Flower, In re (1884), 27 Ch. D. which first gave the authority in
592. question.
•
title. It is impossible for the company to know whether or not

a beneficiary has charged or assigned his interest in the trust, and
if he had done so the person entitled under the charge or assignment
would be payment against the company
in a position to enforce
in the name
of the trustees, and the company would have no
defence even although they had paid the original beneficiary

without any notice of the charge or assignment.
A company making payment to trustees ought* to

before TiUoof
satisfy themselves that the trustees making the claim and giving appofntment
the receipt have been regularly appointed, and that the legal °* "^^ t"^"^-
chose in action has duly vested in them. New trustees may be ing of trust
appointed either by the person or persons nominated for that

(a) P''°P''''*^y-
purpose in the trust deed, or (b) by the surviving trustees or the

personal representatives of the last surviving trustee in accordance
with section 10 (1) of the Trustee Act, 1893, or (c) by the Court.
When a new trustee is appointed by a person entitled to appoint,
the deed of appointment should contain a declaration by the
appointor to the effect that the trust property shall vest in the
new and when the deed contains such declaration no
trustees,
further conveyance or assignment is necessary in order to vest
the legal chose in action in the case of a policy. A similar declara-
tion in a deed of retirement of a trustee operates in a similar way
to vest the title to a policy in the continuing trustees.
Trustee Act, 1893, sees. 10, 11, 12

10. — (1) Where a trustee, either original or substituted, and whether 56 & 67 Vict.
53, sees. 10,
appointed by a Court or otherwise, is dead, or remains out of the United King. °-
dom for more than twelve months, or desires to be discharged from all or any '
of the trusts or powers reposed in or conferred on him, or refuses or is unfit annointino'

to act therein, or is incapable of acting therein, then the person or persons new trustees.
nominated for the purpose of appointing new trustees by the instrument, if
any, creating the trust, or if there is no such person, or no such person able
and willing to act, then the surviving or continuing trustees or trustee for
the time being, or the personal representatives of the last surviving or con-
tinuing trustee, may, by writing, appoint another person or other persons
to be a trustee or trustees in the place of the trustee dead, remaining oui of
the United Kingdom, desiring to be discharged, refusing, or being unfit or
being incapable, as aforesaid.
(2) On the appointment of a new trustee for the whole or any part of
trust property —
(a) the number of trustees may be increased and
;
(6) a separate set of trustees may b3 appointed for any part of the trust
property held on trusts distinct from those relating to any other part
or parts of the trust property, notwithstanding that no new trustees or
trustee are or is to be appointed for other parts of the trust property,
and any existing trustee may be appointed or remain one of such
separate set of trustees ; or, if only one trustee was originally

appointed, then one separate trustee may be so appointed for the
first-mentioned part ; and
(c) it shall not be obligatory to appoint more than one new trustee where
only one trustee was originally appointed, or to fill up the original
number of trustees where more than two trustees were originally
appointed ; but, except where only one trustee was originally
appointed, a trustee shall not be discharged under this section
from his trust unless there will be at least two trustees to perform
the trust and;
{d) any assurance or thing requisite for vesting the trust property, or any
part thereof, jointly in the persons who are the trustees, shall be
executed or done.
(3) Every new trustee so appointed, as well before as after all the trust
property becomes by law, or by assurance, or otherwise, vested in him, shall
have the same powers, authorities, and discretions, and may in all respects
act, as if he had been originally appointed a trustee by the instrument, if any,
creating the trust.
(4) The provisions of this section relative to a trustee who is dead include
the case of a person nominated trustee in a will but dying before the testator,
and those relative to a continuing trustee include a refusing or retiring trustee,
if willing to act in the execution of the provisions of this section.

expressed in the instrument, if any, creating the trust, and shall have effect
subject to the terms of that instrument and to any provisions therein con-
tained.
Retirement 11. — (1) Where there are more than two trustees, if one of them by deed
of trustee. declares that he is desirous of being discharged from the trust, and if his
co-trustees and such other person, if any, as empowered to appoint trustees,

is
by deed consent to the discharge of the trustee, and to the vesting in the co-
trustees alone of the trust property, then the trustee desirous of being dis-
charged shall be deemed to have retired form the trust, and shall, by the
deed, be discharged therefrom under this Act, without any new trustee being
appointed in his place.
(2) Any assurance or thing requisite for vesting the trust property in the
continuing trustees alone shall be executed or done.
expressed in the instrument, if any, creating the trust, and shall have effect
subject to the terms of that instrument and to any provisions therein con-
tained.
Vesting of
trustproperfcy
12. — (1) Where a deed by which a new trustee is appointed to perform
^ ^ ^^.^^^^ contains a declarationby the appointor to the effect that any
j estate
m new or i-r- ./
any land subject to the trust, or in any chattel so subject, or the continuing
or interest in
right to recoverand receive any debt or other thing in action so subject, shall trustees,
vest in the persons who by virtue of the deed become and are the trustees
for performing the trust, that declaration shall, without any conveyance or
assignment, operate to vest in those persons, as joint tenants, and for the
purposes of the trust, that estate, interest, or right.
(2) Where a deed by which a retiring trustee is discharged under this
Act contains such a declaration as is in this section mentioned by the retiring
and continuing trustees, and by the other person, if any, empowered to appoint
trustees, that declaration shall, without any conveyance or assignment, operate
to vest in the continuing trustees alone, as joint tenants, and for the purposes
of the trust, the estate, interest, or right to which the declaration relates.
(3) This section does not extend to any legal estate or interest in copyhold
or customary land, or to land conveyed by way of mortgage for securing
money subject to the trust, or to any such share, stock, annuity, or property
as is only transferable in books kept by a company or other body, or in manner
directed by or under Act of Parliament.
(4)Eor purposes of registration of the deed in any registry, the person or
persons making the declaration shall be deemed the conveying party or parties,
and the conveyance shall be deemed to be made by him or them under a
power conferred by this Act.
(5) This section applies only to deeds executed after the thirty-first of
December one thousand eight hundred and eighty-one.
When a trustee is appointed by the Court, a vesting order

Appointment is
commonly made whereby the legal chose in action in the case of a courtân^ ^
pohcy passes to the new trustee. vesting
orciGrs
Where a trustee is incapable or refuses or neglects to enforce a
chose in action, the Court may make a vesting order enabling
some other person or persons to enforce it for the benefit of the
trust*
The above powers are exercisable by the High Court or by the

Palatine Courts of Lancaster and Durham in matters arising
within their jurisdiction. When the value of the trust estate is
less than £500 they may be exercised by a county court judge.
Trustee Act, 1893, sees. 25, 35, 37, 46, and 48

26. — (1) The High Court may, whenever it is expedient to appoint a C6 & 57 Vict,
new trustee or new trustees, and it is found inexpedient, difficult, or im- c- 53, sees. 25,
practicable so to do without the assistance of the Court, make an order for % ,g '
the appointment of a new trustee or new trustees either in substitution for p.™.. _f +].„
or in addition to any existing trustee or trustees, or although there is no existing Court to
trustee. In particular and without prejudice to the generality of the fore- appoint new
trustees.
going provision, the Court may make an order for the appointment of a new
trustee in substitution for a trustee who is convicted of felony, or is a bankrupt.
(2) An order under this section, and any consequential vesting order or
— — — :
conveyance, shall not operate further or otherwise as a discharge to any

former or continuing trustee than an appointment of new trustees under any
power for that purpose contained in any instrument would have operated.
(3) Nothing in this section shall give power to appoint an executor or
administrator.
Vesting 35. — (1) In any of the following cases, namely :
orders as to (i) Where the High Court appoints or has appointed a new trustee ;
stock and and

choses in
action.
(ii) Where a trustee entitled alone or jointly with another person to stock
or to a chose in action
(a) is an infant, or
(6) is out of the jurisdiction of the High Court, or
(c) cannot be found ; or
{d) neglects or refuses to transfer stock or receive the dividends
or income thereof, or to sue for or recover a chose in action,
according to the direction of the person absolutely entitled
thereto for twenty-eight days next after a request in
writing has been made to him by the person so entitled, or
(e) neglects or refuses to transfer stock or receive the dividends
or income thereof, or to sue for or recover a chose in action
for twenty-eight days next after an order of the High
Court for that purpose has been served on him ; or
(iii) Where it is uncertain whether a trustee entitled alone or jointly
with another person to stock or to a chose in action is alive or
dead,
the High Court may make an order vesting the right to transfer or call for a
transfer of stock, or to receive the dividends or income thereof, or to sue for or

recover a chose in action, in any such person as the Court may appoint
Provided that
{a) Where the order is consequential on the appointment by the Court
of a new trustee, the right shall be vested in the persons who,
on the appointment, are the trustees ; and
(6) Where the person whose right is dealt with by the order was entitled
jointly with another person, the right shall be vested in that

last-mentioned person either alone or jointly with any other
person whom the Court may appoint.
(2) In all oases where a vesting order can be made under this section,
the Court may, if it is more convenient, appoint some proper person to make
or join in making the transfer.
(3) The person in whom the right to transfer or call for the
transfer of
any stock is vested by an order of the. Court under this Act, may transfer the
stock to himself or any other person, according to the order, and the Banks
of England and Ireland and all other companies shall obey every order under
this section according to its tenor.
After notice in writing of an order under this section it shall not be
(4)
lawful for the Bank of England or of Ireland or any other company to transfer
any stock to which the order relates or to pay any dividends thereon except
in accordance with the order.
(5) The High Court may make declarations and give directions concerning
the manner in which the right to any stock or chose in action vested under the
provisions of this Act is to be exercised.
(6) The provisions of this Act as to vesting orders shall apply to shares
in ships registered under the Acts relating to merchant shipping as if they
were stock.
if: 4i :!: * * *
37. Every trustee appointed by a court of competent jurisdiction shall, Powers of

as well before as after the trust property becomes by law, or by assurance, "^^ trustee
or otherwise, vested in him,have the same powers, authorities, and discretions, n^J,^^
and may in all respects act as if he had been originally appointed a trustee
by the instrument, if any, creating the trust.
46. The provisions of this Act with respect to the High Court shall, in Jurisdiction
their application to cases within the jurisdiction of a palatine court or county of palatine
court, include that court, and the procedure under this Act in palatine courts pQ^j^jg
and county courts shall be in accordance with the Acts and rules regulating
the procedure of those courts.
^ S|C !^ 3f! 9fS -t*
48. Property vested in any person on any trust or by way of mortgage Trust estates
shall not, in case of that person becoming a convict within the meaning of not affected
the Forfeiture Act, 1870, vest in any such administrator as may be appointed j,ecomina a
under that Act, but shall remain in the trustee or mortgagee, or survive to his convict,
co-trustee or descend to his representative as if he had not become a convict 33 & 34 Vict. ;
provided that this enactment shall not affect the title to the property so far 0. 23.
as relates to any beneficial interest therein of any such trustee or mortgagee.
County Courts Act, 1888, see. 67

67.
High Court in
******
The Court have and exercise all the powers and authority of the 51 & 52
shall
the actions and matters hereinafter mentioned ; (that is to say)
Under the Trustees Relief Acts, or under the Trustee Acts, or under
(5)
any of such Acts in which the trust estate or fund to which the action or matter
Vict.
j^^^^'jjigtô^^*
in equity.
relates shall not exceed in amount or value the sum of five hundred pounds.
Independently of the Trustee Act the High Court has inherent Inherent
jurisdiction to appoint a trustee or trustees when it is expedient to '^[g^ Court.°
do so (b). The County Court has no such jurisdiction and cannot

therefore appoint a trustee or trustees except in cases to which
the Trustee Act apphes.
When a poHcy is settled so that the legal interest is vested in Liability for
the trustees of the settlement and therefore does not pass to the on settled^
assured's legal representatives on his death, the company may policy.
(6) DodUn V. Brunt (1688), L. R. 6 Eq. 580.

—
become liable to pay tbe estate duty, The following statutory

provisions must be considered.
rinanee Act, 1894, sees. 1, 2 (1) (3), 3 (1), 8 (4), 9 (1)
57 & 58 Vict, 1. In the case of every person dying after tlie commencement of this Part
c. 30, seoa. 1, of this Act there shall, save as hereinafter expressly provided, be levied and
2(1) (3), 3(1),
paid upon the principal value ascertained as hereinafter provided of all
8 (4), 9 (1).
Grant of property, real or personal, settled or not settled, which passes on the death
Estate dutv. of such person a duty called " Estate duty," at the graduated rates herein,
after mentioned . . .
^Vhat pro-
perty deemed
2.
—
(1) Property passing on the death of the deceased shall be deemed to
include the property following, that is to say :
to pass.
(a) Property of which the deceased was at his death competent to dispose.
(6) Property in which the deceased or any other person had an interest
ceasing on the death of the deceased, to the extent to which a benefit
accrues or arises by the cesser of such interest ; but exclusive of
property the interest in which of the deceased or other person was

only an interest as holder of an office or recipient of the benefits
of a charity, or as a corporation sole,

(c) Property which would be required on the death of the deceased to be
included in an account under section 38 of the Customs and Inland
Revenue Act, 1881, as amended by section 11 of the Customs and
Inland Revenue Act, 1889, if these sections were herein enacted
and extended to real property as well as personal property and the
words " voluntary " and " voluntarily " and a reference to a volun-
teer were omitted therefrom.
{d) Any annuity or other interest purchased or provided by the deceased
******
either by himself alone, or in concert, or by arrangement with any
other person to the extent of the beneficial interest accruing or
arising by survivorship, or otherwise on the death of the deceased.
Property passing on the death of the deceased shall not be deemed to

(3)
include property held by the deceased as trustee for another person under a
disposition not made by the deceased or under a disposition made by the
deceased more than six months before his death, where possession and enjoy-
ment of the property was bond fide assumed by the beneficiary immediately
upon the creation of the trust and thenceforward retained to the entire exclu-
sion of the deceased or of any benefit to him by contract or otherwise.
—
******
Exception 3. (1) Estate duty shall not be payable in respect of property passing
on
for transac- the death of the deceased by reason only of a bond fide purchase from the
tions for
person under whose disposition the property passes. . . .
money con-
sideration.
Supplemental
provisions as
8. — (4) Where property passes on the death of the deceased and his
executor (c), is not accountable for the Estate duty in respect of such property,
to collection.
every person to whom any property so passes for any beneficial interest m
possession, and also to the extent of the property actually received or disposed
of by him every trustee, guardian, committee, or other person in whom any
interest in the property so passing or the management thereof is at any tune
vested . . . shall be accountable for the Estate duty , . .
•
TRQSTEES AND SETTLED POLICIES 523
9.
— (1) A
rateable part of the Estate duty on an estate in proportion to Charge of
the value of any property which does not pass to the executor (c), as such shall Estate duty
be a first charge on the property in respect of which duty is leviable, provided
^' 'PI
that the property shall not be so chargeable as against a bond fide purchaser
thereof for valuable consideration without notice.
Customs and Inland Revenue Act, 1881, sec. 38, amended by

Customs and Inland Revenue Act, 1889, sec. 11
38. — (2) The personal or moveable property to be included in an account 44 Vict. c. 12,
shall be property of the following descriptions, viz. : — ko'v f

(a) Any property taken as a donatio mortis causa made by any person gg(j_ n'
dying on or after the first day of June, one thousand eight hundred
and eighty-one, or taken under a voluntary disposition made by any
person so d3Hlng purporting to operate as an immediate gift inter
vivos whether by way of transfer, delivery, declaration of trust or
otherwise, which shall not have been bond fide made twelve months
before the death of the deceased, and property taken under any gift,
whenever made, of which property bond fide possession and enjoyment
shall not have been assumed by the donee immmediately on the gift
and thenceforward retained to the entire exclusion of the donor,
or of any benefit to him by contract or otherwise.
* ^ H; H: ii: :^
(c) Any property passing under any past or future voluntary settlement
made by any person djdng on or after such day by deed or any other
instrument not taking effect as a will, whereby an interest in such
property for life or any other period determinable by reference to
death is reserved either expressly or by implication to the settlor,
or whereby the settlor may have reserved to himself the right, by the
any power, to restore to himself, or to reclaim the interest
exercise of
such property.
in
The charge under this section shall extend to money received under a
policy of assurance effected by any person djdng on or after the first
day of June, one thousand eight hundred and eighty-nine, on his
where the policy is wholly kept up by him for the benefit of a
life,
donee, whether nominee or assignee, or a part of such money in

proportion to the premiums paid by him for such benefit.
It will be noticed that the adoption here of the method of When estate
^^'^
legislatingby reference has caused a considerable overlapping of ablJon
the taxing enactments, and that section 2 (c) of the Act of 1894, by settled pohoy.
incorporating property previously subject to account duty, brings
under taxation indirectly a good deal of what is brought under
taxation directly by section 2 (b) and (d), and many of the limita-
tions contained in the provisions of the incorporated sections of

the Customs and Inland Eevenue Acts, 1881 and 1889, are taken
(c) The expression " executor " of a deceased person (Finance Act,
means the executor or administrator 1894, s. 22 (1) (d)).
away by reason of the wider provisions in section 2 (b) and (d).
This is particularly noticeable in the case of settled policies.

These were chargeable with account and succession duty under
the earlier Acts, in so far as the settlor reserved an interest to him-
self or in so far as he kept up the policy for the benefit of a donee.
If the assured settled his policy and reserved no interest to himself
and did not keep up after the date of the settlement, it was not
it
liable to account and succession duty even to the extent of pre-
miums paid by him before the date of the settlement (d). Nor
was the policy liable to account and succession duty when the
settlement was made for valuable consideration and kept up by
the settlor in favour of a purchaser (e). Section 2 (d) of the
Finance Act, 1894, removes these limitations. A policy of in-
surance is an interest within the meaning of that subsection, and

every life policy is chargeable with estate duty to the full amount
of the policy moneys if it was purchased or provided by the
assured either by himself alone or in concert or by arrangement
with any other person, and settled so as to create a beneficial
interest accruing on the death of the assured. The fact that the
settlement was made for good or valuable consideration, or that
the policy has not been kept up by the assured does not affect the
liability to pay estate duty.
Attorney-General v. Dobree, [1900] 1 Q. B. 442

A.-G. V. In this case the deceased shortly before his marriage effected a policy
Dobree. of insurance on his own life payable on his death to his intended wife. By his
marriage settlement the deceased assigned the policy to the trustees of the
settlement, and covenanted to pay the premiums during his life. He paid
the premiums in accordance with the covenant and on his death the company
paid the money to the trustees. The Crown claimed estate duty from the
trustees on the ground that the whole policy moneys must by reason of the
Finance Act, 1894, section 2 (1) (d) be deemed to be property passing on death-
It was held that the policy was an interest purchased or provided by the
deceased, within the meaning of the subsection, and that it was not " property
passing on the death of the deceased by reason only of a bond fide purchase
f com the person under whose disposition the property passes " within the
meaning of the exception in section 3, and that it was therefore chargeable.
Attorney-General v. Hawkins, [1901] 1 Q. B. 285

A.-O. V. The deceased was entitled to three policies of insurance on his own life
Hawkins. for £69,500. He was tenant for life, and his son was tenant in tail, of settled
(d) The Lord Advocate v. Fleming, 1890, and involves no decision on

[1897] A. C. 145. This case was on a the effect of the Finance Act, 1894.
question of succession and account (e) The Lord Advocate v. Earl 0/
duty arising in respect of a death in Fife (1883), 11 R. 222.
land. By arrangement with his son a disentailing deed was executed and
the fee was mortgaged to secure a loan of £70,000 to
meet the deceased's debts.
The deceased assigned to the trustees of a deed of family arrangement the
insurance and his life interest in trust to pay out of the life interest
policies of
the premiums on the policy and interest on the loan, and after deducting
expenses to pay two-thirds of the surplus income to the deceased and one-
third to the son, and in trust as to the policy moneys to hold them for the son.
The Court of Appeal held that the policies were " an interest purchased or
provided by the deceased." There was no assignment of the policies to the
son, but an arrangement by virtue of which an interest accrued to the son on
the death of the deceased.
Attorney-General v. Robinson, [1901] 2 I. E. 67

By upon the marriage of the deceased four policies of A.-O. v.
the settlement
insurance effected by him upon his life, and certain moneys of his intended ô**'*'''^™-
wife were assigned to trustees upon trust as to the moneys secured by the
policies (when received) to pay the income thereof to the wife for life, and
after her death as to the principal moneys for the children of the marriage,
and the trusts of the intended wife's moneys were to apply after the marriage
so much of the income thereof as might be necessary to pay the premiums
on the policies, and to pay the residue thereof to the deceased for life, and
after his death to his intended wife for life, and then to the children abso-
lutely. The policies were kept up in accordance with the settlement out of
the income of the moneys provided by the wife. The wife predeceased the
husband, and upon the death of the latter the children became entitled to
the policy moneys in possession. The Crown claimed estate duty. It was
held that the moneys were liable to estate duty. The policies were not kept
up by the deceased, and were therefore not chargeable under the Finance Act,
1894, section 2 (c), but they were chargeable as an interest provided by the
deceased within the meaning of section 2 (d) of the same Act.
Although section 2 (d) of the Finance Act, 1894, brings under Policies
assigned to
taxation poHcies which are settled upon good or valuable considera- purchaser.
tion, it does not bring in policies which are assigned to a purchaser
for full consideration in money or money's worth, even although
the assignment may form part of what is called a family arrange-
ment.
Lethbridge v. Attorney- General, [1907] A. C. 19

The deceased effected fifteen policies on Ms own life, and after maintaining Lethbridge v.
them for some time assigned them to his son under a series of family arrange- A.-O.
ments necessitated by financial difficulties. The deceased was tenant for life
and the son tenant in tail in remainder of the family estates and these were
disentailed and re-settled the fee was mortgaged by the father and son to
;
secure a loan to pay o££ the father's debts. The policies were assigned to the
son, togetherwith a portion of the rents and profits of the estate sufficient
topay the premiums and an annuity during the joint lives of father and son.
The House of Lords held that the son had given full value for the policies, and
the annual premiums paid to keep them up. The son was a purchaser of the
policies formoney's worth, and they were not kept up by the father. The
general purpose of the subsection 2 (d) was to prevent a man escaping estate
duty by subtracting from his means, during his life, moneys or money's
worth which when he dies are to reappear in the form of a beneficial interest
accruing or arising on his death but it is not subtracting from his means if
;
the deceased has received a full equivalent in return for whatever he has laid
out. The
father neither purchased nor provided anything because he was
compensated in full for what he had expended on the policies. There was an
absolute assignment to the son at the date of the arrangement, and in this
respect the case was quite different from Hawkins' case, in which there was
a settlement in the name of trustees under which an interest accrued at the
death of the deceased.
Estate duty Estate duty is chargeable on a settled policy even although

on policies
made without the policy is illegal for want of interest. If the insurance company
interest. have paid the policy moneys the trustees or beneficiaries cannot,
as against the Crown, set up the defence that it was an illegal and
void policy.
Policy pur- Estate duty isnot chargeable under the Finance Act, 1894,
chased or pro-
vided by section 2 (1) (d), when the settled policy was wholly purchased or
some one
other than
provided by some one other than the deceased.
deceased.
Attorney- General v. Murray, [1904] 1 K. B. 165
A.-Q. V. The father of the deceased efieoted a policy of insurance upon the deceased's
Murray. life. The deceased was then eleven years of age, and the policy was in the
father's name as assured. It was payable on the deceased's death at any time
after he attained the age of twenty- one, and was granted in consideration of
the payment of ten annual premiums. The father paid all the premiums.
On the deceased's marriage the policy was settled on the trusts of a marriage
settlement to which the deceased and his father were both parties, the deceased
bringing into settlement some of his own property. The Crown claimed
estate duty on the policy moneys which were paid to the trustees on the death
of the deceased. The Court of Appeal held (1) that the fact that the policy
was effected by the father without an insurable interest in the life of his son
was not material as it could not afieot the liability to estate duty if the moneys
were in fact paid, (2) that the policy was an interest, but that it was not pur-
chased or provided by the deceased either alone or in concert or by arrange-
ment with another person.
Liability of Under section 9 (1) of the Finance Act, 1894, the commissioners
insurance
might on the insurance companies paying the estate duty
insist
company to
pay estate on poHcies which have been settled by the assured, and which do
duty on
settled not pass to his executors as such. Under that section the estate
policies. duty is a first charge on the property. Apparently the commis-
sioners do not in practice charge the companies on these policies,
but charge the trustees under section 8 (4). The habihty of the
companies to pay the duty ought, however, to be kept in mind,

and it forms an additional reason for the company making
payment in every case to the trustee or trustees of a settlement,
and not directly to the beneficiaries. If the company paid the
beneficiaries the commissioners would probably charge the com-
pany with the estate duty.
A settlor who has covenanted with trustees to insure his life Settled
is liable for breach of the covenant if the insurance companies oovenMitrto

refuse to insure (/). The covenant is prima facie absolute and not insure,
conditional on the offices accepting him as a good hfe (/).
A hfe policy effected by a settlor may fall within the covenant Whether life
to bring all Thus where a husband ^jj^ cove-

acquirenda into the settlement.
by ante-nuptial settlement covenanted that if at any time during nant to settle
.
the marriage he should become possessed of or entitled, by devise,

acquirenda. -iiiT-
payment or otherwise, to any property or estate, whether real
or personal, he would convey or assign his interest therein to the
trustees, and thereafter during the marriage insured his life, it
was held that he was bound to bring the policy into the settlement
as property purchased by him (g).
Where a policy is settled the trustees are primci facie entitled Bonus addi-
to all bonus additions to the amount of the original policy (/i).

settled policy,
Gilly V. Burley (1856), 22 Beav. 619

An ante-nuptial marriage settlement contained a recital that the settlor Oilly v.
had agreed to an insurance for £2600 in the names of the trustees, and
effect Burley.
that the same had been effected. The settlor covenanted to pay the pre-
miums, and then followed a declaration of the trusts of the sum of £2500 to
become due and payable to the said trustees on the death of the settlor.
Contrary to the recital in the deed the policy was in fact issued after the
marriage, and in the name of the settlor and not of the trustees. By the
rules of the company persons holding policies were entitled to elect as to whether
a bonus should be applied (i) by payment to holder, (ii) by reduction of premiums,
or (iii) by addition to the insured amount. The settlor allowed the bonus
(/) Arthur, In re (1880), 14 Ch. D. then the question may arise whether,
603. if the settlor has thus reserved part
Turcan, In re (1888), 40 Ch. D.
{g) of the chose in action, the trustees
5 Holland, In re, [1902] 2 Ch. 360.
; acquire any legal chose in action in
(h) It is not uncommon for the respect of the remainder (vide supra,
settlor to reserve bonus additions, and p. 431).
"
additions to be added to the insured amount, and on his death it was held
that such additions fell to the trustees of the settlement, and not to his personal
representatives. The was to be considered on the footing that the settlor
case
had and insured in the name of the trustees. The
fulfilled his obligation,
question was whether the intention was to settle the whole policy moneys or
to settle only £2500, and assign the policy in security. The Court held the
intention was to settle the policy. The settlor might have applied the bonus
additions towards payment of his premuims, but he had not done so, and they
became part of the policy moneys to which the trustees were entitled.
Courtney v. Ferrers (1827), 1 Sim. 137

Courtney v. A settlor having insured his life in the sum of £3000 assigned to the trustees
Ferrers. of his marriage settlement " the policy of assurance, and all sums of money,
benefits and advantages to arise, accrue or become due or payable upon oi by
virtue of it in any manner howsoever.'' In the events which happened the
settlor's daughter became absolutely entitled to the policy, subject only to her
father's life interest.On her marriage she assigned to her trustees " all that
the sum £3000 assured by " the policy, and in the event which happened
of
the trust was to assign the trust property to such persons as she might by her
will appoint. In her will she bequeathed " £1000 part of the sum of £3000,
which, by the settlement made on my marriage my father covenants to keep
insured on his life, and which is subject to the trusts of the said settlement
to one legatee and the " remaining £2000 " to another legatee. On the death
of the father £6000 bonus additions were due upon the pohoy. The Court
held that the daughter's intention was to settle her whole interest in the
policy, .and by her will to divide the whole proceeds of the policy between the
two legatees in the proportion of one-third and two-thirds. The legatees
were therefore entitled to the whole £9000 in that proportion.
Parkes v. Bott (1838), 9 Sim. 388

Parkes v. An ante-nuptial settlement recited thatit had been agreed that the in-
So**- tended husband should insure his life in the Rock Insurance Office in the
names of the trustess in the sum of £3000, that the dividends of certain shares
should be applied in keeping the policy on foot, and that the said sum of £3000
should be settled in manner thereinafter mentioned, and it was declared that
the trustees should stand possessed of the policy in trust for the intended
husband until the marriage, and that upon the solemnisation thereof they
should stand possessed of the said sum of £3000 when received under the
policy upon certain trusts for the benefit of the intended wife and children of
the marriage. The husband became bankrupt and died. At the time of
his death a bonus of £885 had accrued upon the policy. It was held that it
belonged to the trustees of the settlement, and not to the assignee in bank-
ruptcy. The intention was to settle the whole policy, and not merely a sum
of £3000 secured by it.
Roberts v. Edwards (1863), 9 Jur. N. S. 1219
HoheHs V. A testator bequeathed " the £2000 insured on my life." There were at
Edwards. the date of the will two policies, £1000 each. Subsequently the testator
surrendered one and a bonus of £112 10s. was declared on the other. It was
held that the bonus passed to the legatee.
A case arising in practice is mentioned by Mr. Barrand [h). Application
The settlement provided that any bonus might be applied in redu°tioVof

reduction of future premiums. The settlor with the concurrence premiums,
of the trustees asked the company to apply any bonus as it became

payable to the payment of the premiums in full until the bonus
should be exhausted. The directors were of opinion that they
could not safely make such an arrangement because the power to
apply a bonus " in reduction of future premiums " meant that it
should be applied in reduction of premiums pro rata, and
all future
that the company could not be a party to an arrangement not
sanctioned by the terms of the settlement. This decision was
probably correct. On a liberal construction " reduction of future
premiums " might be held to include extinction ; but the expres-
sion as used in the settlement was apparently a reference to
one of the usual options given by practically all offices, that is to
say the method of permanent reduction of premiums (&).
Where the settlor is the sole surviving beneficiary in the trust, Settlor sole
l^^n^fi^'^'^y-
he may refuse to keep up the policy or to allow the trustee to keep
it up, or he may call upon the trustee to assign it according to his
direction.
Godsal V. Webb (1838), 2 Keen 99

A woman on her marriage settled her interest in certain property which Godsal v.
was limited to her for her separate use for life. The settlement provided that Webb.
the trustees should out of the income insure the wife's life, and that they should
hold the proceeds of the policy in trust to pay the income to her husband for
life, and after his decease to pay them to such person or persons as she should
by her will appoint, and The wife

in default of such will to her next of kin.
survived her husband, and had no issue, and being unwilling to continue the
payment of the annual premium she joined with the trustees in a voluntary
assignment of the policy to her cousin. The cousin paid the premiums from
that date until the wife's death, when the wife's next of kin claimed the policy
moneys. It was held that there was no intention to settle the policy for the
benefit of the next of kin as against the wife, and on becoming sole beneficiary
she was entitled to dispose of it absolutely, and her cousin as assignee was
accordingly entitled to the whole proceeds of the policy.
A settlor may reserve the right to withdraw the policy from the Settlor's right
°* revocation.
settlement and if he has the right to withdraw it altogether, he
(h) Journal of the Institute of difficulty might have been got over
Actuaries, vol. xxxiii. p. 220. by permitting the trustees each year
(fc) If the trustees had express to borrow the annual premium on
power to borrow for the purpose of the security of the bonus {vide infra,
paying premiums, or had implied p. 532).
power through absence of funds, the
i.L. 34
may incumber it so that it remains in the settlement, but subject

to the debts charged upon it. Where a settlor reserved the right
to cease payment of the premiums and to sell the policy, and after-
wards purported to assign the policy to his bankers in security for
advances, and covenanted with them to pay the premiums, it was

held that the beneficiaries took subject to the charge in favour of
the bank (l).
Revocation Where a settlor reserves the right of revocation in general

by will.
terms the right may be exercised by a properly executed will,
and a some person other than the

disposition of the property to
beneficiary under the settlement is a sufficient revocation. Where
a revocation of the settlement is made by an instrument which is
intended to operate on the settlor's death it must be made in the
form of a will as provided by the Wills Act, 1837, because it is an
appointment by a " writing in the nature of a will in the exercise
of a power " within the meaning of section 1 of the Wills Act, and
therefore void under section 10 of the same Act unless properly
executed as a will (m). If the appointment is testamentary in its
nature it is not sufficient that it is made with all the formalities

indicated by the settlement, it must also comply with the pro-
visions of the Wills Act (m).
Settlor's Where the settlor covenants to pay the premiums and fails to
covenant to
pay pre- do so, the trustees may sue him for the premiums paid by them,
miums. or if he is insolvent they may prove in his bankruptcy for the
value of the covenant to pay future premiums, that value being

the amount necessary to purchase a paid-up policy. But where a
became bankrupt and the trustees proved for that amount
settlor
and the proof was allowed, but before payment of a dividend

the settlor died and the trustees became entitled to the
whole pohcy moneys, it was held that the proof must be
expunged except as to the premiums which the trustees had
actually paid (mm).
{I) Pedder v. Mosely (1862), 31 fore revocable in so far as it secures

Beav. 159. In Scotland a gift from a benefit to the wife during coverture,
husband to vpife is revocable stante but irrevocable in so far as it secures
matrimonio [Dunlop v. Johnston (1867), a provision for her after the husband's
L. R. 1 Sc. App. 109). A post-nuptial death.
provision for the wife is irrevocable (m) Barnett, In re, [1908] 1 Ch. 402.
(Hay's Trustees v. Hay (1904), 6 (mm) Miller, In re (1877), 6 Ch. D.
F. 978). A voluntary post-nuptial 790.
settlement by the husband is there-
Where a policy was settled and the settlor covenanted to pay Where insur-
the premiums, but before the settlor's death the insurance company fg^ôundûp^
was wound up, itwas held that the settlor was under no further
obligation to the settlement. The trustees could prove in the
winding up for the value of the policy, and the settlor was relieved
from payment of further premiums (n).
The settlor's liability to bring a certain sum into the settlement Settlor's
may be secured by the assignment of a policy on his life, and a ]êep policy
covenant bond or warrant of attorney to enter judgment against on foot
sccur6(i bv
him for the amount but subject to the condition in defeasance bond,
that the trustees shall not sue or enter up judgment so long as
the settlor punctually pays the premiums and does nothing to
invalidate the policy. If the settlor upon such a settlement fails
to pay the premiums so that the policy lapses even for one day, the
trustees may proceed on the covenant bond or warrant of attorney,
and at the same time may themselves pay the overdue premiums
and revive the policy as security for satisfaction of their judgment
against the settlor.
Winthrop v. Murray (1850), 14 Jur. 302
A debtor gave to his creditor a warrant of attorney to enter up judgment Winthrop v.
for thedebt on condition that the creditor should not act upon it so long as Murray.
the premiums on a policy on the debtor's life were punctually paid, and the
debtor allowed the policy to lapse for four days, and the creditor entered up
judgment for the debt, the Court refused to stay proceedings on the judgment
on the ground that the creditor had afterwards paid the overdue premium,
and revived the policy.
Besides a covenant to pay the premiums a settlement of a Settlor's
policy on the Hfe of the settlor should contain a covenant by him tolnvaMate
not to do any act or thing by which the policy should be forfeited. ^^^ policy.
The damages for breach of this covenant, as where a settlor went
beyond the Hmits of a life policy without consent of the directors
and the poKcy became void, is not the total amount insured, but
the then value of the policy forfeited, and the value of the
settlor's covenant to pay future premiums on the policy (o).
(n) Garniss v. Heinke (1871), 40 (o) Hawkins v. Coulthurst (1864),

L. J. Oh. 306. 5B & S. 343.
Vyse V. Wakefield (1840), 6 M. & W. 442

Vyse V. A settlor covenanted to present himself for insurance when required and
Wakefield. that thereafter he would not do or permit to be done any act or deed whereby
the insurance might be avoided or prejudiced. He was required to undergo
examination for insurance, but received no notice that an insurance was
effected. In fact a policy was efEected on his life subject to the condition that
it should be void if he went beyond the limits of Europe. He went beyond
the limits of Europe, and this action was brought against him for breach of
his covenant. was held that no action lay in the absence of notice to the
It
settlor that an insurance had been efEected, and of the terms and conditions
upon which it had been effected.
Dormay v. Borrodaile (1847), 10 Beav. 335

Dormay v. A policy was granted on the usual condition that it should be void
life
Borrodaile. if the assured " should die by his own hands." The policy was settled and the
assured covenanted " to do and perform all such acts, matters and things that
should be requisite for continuing and keeping on foot the policy." The
assured committed suicide. It was held that there was no breach of the
covenant. The
positive covenant to do all things necessary to keep the policy
on not include the negative covenant not to do any act which might
foot, did
invalidate the policy. Although the policy was void the estate of the settlor
was not liable to the trustees of the settlement.
Trustee's Trustees are not bound to pay the premiums on a policy unless
obligation to
they have trust funds available for that purpose. If they have
keep policy
on foot. such funds they must use them to pay the premiums. If they
have no such funds they may pay the premiums from their own
pockets or borrow money to pay them, and may charge the money
so paid or borrowed on the policy (s). A company may there-
fore on the security advance money to the

of a settled policy
trustee or trustees to pay the premiums provided the company
is by a statutory declaration or other sufficient evidence
satisfied
that there an absence of funds and consequent danger of the

is
policy lapsing. Trustees cannot renew the poHcy for their own
benefit. Even although they have renewed entirely at their own
expense the policy remains subject to the trust (t).
Obligation to
The trustees of a settlement are primd facie bound to enforce
enforce the covenant of the trust against the settlors, but the beneficiaries
settlor's
covenants. cannot hold them liable for failure to do so unless they can show
that proceedings against the settlor would have been productive.
(«) Clack V. Holland (1854), 19

(t) Pitzgibbon v. Scanlan (1813), 1
Beav. 262, 273, 277 ; Todd v. Moor-
house (1874), L. R. 19 Eq. 69; Leslie, Dow. 261.
In re (1883), 23 Ch. D. 552.
Ball V. Ball (1847), 11 Ir. Eq. E. 370

A settlor entered into a covenant to pay £1200 to the settlement, and in -SoH v. Ball.
security to insure his life for that amount. The settlor did not pay the
£1200, or insure his life to that amount, but he did insure his life for £800,
and the trustees advanced him £800 from the trust funds, and took an assign-
ment of the policy in security for that advance. On the settlor's death it
was held that the trustees might apply the £800 policy to reimburse the trust
funds in respect of the advance, and that they were not personally liable for
their failure to take proceedings in respect of the £1200 unless it could be
shown that the trust would have benefited by such proceedings being taken.
Where the settlor has become unable to pay the premiums, Application
and the trustees have no available funds, they may go to the Court sell policy,
for an order to sell or surrender the policy and to apply the

proceeds to the trust purposes after deducting any sums already
expended by them in keeping up the policy (u). And in a proper
case the Court would sanction the surrender of the policy in ex-
change for a paid-up policy of the amount which the surrender

value would then purchase (x).
Where an infant is entitled under a settlement of a life policy Sale or sur-
and the trustees have powers maintenance

to a contingent reversionary interest,
of maintenance and advancement, they may, with the consent of °^ °^ advanoe-
ment to . .
the Court, surrender to the company any bonus additions to the infant hene-
°"='*"^''-
policy, receiving in exchange the then surrender value of such
additions (y). And apparently the Court might sanction the
surrender or sale of any part of the original sum insured as might
be necessary to provide the sum required for maintenance.
Where trustees have declined to undertake the duty of keeping Refusal of
a hfe policy on foot out of the income of the trust property, the ke"p policy
Court may appoint some other person to receive and apply a on foot-
sufficient portion of the income for this purpose on giving security
for the amount of the principal sum insured (z).
Where a policy is settled upon trust for a person for life with Apportion-
remainders over, and the policy moneys do not become payable poUoy moneys
until some time after the trust has become operative, they must ^^^^^^^^^^^^^^
be apportioned as between capital and income by ascertaining the and re-
^^'
sum which, put out at interest at 3 per cent, per annum on the day ^^J^"
when the trust became operative and accumulating at compound
(u) Hill V. Trenery (1857), 23 (x) Bunyon on Life Insurance

Beav. 16; Beresford v. Bereaford (2nd edition, p. 205)
"
(1857), 23 Beav. 292; Vickers v. a}t i^'^t ^ ''
Scott (1837), 1 Jur.402; Steen v. (2) Vickers v. Scott (1837), 1 Jur.

PeeJZe« (1890), 25 L. R. Ir. 544. 402; TfeZZ«,7n re,[1903]lCh.848,853.
interest calculated at that rate with yearly rests and deducting

income tax, would, with the accumulations of interest, have pro-
duced at the day of receipt of the policy moneys the amount
actually received, and the sum so ascertained should be treated as
capital and the residue as income (a). Where the premiums on
such a policy have been paid by the trustees out of income the
premiums ought to be recouped to the tenant for Hfe with interest
at 3 per cent, out of the policy moneys, and the balance should
then be divided between capital and income in the manner already
indicated (6). If the policy was subject to a mortgage and the
trustees kept down the inter est thereon out of income, such payments
must also be recouped to the tenant for life with interest at 3 per
cent, before division of the balance (b).
Assigament If trustees assign a policy in breach of trust the assignee

" acquires no title if he knew of the breach. If he did not, the ques-
brea™o/^
trust. tion of priority between a purchaser and the beneficiaries depends
on the usual rules of priority of notice to the company. That is
to say, if company had knowledge of the trust the title of the

the
beneficiary must prevail against a subsequent assignment in breach
of trust even although made to a bond fide purchaser for value (c).
Where trustees assigned a policy in alleged breach of trust and
then assigned the rest of the trust funds to new trustees, it was
held that the new trustees had no right to recover the proceeds
from the purchaser. If there was any breach of trust the old
trusteesand the purchaser, unless he took for value and without

notice,was liable to account to the beneficiaries but not to the
new trustees who had acquired no interest in the policy (d).
Life policy as By means of a settled life policy money may be accumulated

acJumuMon beyond the period defined by the Thellusson Act (e).
of income
permitted"y («) Earl of Chesterfield's Trusts, In Bebb, [19001 2 Ch. 107, 117 ; Woods,
Thellusson re (1883), 24 Ch. D. 643. In re, [1904] 2 Ch. 4).
A(jt_ Having regard to the present rate (6) Morley, In re, [1895] 2 Ch. 738.
of interest which may be obtained by (c) Capell v. Winter, [1907] 2 Ch.
trustees, 3 per cent, is now the cur- 376.
rent rule for calculation of interest (d) Johnson v. Swire (1861), 3
in all questions relating to trust funds Giff. 194.
where no statute or rule of Court (e) 39 & 40 Geo. 3, c. 98.
interferes to prevent it {Rowlls v.
MAERIBD WOMEN 535
Thellusson Act, 1800, sec. 1
1. ... No person or persons shall, after the passing of this Act by any 39 & 40 Geo.
Deed or Deeds, Surrender or Surrenders, Will, Codicil, or otherwise howsoever, 3, 0. 98.
settle or dispose of any real or personal property so and in such manner

that the rents, issues, profits, or produce thereof shall be wholly or partially
accumulated for any longer term than the life or lives of any such Grantor
or Grantors, Settlor or Settlors ; or the Term of 21 years from the death of
any such Grantor, Settlor, Devisor, or Testator ; or during the Minority or
respective Minorities of any Person or Persons who shall be living or in Ventre
sa Mire at the Time of the Death of such Grantor, Devisor, or Testator or ;
during the Minority or respective Minorities only of any such Person or

Persons, who under the user or trusts of the Deed, Surrender, Will, or other
Assurances directing such Accumulations, would for the Time being, if of
full Age, be entitled unto the Rents, Issues, and Profits or the Interest, Dividends,
or Annual Produce so directed to be accumulated and in every Case where;
any Accumulation shall be directed otherwise than as aforesaid such Direction

shall be null and void, and the Rents, Issues, ^Profits, and Produce of such
Property so directed to be accumulated shall so long as the same shall be directed
to be accumulated contrary to the provisions of this Act go to and be received
by such Person or Persons as would have been entitled thereto if such Accumu-
lation had not been directed.
Where a testator having effected poHcies on the Hves of bis

two sons directed that his trustees should pay the premium
during their hves out of the income of his property, it was held
that this was not a direction to accumulate income within the mean-
ing of the Thellusson Act (/).
Section IX. — Married Women and Settlement Policies
At common law all personal property possessed by a woman at Common law

marriage, or coming into her possession during coverture, passed properTyIn
to her husband absolutely as his property ; but choses in action li^f'band.
belonging to a married woman remained her property subject to
the right of her husband (1) to reduce them into possession during
coverture by receiving payment or suing in their joint names for
their recovery and (2) to have them as
; his absolute property in
the event of his surviving his wife {g).
This right of the husband to his wife's property was modified Equitable
exceptions.
by two rules estabhshed by the Court of Chancery.
The first equitable rule was that where property was expressly Separate
estate.
(/) BamZv. £i«<6r (1851), 9 Hare, {g) Purdew v. Jackson (1824), 1

177. Kusa. 1, 43.
granted to a woman husband could not

for her separate use, the
claim the beneficial enjoyment (h). If the legal title was vested in
trustees the husband took nothing, and if it was granted to the
woman without the intervention of trustees, the husband took the
legal title, but held it in trust for his wife's benefit. In either case
the wife might freely dispose of the beneficial interest without the
concurrence of her husband (i). Property purchased by the wife
out of her separate estate was deemed to be property hmited
to her separate use. But property might be settled upon a
woman power of anticipation, in
for her separate use without
which case neither she nor her husband could, during the coverture,
dispose of the property or of the prospective income arising from it.
Equity to a The second equitable rule which invaded the husband's

settlement.
marital right was that in the case of any equitable chose in action
belonging to the wife, that is, where the right was one which had
to be enforced in a Court of Equity, such Court would not permit
the husband to reduce the wife's chose in action into possession
for his own benefit, unless he undertook to make a reasonable
provision for his wife out of the property received by him. This
was known as the wife's equity to a settlement.
Wife's choses A policy of insurance being a chose in action of a reversionary
in action at
nature, the rightsof husband and wife at common law over property
common law.
of this kind belonging to the wife may be briefly stated thus :
Unless limited to the wife's separate use, the husband had the
right to reduce it into possession and the right of survivorship.
A chose in action could not be reduced into possession until it
became payable and when it did become payable it was not

(fe),
reduced into possession by the husband unless during his hfetime

he or his assigns actually received the moneys or brought an
action to recover them (I). Where during the coverture the
husband purported to assign his wife's reversionary chose in action,
and the husband survived the person upon whose life the reversion
depended, and could have reduced it into possession but died
{h) The trust for separate use only for separate use ceased to operate,
operated during coverture, but unless and the husband's marital right
limited to one particular marriage, attached {Cooper v. Macdonald (1877),
might revive upon each successive 7 Ch. D. 288, 296 ; Surman v. Whar-
marriage if a woman married more ton, [1891] 1 Q. B. 491).
than once (Hawkes v. Hubback (1870), {k) Purdew v. Jackson (1824), 1
L. R. 11 Eq. 5). Russ. 1, 43 ; Aitchison v. Dixon
(i) She might so dispose of it by (1870), L. R. 10 Eq. 589 ; Watson, In
deed inter vivos or by will {Fetiiplace ?-e(1890). 7Mor. 65.
V. Gorges {1189), 1 Ves. 481 : but if she {I) Ashby V. Ashby (1844), 1 Coll.
died without disposing of it, the trust C. C. 649, 553.
MARRIED WOMEN 537
without doing so, his wife, who survived, was entitled absolutely,
and the assignment was void against her (l). But where during
the husband's hfetime the reversion fell in and the moneys were
paid to the husband's assignees, that was held to be a sufficient
reduction into possession to bind the wife (m). The fact that a
husband received a bonus or other payment due in respect of a
poUcy belonging to his wife was not a reduction into possession of
the whole policy, but only of that part actually received (n).
If a husband survived his wife, her choses in action passed to

him absolutely, although not reduced into possession during the
coverture (o). If a husband predeceased his wife without having
reduced her choses in action into possession, the wife became
absolutely entitled to them.
The result of the law as stated in the preceding paragraph was Capacity of
that at common law a husband could not dispose at all of his wife's ^,"fe to dis-
policy if granted to her for her separate use or purchased by pay- pos? of wife's
ment of premiums out of her separate property. In the case of

a policy belonging to his wife, but not so granted or purchased,
he could dispose of it by sale, mortgage, or settlement ; and where
the wife was entitled to the policy at law, the disposition would be
effective in the event of the husband subsequently reducing the
poUcy into possession during coverture, or surviving his wife, but
ineffective in the event of his predeceasing his wife without having
reduced the policy into possession. Where the wife was only entitled
to the policy in equity, the husband's power of effective disposition
was further hmited by the wife's equity to a settlement. The
wife could by sale, mortgage, or settlement dispose of a policy
hmited to her separate use but she could not during coverture,
either with or without her husband's consent, dispose of or release
her right of survivorship or her equity to a settlement in a policy
not hmited to her separate use. It follows that at common law
neither the wife nor the husband nor the spouses jointly could
effectively sell, charge, or settle the wife's policy not limited to
her separate use so as to bind the wife in the event of her surviving
the husband, the pohcy not having been reduced into possession,
or in the event of her being entitled in equity to a settlement (p).
(m) Hansen v. Miller (1844), 14 jointly assigned or settled a policy

Sim. 22. the Court would not readily hold that
(n) Nash v. Nash (1817), 2 Madd. the policy was the wife's property
133. not limited to her separate use ( Winn,
(o) Harding, In the Goods of (1872), In re (1887), 57 L. T. 382 ; Winter v.
L. R. 2 P. & D. 394. Easum (1864), 10 Jur. N. S. 759).
(p) But where husband and wife
Neither could the wife, without the consent of her husband,

assign, sell, or release her rights under such a policy so as to
affect her husband's right to reduce into possession and right of
survivorship {q).
Woman's An unmarried woman could settle her property, including any

capacity to
dispose of reversionary chose in action to which she might at the time be
her property entitled, and therefore she could, in anticipation of marriage,
before marri-
age or after by ante-nuptial settlement made with her prospective husband's
dissolution
consent, effectively dispose of any personal property (r). If she
of marriage.
was an infant at the time the settlement would be voidable, but
not void, and she could ratify it on attaiaing full age, although
then under coverture (s). And an oral agreement to settle made
by the woman before marriage could be completed after marriage,
so as to dispose effectively of her property, including any rever-

sionary chose in action (t). But where a married woman, in the
absence of any ante-nuptial agreement, purported to dispose of her
reversionary chose in action not limited to her separate use, the

disposition was void, and mere ratification after her husband's
death did not make the disposition valid. An actual disposition
by her while discovert was essential (w).
Act to enable In 1857 Malins' Act was passed to enable a husband and wife
married
women to to dispose effectively of the wife's reversionary choses in action,
dispose of if acquired by her under an instrument (other than her own
reversionary
interests. marriage settlement) made after the commencement of the Act,
so as to bind not only the husband in respect of his interest, but

the wife in respect of her right of survivorship and equity to a
settlement.
Malins' Act, 1857

20 & 21 I. After the Thirty-first day of December
One thousand eight hundred
Vict. c. 57.
and be lawful for every Married Woman by Deed to dispose
fifty-seven, it shall
Married
of every future or Reversionary Interest, whether vested or contingent, of
Women may
dispose of such Married Woman, or her Husband in her Right, in any Personal Estate
Reversionary whatsoever to which she shall be entitled under any Instrument made after
Interests in Day of December One thousand eight hundred and fifty-
the said Thirty-first
Personal
Estate, and seven (except such a Settlement as after mentioned), and also to release or
release. extinguish any Power which may be vested in or limited or reserved to her in
(g) Rogers V. Bolton (1880), 8L. B. (t) Oreenhill v. North British and
Ir. 69.
Mercantile, [1893] 3 Ch. 479.
(r) Lloyd v. Prichard, [1908] 1
Ch. 265. (u) Beaton v. Seaton (1888), 13
(s) WiUer v. Pigott (1882), 22 A. C. 61.
Ch. D. 263.
;
MARRIED WOMEN 539
regard to any such Personal Estate, as fully and efiectually as she could do if Powers over
she were a Feme Sole, and also to release and extinguish her Right or Equity such Estate,
and also their
to a Settlement out of any Personal Estate to wliich she, or her Husband in
Bights to a
her Right, may be entitled in possession under any such Instrument as afore- Settlement
said, save and except that no such Disposition, Release, or Extinguishment shall out of such
Estate in
be valid unless the Husband concur in the Deed by which the same shall be possession.
nor unless the Deed be acknowledged by her as hereinafter directed
effected, :
Provided always, that nothing herein contained shall extend to any Rever-
sionary Interest to which she shall become entitled by virtue of any Deed, Will,
or Instrument by which she shall be restrained from alienating or affecting
the same.
Every Deed to be executed in England or Wales by a Married Woman
II. Deeds to be
any of the Purposes of this Act shall be acknowledged by her, and be other- acknowledged
for
b}' Married
wise perfected, in the Manner in and by the Act passed in the Third and Fourth Women in
Years of the Reign of His late Majesty King William the Fourth, intituled the manner
An Act for the Abolition of Fines and Recoveries, and for the Substitution of more required by
3 & 4 W. 4,
simple Modes of Assurance, prescribed for the Acknowledgment and perfecting
0. 74, for
of Deeds disposing of Interests of Married Women in Land {y) and every
; disposing of
Deed to be executed in Ireland by a Married Woman for any of the Purposes Interests in
or Powers
of this Act shall be acknowledged by her and be otherwise perfected in the
over Land
Manner in and by the Act passed in the Fourth and Fifth Years of the Reign in England
of His late Majesty King William the Fourth, intituled An Act for the Abolition 01 Wales
of Fines and Recoveries, and for the Substitution of more simple Modes of Assur- In Ireland,
as by 4 & 5
ance, in Ireland, prescribed for the Acknowledgment and perfecting of Deeds
W. 4. c 92.
disposing of Interests of Married Women in Land and all and singular the
;
Clauses and Provisions in the said Acts concerning the Disposition of Lands
by Married Women, including the Provisions for dispensing with the Con-
currence of the Husbands of Married Women, in the Cases in the said Acts
mentioned, shall extend and be applicable to such Interests in Personal
Estate and to such Powers as may be disposed of, released, or extinguished
by virtue of this Act, as fully and efiectually as if such Interests or Powers
were Interests in or Powers over Land.
{y) That is to say, it must have been and an affidavit verifying the same
produced and acknowledged by the was required to be filed with an officer
wife as her act and deed before a of the Court of Common Pleas, and
judge of one of the superior Courts an office copy of the certificate is
at Westminster (or if acknowledged conclusive evidence of the acknow-
after November 1, 1875, before a ledgment (3 & 4 Will. 4, c. 74, ss.
judge of the High Court), or before 79-91). These provisions are amended
a Master in Chancery, or before two by the Conveyancing Act, 1882
commissioners appointed for the (45 & 46 Vict. c. 39, s. 7) and in the
;
purpose whose duty it was to ex- case of deeds acknowledged after

amine the wife apart from her December 21, 1882, the acknow-
husband touching her knowledge of ledgment may be before one com-
the deed, and to ascertain whether missioner, and no certificate need be
she freely and voluntarily consented filed, but the memorandum on the
to it, and unless the judge, master, deed purporting to be signed by a,
or commissioners were satisfied that person duly authorised shall be con-
she did so consent and signed a clusive evidence of the acknowledg-
memorandum on the deed to that ment. Under the County Courts
eSect, the deed was void. The Act, 1888 (51 & 52 Vict. c. 43, s. 184),
judge, master, or commissioners an acknowledgment made after
were required to sign a certificate of December 31, 1888, may be made
the fact that the deed had been duly before a county court judge.
acknowledged, and the certificate
The Powers Provided always, That the Powers of Disposition given to a Married
III.
of Disposition Woman by this Act shall not interfere with any Power which independently
given by this
of this Act may be vested in or limited or reserved to her, so as to prevent her
Act not to
interfere with from exercising such Power in any Case, except so far as by any Disposition
any other made by her under this Act she may be prevented from so doing, in conse-
Powers. quence of such Power having been suspended or extinguished by such Dis-
position.
Act not to IV. Provided always, That the Powers of Disposition hereby given to a,
extend to
Settlements
Married Woman shall not enable her to dispose of any Interest in Personal
of Married Estate settled upon her by any Settlement or Agreement for a Settlement
Women upon made on the Occasion of her Marriage.
Marriage. V. This Act shall not extend to Scotland.
Not to
extend to
Scotland.
Married The Married Women's Property Acts, 1882 to 1908, have now
Women's
Property practically extinguished the husband's marital rights over the
Acts.
wife's property, and placed the wife in the position of a feme sole
with regard to her capacity to contract and to the acquisition,

management, and disposal of property (z). The Acts, however,
are not retrospective, and questions may still arise which may
make it necessary to consider the rights of husband and wife at
common law or under some of the earlier statutes.
Married By the Married Women's Property Act, 1870, a married
Women's
Property woman was entitled to hold as her separate property, and, there-
Act, 1870.
fore to dispose without her husband's concurrence of the following
property : —
(1) Wages and earnings gained during marriage ;
(2) Deposits in savings banks and annuities granted by the

Commissioners for the Reduction of the National Debt, if
standing in her name ;
(3) Money in the public stocks and funds standing in her name
and expressed to be for her separate use ;
(4) Money in fully paid up shares or debentures of any joiat

stock company standing in her name and expressed to
be for her separate use ;
(5) Benefits to the holding of which no liabiHty is attached

in any industrial and provident society, or in any friendly
(z) The wife is not for all purposes property by act or deed inter vivos or
in the position of a feme sole with re- by will, the husband still takes it by
gard to her property. She may still his marital right (Surman v. Wharton,
be restrained from anticipation ; [1891] 1 Q. B. 491). The contract
that is to say, from disposing of the of a married woman does not bind
property during the coverture by act her personally, but only her separate
or deed inter vivos (45 & 46 Vict. c. 75, estate which she has at the time or
s. 19). If the wife predeceases her may afterwards acquire (Lynes, In re,
husband without disposing of her [1893] 2 Q. B. 113).
;
MAREIED WOMEN 541
society, benefit building society, or loan society duly

registered, certified, or enrolled under the Acts relating
to such societies where she is entered in the books as
entitled to the benefits for her separate use ;
(6) Any personal property to which she shall, during her

marriage, become entitled as next-of-kin or one of the
next-of-kin of an intestate, or any sum of money not
exceeding £200 under any deed or will
(7) Rents and profits of real estate descending upon her after
August 9, 1870.
By section 10 of the Married Women's Property Act, 1870,
provision was made for a married woman poHcy of
effecting a
insurance on her own life or the Ufe of her husband for her own
benefit, and for a married man effecting a poHcy of insurance on
his own life for the benefit of his wife and children.
Married Women's Property Act, 1870, sec. 10

10. A married woman may effect a policy of insurance upon her own life 33 & 34
or the life of her husband for her separate use, and the same and ail benefit ^''''*'- " ^^
thereof, if expressed on the face of it to be so effected, shall enure accordingly, Married
and the contract in such policy shall be as valid as if made with an unmarried ^^f "Ij^Kov
woman. of insurance.
A policy of insurance effected by any married man on his own life,and ^
to insur-
expressed upon the face of it to be for the benefit of his wife or of his wife and ance of a
children, or anythem, shall enure and be deemed a trust for the benefit of
of ij"^ c? ± if-
his wife for her separate use, and of his children, or any of them, according to ^^,ife.
the interest so expressed, and any object of the trust re-

shall not, so long as
mains, be subject to the control of the husband or to his creditors, or form
part of his estate. When the sum secured by the policy becomes payable,
or at any time previously, a trustee thereof may be appointed by the Court
of Chancery in England or in Ireland according as the policy of insurance
was efiected in England or in Ireland, or in England by the judge of the County
Court of the district, or in Ireland by the Chairman of the Civil Bill Court of
the division of the county, in which the insurance office is situated, and the
receipt of such trustee shall be a good discharge to the office. If it shall be
proved that the policy was effected and premiums paid by the husband
with intent to defraud his creditors, they shall be entitled to receive out of
the sum secured an amount equal to the premiums so paid.
The Married Women's Property Act, 1870, is repealed by the

Married Women's Property Act, 1882, except in so far as it is
necessary to give validity to Acts done or rights acquired while it
was in force. The Acts now in force are the Married Women's
Property Acts, 1882, 1884, 1893, 1907, and 1908. These substan-
tially give a married woman full power to dispose of any property
belonging to her as if she were a feme sole.
Married Women's Property Act, 1882

45 & 46 Vict, 1. — (1) A married woman shall, in accordance with the provisions of this
u. 75. Act, be capable of acquiring, holding, and disposing by will or otherwise, of
Married any real or personal property as her separate property, in the same manner
woman to be
without the intervention of any trustee.
as if she were a feme sole,
capable of
holding pro- (2) A married woman shall be capable of entering into and rendering herself
pert^' and of liable in respect of and to the extent of her separate property on any contract,
contracting
and and being sued, either in contract or in tort, or otherwise (a)
of suing
as a feme
in all respects asif she were a feme sole, and her husband need not be joined
sole.
with her as plaintiff or defendant, or be made a party to any action or other
legal proceeding brought by or taken against her ; and any damages or
costs recovered by her in any such action or proceeding shall be her separate
property ; and any damages or costs recovered against her in any such
action or proceeding shall be payable out of her separate property, and not
otherwise.
(3) Every contract entered into by a married woman shall be deemed to be a
contract entered into by her with respect to and to bind her separate property, unless
the contrary be shown (6).
(4) Every contract entered into by a married woman with respect to and to
bind her separate property shall bind not only the separate property which she is
possessed of or entitled to at the date of the contract, but also all separate property
which she may thereafter acquire (c).
(5) Every married woman carrying on a trade separately from her husband
shall, in respect of her separate property, be subject to the bankruptcy laws
in the same way as if she were a feme sole.
Property of 2. Every woman who marries after the commencement of this Act shall
a, woman be entitled to have and to hold as her separate property, and to dispose of
,
married after
in manner aforesaid all real and personal property wliich shall belong to her
the Act to
be held by at the time of marriage, or shall be acquired by or devolve upon her after
her as a marriage, including any wages, earnings, money, and property gained or
feme sole.
acquired by her in any employment, trade, or occupation, in which she is
engaged, or which she carries on separately from her husband, or by the
exercise of any literary, artistic, or scientific skill.
Loans by 3. Any money or other estate of the wife lent or entrusted by her to her
wife to husband for the purpose of any trade or business carried on by him, or other-
husband.
wise, shall be treated as assets of her husband's estate in case of his bank-
ruptcy, under reservation of the wife's claim to a dividend as a creditor for
the amount or value of such money or other estate after, but not before, all
claims of the other creditors of the husband for valuable consideration in money
or money's worth have been satisfied.
Execution of 4. The execution of a general power by will by a married woman shall have
general the effect of making the property appointed liable for her debts and other
power.
liabilities in the same manner as her separate estate is made liable under
this Act.
(a) In Pontypool Union v. BucJc, pauper parent. This was remedied

[1906J 2 K. B. 896, it was held that by 8 Edw. 7, o. 27.
a married woman having separate (6) Repealed 56 & 57 Vict. c. 63,
estate was not by reason of this s. 4.
section liable under the poor laws to (c) Repealed 56 & 57 Vict. c. 63,
contribute towards the relief of a s. 4.
MARRIED WOMEN 543
Every woman married before the commencement of this Act shall be

5. Property
entitled to have and to hold and to dispose of in manner aforesaid as her acquired after
the Act by »•
separate property all real and personal property, her title to which, whether
woman
vested or contingent, and whether in possession, reversion, or remainder, married be-
shall accrue after the commencement of this Act, including any wages, earn- fore the Act
to be held by
ings, money, and property so gained or acquired by her as aforesaid.
her as a feme
6. All deposits in any post office or other savings bank, or in any other solo.
bank, all annuities granted by the Commissioners for the Reduction of the As to stock,
National Debt or by any other person, and all sums forming part of the public &c. to which
stocks or funds, or of any other stocks or funds transferable in the books a married
woman is
of the Governor and Company of the Bank of England, or of any other entitled.
bank, wliich at the commencement of this Act are standing in the sole name
of a married woman, and all shares, stock, debentures, debenture stock,
or other interests of or in any corporation, company, or public body,
municipal, commercial, or otherwise, or of or in any industrial, provident,
which at the commencement of
friendly, benefit, building, or loan society,
this Act are standing in her name, shall be deemed, unless and until the
contrary be shown, to be the separate property of such married woman ;
and the fact that any such deposit, annuity, sum forming part of the
public stocks or funds, or of any other stocks or funds transferable in the
books of the Governor and Company of the Bank of England or of any other
bank, share, stock, debenture, debenture stock, or other interest as aforesaid,
is standing in the sole name of a married woman, shall be sufficient primA facie
evidence that she is beneficially entitled thereto for her separate use, so as to
authorise and empower her to receive or transfer the same, and to receive the
dividends, interest, and profits thereof, without the concurrence of her husband,
and to indemnify the Postmaster General, the Commissioners for the Re-
duction of the National Debt, the Governor and Company of the Bank of
England, the Governor and Company of the Bank and all directors,
of Ireland,
managers, and trustees of every such bank, corporation, company, public
body, or society as aforesaid, in respect thereof.
7. All sums forming part any other As to stock,
of the public stocks or funds, or of
stocks or funds transferable in the books of the England or of any &c. to be
Bank of
transferred,
other bank, and all such deposits and annuities respectively as are mentioned &c. to a
in the last preceding section, and all shares, stock, debentures, debenture married
stock, and other interests of or in any such corporation, company, public
body, or society as aforesaid, which after the commencement of this Act shall
be allotted to or placed, registered, or transferred in or into or made to stand
in the sole name of any married woman shall be deemed, unless and until
the contrary be shown, to be her separate property, in respect of which so far
as any liability may be incident thereto her separate estate shall alone be liable,
whether the same shall be so expressed in the document whereby her title to
the same is created or certified, or in the books or register wherein her title is
entered or recorded, or not.
Provided always, that nothing in this Act shall require or authorise any
corporation or joint stockcompany to admit any married woman to be a holder
of any shares or stock therein to which any liability may be incident, contrary
to the provisions of any Act of Parliament, charter, byelaw, articles of associa-
tion, or deed of settlement regulating such corporation or company.
8. All the provisions herein-before contained as to deposits in any Investments
in joint names
post office or other savings bank, or in any other bank, annuities granted by
;;
of married the Commissioners for the Reduction of the National Debt or by any other
women and person, sums forming part of the public stocks or funds, or of any other stocks
others.
or funds transferable in the books of the Bank of England or of any other
bank, shares, stock, debentures, debenture stock, or other interests of or in
any such corporation, company, public body, or society as aforesaid respectively,
which at the commencement of this Act shall be standing in the sole name of
a married woman, or which, after that time, shall be allotted to, or placed,
registered, or transferred to or into, or made to stand in, the sole name of a
married woman, shall respectively extend and apply, so far as relates to the
estate, right, title, or interest of the married woman, to any of the particulars
aforesaid which, at the commencement of this Act, or at any time afterwards,
shall be standing in, or shall be allotted to, placed, registered, or transferred
to or into, or made to stand in, the name of any married woman jointly with
any persons or person other than her husband.
As to stock, 9. It shall not be necessary for the husband of any married woman, in
&o. standing respect of her interest, to join in the transfer of any such annuity or deposit as
in the joint
aforesaid, or any sum forming part of the public stocks or funds, or of any
names of a
married other stocks or funds transferable as aforesaid, or any share, stock, debenture,
woman and debenture stock, or other benefit, right, claim, or other interest of or in any
others.
such corporation, company, public body, or society as aforesaid, which is now
or shall at any time hereafter be standing in the sole name of any married
woman, or in the joint names of such married woman and any other person or
persons not being her husband.
Fraudulent 10. If any investment in any such deposit or annuity as aforesaid, or in
investments
any of the public stocks or funds, or in any other stocks or funds transferable
with money
of husband. as aforesaid, or in any share, stock, debenture, or debenture stock of any
corporation, company, or public body, municipal, commercial, or otherwise,
or in any share, debenture, benefit, right, or claim whatsoever in, to, or
upon the funds of any industrial, provident, friendly, benefit, building, or
loan society, shall have been made by a married woman by means of moneys
of her husband, without his consent, the Court may, upon an application under
section seventeen of this Act, order such investment and the dividends thereof,
or any part thereof, to be transferred and paid respectively to the husband
and nothing in this Act contained shall give validity as against creditors of
the husband to any gift, by a husband to his wife, of any property, which,
after such gift shall continue to be in the order and disposition or reputed,
ownership of the husband, or to any deposit or other investment of moneys
of the husband made by or in the name of his wife in fraud of his creditors
but any moneys so deposited or invested may be followed as if this Act had
not passed.
Moneys pay- 11. A married woman may by virtue of the power of making contracts
able under herein-before contained effect a policy upon her own life or the life of her
policy of as-
surance not
husband for her separate use ; and the same and all benefit thereof shall enure
to form part accordingly.
of estate of A policy of assurance efiected by any man on his own life, and expressed to
the insured.
be for the benefit of his wife, or of his children, or of his wife and children, or any
of them, or by any woman on her own and expressed to be for the benefit
life,
of her husband, or of her children, or of her husband

and children, or any of them,
shall create a trust in favour of the objects therein named, and the moneys
payable under any such policy shall not, so long as any object of the trust
Remains unperformed, form part of the estate of the insured, or be subject
MAERIED WOMEN 545
to his or her debts Provided, that if it shall be proved that the policy was
:
effected and the premiums paid with intent to defraud the creditors of the
insured, they shall be entitled to receive, out of the moneys payable under the
policy, a sum equal to the premiums so paid. The insured may by the policy,
or by any memorandum under his or her hand, appoint a trustee or trustees
of the moneys payable under the policy, and from time to time appoint a new
trustee or new trustees thereof, and may make provision for the appointment
of a new trustee or new trustees thereof, and for the investment of the moneys
payable under any such policy. In default of any such appointment of a
trustee, such policy, immediately on its being effected, shall vest in the insured
and his or her legal personal representatives, in trust for the purposes afore-
said. If, at the time of the death of the insured, or at any time afterwards,
there shall be no trustee, or it shall be expedient to appoint a new trustee or
new new trustee or new trustees may be
trustees, a trustee or trustees or a
appointed by any Court having jurisdiction under the provisions of the Trustee 13 & 14 Vict,
c. GO.
Act, 1850, or the Acts amending and extending the same. The receip't of a
trustee or trustees duly appointed, or, in default of any such appointment, or
in default of notice to the insurance office, the receipt of the legal personal,
sum
representative of the insured shall be a discharge to the office for the
secured by the policy, or for the value thereof, in whole or in part.
of
12. Every woman, whether married before or after this Act, shall have in Remedies
married
her own name against all persons whomsoever, including her husband, the
woman for
same civil remedies, and also (subject, as regards her husband, to the proviso protection
herein-after contained) the same remedies and redress by way of criminal pro- and security
separate
ceedings, for the protection and security of her own separate property, as if of
property.
such property belonged to her as a feme sole, but, except as aforesaid, no
husband or wife shall be entitled to sue the other for a tort. In any indict-
ment or other proceeding under this section it shall be sufficient to allege such
property to be her property ; and in any proceeding under this section a
husband or wife competent to give evidence against each other, any
shall be
statute or rule of law to the contrary notwithstanding Provided always, :
that no criminal proceeding shall be taken by any wife against her husband
by virtue of this Act while they are living together, as to or concerning any
property claimed by her, nor while they are living apart, as to or concerning
any act done by the husband while they were living together, concerning pro-
perty claimed by the wife, unless such property shall have been wrongfully
taken by the husband when leaving or deserting, or about to leave or desert,
his wife.
13. A woman after her marriage shall continue to be liable in respect and Wife's ante-
nuptial
to the extent of her separate property for all debts contracted, and all con- debts and
tracts entered into or wrongs committed by her before her marriage, including liabilities.
any sums which she may be liable as a contributory, either before or after
for
she has been placed on the list of contributories, under and by virtue of the
Acts relating to joint stock companies and she may be sued for any such
;
debt and for any liability in damages or otherwise under any such contract,
or in respect of any such wrong and all sums recovered against her in respect
;
thereof, or for any costs relating thereto, shall be payable out of her separate
property and, as between her and her husband, unless there be any contract
;
between them to the contrary, her separate property shall be deemed to be

primarily liable for all such debts, contracts, or wrongs, and for all damages
or costs recovered in respect thereof ; Provided always, that nothing in thig
I.I,. 35
;
Act shall operate to increase or diminish the liability of any woman married
before the commencement of this Act for any such debt, contract, or wrong,
as aforesaid, except as to any separate property to which she may become
entitled by virtue of this Act, and to which she would not have been entitled
for her separate use under the Acts hereby repealed or otherwise, if this Act
had not passed.
Husband to 14. A husband shall be liable for the debts of his wife contracted, and for
be liable for all contracts entered into and wrongs committed by her, before marriage,
his wife's
debts con- including any liabilities to which she may be so subject under the Acts relating
tracted before to joint stock companies as aforesaid, to the extent of all property whatsoever
marriage to belonging to his wife which he shall have acquired or become entitled to from
a certain
or through his wife, after deducting therefrom any payments made by him,
extent.
and any sums for which judgment may have been bona fide recovered against
him in any proceeding at law, in respect of any such debts, contracts, or wrongs
for or in respect of which his wife was liable before her marriage as aforesaid
but he shall not be liable for the same any further or otherwise and any ;
court in which a husband shall be sued for any such debt shall have power
to direct any inquiry or proceedings which it may think proper for the purpose
of ascertaining the nature, amount, or value of such property : Provided
always, that nothing in this Act contained shall operate to increase or diminish
the liability of any husband married before the commencement of this Act
for or in respect of any such debt or other liability of his wife as aforesaid.
Suits for 15. A husband and wife may be jointly sued in respect of any such debt
ante-nuptial
or other liability (whether by contract or for any wrong) contracted or incurred
liabilities.
by the vdfe before marriage as aforesaid, if the plaintiff in the action shall seek
to establish his claim, either wholly or in part, against both ofthem and it ;
in any such any action brought in respect of any such debt or

action, or in
liability against the husband alone, it is not found that the husband is liable
in respect of any property of the wife so acquired by him or to which he shall
have become so entitled as aforesaid, he shall have judgment for his costs of
defence, whatever may be the result of the action against the wife if jointly
sued with him and in any such action against husband and wife jointly, if it
;
appears that the husband is liable for the debt or damages recovered, or any
part thereof, the judgment to the extent of the amount for which the husband
is liable shall be a joint judgment against the husband personally and against
the wife as to her separate property and as to the residue, if any, of such debt
;
and damages, the judgment shall be a separate judgment against the wife as
to her separate property only.
Act of wife 16. A
wife doing any act with respect to any property of her husband,
liable to cri-
done by the husband with respect to property of the wife, would
which, if
minal pro-
ceedings.
make the husband liable to criminal proceedings by the wife under this Act,
shall in like manner be liable to criminal proceedings by her husband.
Questions 17. In any question between husband and wife as to the title to or posses-
between hus- sion of property, either party, or any such bank, corporation, company, public
band and
wife as to
body, or society as aforesaid in whose books any stocks, funds, or shares of
property to either party are standing, may apply by summons or otherwise in a summary
be decided way to any judge of the High Court of Justice in England or in Ireland, accord-
in a summary
ing as such property is in England or Ireland, or (at the option of the applicant
way.
irrespectively of the value of the property in dispute) in England to the judge
of the county court of the district, or in Ireland to the chairman of the civil
bill court of the division jn which ejther party resides, and the judge of the
,
MAERIED WOMEN 547
High Court of Justice or of the county court, or the chairman of the civil bill
court (as the case may be) may make such order with respect to the property
in dispute, costs of and consequent on the application as he
and as to the
thinks fit, or may direct
such application to stand over from time to time, and
any inquiry touching the matters in question to be made in such manner as
he shall think fit Provided always, that any order of a judge of the High
:
Court of Justice to be made under the provisions of this section shall be subject
same way as an order made by the same judge in a suit pend-
to appeal in the
ing or on an equitable plaint in the said court would be and any order of a ;
county or civil bill court under the provisions of this section shall be subject
to appeal in the same way as any other order made by the same court would
be ; and all proceedings in a county court or civil bill court under this section
in which, by reason of the value of the property in dispute, such court would
not have had jurisdiction if this Act or the Married Women's Property Act,
1870, had not passed, may, at the option of the defendant or respondent to
such proceedings, be removed as of right into the High Court of Justice in
England or Ireland (as the case may be) by writ of certiorari or otherwise as
may be prescribed by any rule of such High Court but any order made or ;
act done in the course of such proceedings prior to such removal shall be valid,
unless order shall be made to the contrary by such High Court Provided :
also, that the judge of the High Court of Justice or of the county court, or the
chairman of the civil bill court, if either party so require, may hear any such
application in his private room Provided also, that any such bank, corpora-
:
tion, company, public body, or society as aforesaid, shall, in the matter of

any such application for the purposes of costs or otherwise, be treated as a
stakeholder only.
18. A married woman who is an executrix or administratrix alone or jointly Married
with any other person or persons of the estate of any deceased person, or a woman as an
trustee alone or jointly as aforesaid of property subject to any trust, may sue ^jrygtee
or be sued, and may transfer or join in transferring any such annuity or deposit
as aforesaid, or any sum forming part of the public stocks or funds, or of any
other stocks or funds transferable as aforesaid, or any share, stock, debenture,
debenture stock, or other benefit, right, claim, or other interest of or in any
such corporation, company, public body, or society in that character, without
her husband, as if she were a feme sole.
19. Nothing in this Act contained shall interfere with or affect any settle- Saving of
existing
ment or agreement for a settlement made or to be made, whether before or
after marriage, respecting the property of any married woman, or shall interfere ^^^ ^-^^
'
with or render inoperative any restriction against anticipation at present power to

attached or to be hereafter attached to the enjoyment of any property or make future
income by a woman under any settlement, agreement for a settlement, will,

or other instrument ; but no restriction against anticipation contained in any
settlement or agreement for a settlement of a woman's own property to be
made or entered into by herself shall have any validity against debts con-
tracted by her before marriage, and no settlement or agreement for a settle-
ment shall have any greater force or validity against creditors of such woman
than a like settlement or agreement for a settlement made or entered into by
a man would have against his creditors.
20. England the husband of any woman having separate pro- Married
Where in
to any union or parish, the justices having juris- ^yoman
to be
pertv becomes chargeable
°
•^ ' •;
11 J hable to the
diction in such union or pansh may, m petty
.
sessions
.
assembled, upon
,
.
^^^.j^j^ j^^.
the main- application of the guardians of the poor, issue a summons against the wife, and
tenance of make and enforce such order against her for the maintenance of her husband
her husband.
out of such separate property as by the thirty-third section of the Poor Law
31 & 32 Vict.
Amendment Act, 1868, they may now make and enforce against a husband
0. 122.
for the maintenance of his wife if she becomes chargeable to any union or
parish. Where under the provisions of the Acts
in Ireland relief is given
husband of any woman having
relating to the relief of the destitute poor to the
separate property, the cost price of such relief is hereby declared to be a loan
from the guardians of the union in which the same shall be given, and shall
be recoverable from such woman as if she were a feme sole by the same actions
and proceedings as money lent.
Married 21. A married woman having separate property shall be subject to all
woman to be such liability for the maintenance of her children and grandchildren as the
liable to the
parish for
husband is now by law subject to for the maintenance of her children and
the mainte- grandchildren : Provided always, that nothing in this Act shall relieve her
nance of her husband from any liability imposed upon him by law to maintain her children
children.
or grandchildren.
Repeal of 33 22. The Married Women's Property Act, 1870, and the Married Women's
& 34 Vict, Property Act, 1870, Amendment Act, 1874, are hereby repealed Provided :
c. 93.
that such repeal shall not affect any act done or right acquired while either
37 & 38 Vict.
c. 50. of such Acts was in force, or any right or liability of any husband or wife,
married before the commencement of this Act, to sue or be sued under the
provisions of the said repealed Acts or either of them, for or in respect of
any debt, contract, wrong, or other matter or thing whatsoever, for or in
respect of which any such right or liability shall have accrued to or against
such husband or wife before the commencement of this Act.
Legal repre- 23. For the purposes of this Act the legal personal representative of any
sentative of married woman shall in respect of her separate estate have the same rights
married
and liabilities and be subject to the same jurisdiction as she would be if she
were living.
Interpreta- 24. The word " contract " in this Act shall include the acceptance of any
tion of terms. and the provisions of this
trust, or of the office of executrix or administratrix,
Act as to liabilities of married women shall extend to all liabilities by reason
of any breach of trust or devastavit committed by any married woman being
a trustee or executrix or administratrix either before or after her marriage,
and her husband shall not be subject to such liabilities unless he has acted or
intermeddled in the trust or administration. The word " property " in this
Act includes a thing in action.
Commence- 25. The date of the commencement of this Act shall be the first of January
ment of Act. one thousand eight hundred and eighty-three.
Extent of 26. This Act shall not extend to Scotland.
Act.
27. This Act may be cited as the Married Women's Property Act, 1882.
Short title.

56 & 57 1. Every contract hereafter entered into by a married woman, otherwise
Vict. c. 63. than as agent (d),
Effect of
contracts by (d) When a married woman has in isignorant of the fact, and believes
fact the authority of her husband she that she is contracting as a principal
contracts as his agent, notwithstand- (Paquin v, Beauderk, [1906] A. C.
ing that the other contracting party 148).
;
MARRIED WOMEN 549
(a) shall be deemed to be a contract entered into by her with respect to married
and to bind her separate property whether she is or is not in fact women.
possessed of or entitled to any separate property at the time when
she enters into such contract
(6) shall bind all separate property which she may at that time or there-
after be possessed of or entitled to ; and
(c) shall also be enforceable by process of law against all property which
she may thereafter while discovert be possessed of or entitled to ;
Provided that nothing in this section contained shall render available to

satisfy any liability or obligation arising out of such contract any separate
property which at that time or thereafter she is restrained from anticipating.
In any action or proceeding now or hereafter instituted by a woman or Costs may be
2.
by a next friend on her behalf, the court before which such action or proceeding ordered to be
paid out of
ispending shall have jurisdiction by judgment or order from time to time to
property
order payment of the costs of the opposite party out of property which is subject to
subject to a restraint on anticipation, and may enforce such payment by the restraint on
anticipation.
appointment of a receiver and the sale of the property or otherwise as may
be just.
3. Section twenty-four of the Wills Act, 1837, shall apply to the will of Will of mar-
a married woman made during coverture whether she is or is not possessed ried
woman.
of or entitled to any separate property at the time of making it, and such will
shall not require to be re-executed or republished after the death of her
husband (e).
4. Sub-sections (3) and (4) of section one of the Married Women's Property Repeal.
Act, 1882, are hereby repealed.
5. This Act may be cited as the Married Women's Property Act, 1893. Short title.
6. This Act shall not apply to Scotland. Extent.
1. — (1) A married woman is able, without her husband, to dispose of, or 7 Edw. 7,
1°-
to join in disposing of, real or personal property held by her solely or jointly '^'
Dispositions
with any other person as trustee or personal representative in like manner as
if she were a femme sole { / ).
estates by
(2) This section operates to render valid and confirm such dispositions mairiedall
made after the thirty-first day of December one thousand eight hundred and women,
eighty-two, whether before or after the commencement of this Act, but,
where any title or right has been acquired through or with the concurrence
of the husband before the commencement of this Act, that title or right shall
prevail over any title or right which would otherwise be rendered valid by
this section.
(e) will of a married

Formerly the 1882 did not enable a married
woman made during coverture ope- woman being a ti-ustee to dispose or
rated to pass only such separate join in the disposal of any of the
estate as she then had [Cuno, In re trust property without her husband's
(1889), 43 Ch. D. 12). Property concurrence except those specific
acquired subsequently did not pass kinds of trust property enumerated
by such will unless it was re-executed in sect. 18 of that Act, and as to which
or republished after her husband's she was given express power of dis-
death {Willoch v. Noble (1875), posal without her husband (Harkness,
L. B. 7 H. L. 580). In re, and Allsopp, [1896] 2 Ch. 358).
( /
) It was held that the Act of
— ;
Settlements
of a married
2.
— (1) Notwithstanding section nineteen of the Married Women's Pro-
perty Act, 1882, a settlement or agreement for a settlement made after the
woman's
commencement Act by the husband or intended husband, whether
of this
separate
property. before or after marriage, respecting the property of any woman he may marry
45 & 46 Vict. or have married, shall not be valid unless it is executed by her if she is of full
c. 75. age, or confirmed by her after she attains full age.
(2) But if she dies an infant any covenant or disposition by her husband
contained in the settlement or agreement shall bind or pass any interest in
any property of hers to which he may become entitled on her death and which
he could have bound or disposed of Act had not been passed.
if this
(3) Nothing in any settlement or agree-
this section shall render invalid
18 & 19 Vict. ment for a settlement made or to be made under the provisions of the Infant
c. 43.
Settlements Act, 1855.
Married
woman en-
3.
—
(1) Where a married woman would, if single, be the protector of a
settlement in respect of a prior estate, which is by virtue of the Married Women's
titled to
prior estate o Property Act, 1882, made her separate property, then she alone shall, in
;
be protector respect of that estate, be the protector of the settlement.

of settlement
(2) This section applies to disentailing assurances and surrenders made
alone.
after the thirty-first day of December one thousand eight hundred and eighty-
two, and as well before as after the commencement of this Act.
Short
commence-
title ; 4.
— (1) This Act may be cited as the Married Women's Property Act, 1907.
(2) This Act shall come into operation on the first day of January one
ment con- ;
struction. thousand nine hundred and eight.

(3) This Act shall not extend to Scotland.
45 & 46 Vict. (4) This Act shall be construed with the Married Women's Property Acts,
c.75.
1882, 1884, and 1893, and those Acts and this Act may be cited together as
47 Vict. c. 14.
56 & 57 Vict. the Married Women's Property Acts, 1882 to 1907.
0. 63.
Married "Women's Property Act, 1908

8 Edw. 7, 1. A married woman having separate property shall be subject to all such
i;. 27.
liability for the maintenance of her parent or parents as a feme sole is now by
Married
law subject to for the maintenance of such parent or parents.
women
having 2. This Act shall apply only to England and Wales.
separate pro- 3. This Act shall come into operation on the first day of January nineteen
perty to be hundred and nine.
liable for the
4. This Act may be cited as the Married Women's Property Act, 1908.
maintenance
of parents.
Capacity of The
married
result of the Married Women's Property Act, 1882, is
woman to that as regards women married before January 1, 1883, the husband
dispose of
policy.
still enjoys marital rights as at common law over her policies of
insurance except in the following cases :
(a) Policies granted to her for her separate use ;
(&) Policies purchased by her out of her separate estate ;
(c) Pohcies effected by her after August 9, 1870, upon her own
Hfe or the life of her husband, and expressed on the
face of the poHcy to be for her benefit
(d) All policies acquired by her on or after January 1, 1883.
MARRIED WOMKN 551
Any woman married before January 1, 1883, had and has in
respect of the above specified poUcies, and any woman married

after January 1, 1883, had and has in respect of all pohcies acquired
by her, full disposing power without the concurrence of her husband,
but subject to the reservation contained in section 19 of the Married
Women's Property Act, 1882, to the effect that the Act shall not
interfere with or affect any settlement or agreement for a settle-
ment made or to be made, whether before or after marriage,

respecting the property of any married woman.
The reservation of settlements by section 19 is of considerable Married
importance. It was held that where by her marriage settlement propert/

a woman married before the Act settled all property which might Act, 1882,
subsequently be acquired by her, except property limited to her Husband's

separate use, property acquired by her after the passing of the gettie'^thout
Act, and which by reason only of the Act became her separate concurrence
property, was not within the exception, and therefore fell into
the settlement [g). At first it was thought that the section only
apphed to settlements made or to be made by or with the con-
currence of the married woman entitled to the property ; but it
was held to apply equally to settlements made by a husband

without the wife's concurrence {h), and in the case of a woman
under 21 years of age, married after the Act, having made a joint
settlement with her husband of certain stocks to which she was
entitled, it was held that although the woman's settlement was
voidable by her on the ground of infancy, yet her husband's
settlement was sufficient to dispose of the property effectively as
against her (i). But for the Act he could have so disposed of it,
and the Court held that the effect of section 19 was that in the
case of any settlement of a married woman's property, whether
made with or without her consent, the Act of 1882 must be treated
as absolutely inoperative. The result appears to be that before
January 1, 1908, the husband of a married woman could, without
her consent, make a settlement disposing of any property which
belonged, or might afterwards be acquired by her, and which
would not be her separate property at common law, or under the
(g) TfAitofcer,i"wre(1887),34Ch.D. J., has been doubted (Eversley's

227 ; Stonor's Trusts, In re (1883), Domestic Relations, 3rd ed. p. 135,
24 Ch. D. 195. note 4) but it is submitted that it
;
(h) Hancock v. Hancock (1888), could not be overruled without also

38 Ch. D. 78 ; Stevens v. Trevor overruling the decision of the Court
Oarrick, [1893] 2 Ch. 309. of Appeal in Hancock v. Hancock,
(i) Buckland v. Buckland, [1900] upon the authority of which it was
2 Ch. 534. This decision of Buckley, decided.
Act of 1870. The husband could not dispose of a reversionary
chose in action, such as a policy of insurance, so as to bar the wife's

right of survivorship or equity to a settlement, but otherwise he
could make an effective settlement. If a married woman acquired
a policy and sold, charged, or settled it before the husband made
a settlement, the husband's settlement would to that extent be
inoperative because the policy would have ceased to be the
property of the married woman at the time the settlement was
made, and would not be a settlement " respecting the property
it
of a married woman " within the meaning of section 19.

Married The Married Women's Property Act, 1907, has now deprived
Women's the husband of his power under section 19, and no settlement made
Property
Act, 1907: on or after January 1, 1908, by a husband of his wife's property
^ without her concurrence is effective, except in the case of the
no^î^rrVnpjf
concurrence.
wife dying during infancy.
Married Where a married woman is entitled to the proceeds of a policy,
woman cin
give effective
and the husband has no marital rights in it, she has full capacity
discharge. to give an effective discharge in her own name without the con-
currence of her husband.
Settlement A policy effected under the Married Women's Property Acts,

policie."?.
that is to say, either under section 10 of the Act of 1870, or section
11 of the Act of 1882, for the benefit of spouse and children or
any of them, creates a trust of a very peculiar sanctity, masmuch

as the policy forms no part of the assured's estate, and cannot
be made available for the benefit of his creditors, except that
they may claim out of the insurance money when payable a sum
equivalent to the premiums paid, if they can prove that the
premiums were paid out of the assured's estate with intent to
defraud his or her creditors. The trust cannot be set aside on the
ground that it is a voluntary or fraudulent settlement or disposi-
tion of property under the Bankruptcy Act or Statute of 13
Elizabeth.
Holt V. Everall (1876), 2 Ch. D. 266
Holt V. Before 1870 A effected a policy in ordinary form on his own life. On the
Everall. passing of the Married Women's Property Act of that year he surrendered it
in exchange for a policy expressed to be for the benefit of wife and children.
The original policy had no surrender value at the time, and the substituted
policy was issued at the same premium. On A's death his creditors
claimed the proceeds of the policy on the ground that it was void against
SETTLEMENT POLICIES 553
them as a voluntary settlement. It was held that the policy was protected
by the Act. The substance of the transaction was that the assured simply
dropped the original policy and took out u. new one. If the original policy
had commanded a surrender value at the time of the exchangs, that value might
properly have been treated as part of the premium paid for the new policy,
and would therefore have been added to the amount which creditors would
be entitled to receive out of the policy moneys if they could prove that the
transaction was efiected with intent to defraud them.
Dever, Ex parte (1887), 18 Q. B. D. 660
In 1876 a domiciled Englishman effected an insurance in a New York Dever,

company through their agents in London. The application was made by the ^"^ parte.
husband on behalf of his wife. The policy was a " tontine " policy, whereby
the society promised that on the death of the husband they would pay £6000
to the wife " for her sole use, if living, in conformity with the statute," and if
not living, to the children of the husband, and, failing them, to the executors,
administrators, or assigns of the husband. After a period of ten years the
legal holder of the policy had the option of withdrawing the accumulated
funds appropriated to the policy. The statute referred to was a New York
statute passed in 1870, whereby a policy might be effected for the benefit of
a married woman free from the claims of her husband's creditors, provided
that if premium paid by him exceeded $500 in any one year his creditors
the
should be entitled to a sum equivalent to the excess. The premiums were
paid by the husband until he became bankrupt, and then by the wife out of
her separate estate until the expiration of the ten years, when she exercised
the option and withdrew the accumulated funds. Before this time the husband
had obtained his discharge. The trustee in his bankruptcy claimed the whole
of the policy moneys, or alternatively those of them equivalent to the
premiums paid by him in excess of $500. Lord Esher, M.R., held that the
contract was a contract solely with the wife, and that if she exercised the option
to withdraw the accumulated funds at the end of ten years, it belonged to her
for her sole use. He thought the provision of the New York statute in favour
of creditors of the contract, and that " in conformity with
was not made part
the statute " meant nothing more than that the policy was effected for the
benefit of the wife. Bowen and Fry, L. JJ., agreed that the statutory provision
in favour of creditors was not incorporated into the policy, and also that the
wife was the " legal holder " of the policy ; but they differed from Lord Esher
on the first point, and were of opinion that if the wife exercised her option
of withdrawing the accumulated funds during the husband's life, the intention
was that it should belong to the husband. They held, however, that as the
husband had obtained his discharge before the option had been exercised, the
property thus accruing to him did not fall to the trustee in bankruptcy, because
during the bankruptcy was not a contingent interest of any value, but a
it
mere possibility of future benefit, and such a possibility did not pass to the
trustee in bankruptcy.
The provisions in the Enghsh Acts relating to settlement

policies and contained in section 10 of the Act of 1870 and section 11
;
of the Act of 1882 find their counterpart in Scotland in the

Married Women's PoHcies of Assurance (Scotland) Act, 1880.
Married Women's Policies of Assurance (Scotland) Act, 1880

43 & 41 Vict. 1. A married woman may efiect a policy of assurance on her own life or on
c. 26. the life of her husband for her separate use, and the same and all benefit
Married thereof, expressed to be for her separate use, shall immediately on being so
if
woman may effected vest in her, and shall be payable to her and her heirs, executors, and
effect policy
of assurance
assigns, excluding the jii.s mariti and right of administration of her husband,
for her and be assignable by her either inter vivos or mortis causa without consent
shall
separate use. of her husband ; and the contract in such policy shall be as valid and effectual
as if made with an unmarried woman.
Policy of 2. A policy of assurance effected by any married man on his own life and
assurance expressed upon the face of it to be for the benefit of lu's wife for her separate
may be
use or for the benefit of his children shall, together with all benefit thereof, be
effected in
trust for wife deemed a trust for the benefit of his wife for her separate use or for the benefit
and children. of his children, or for the benefit of his wife and children ; and such policy,
immediately on its being effected, shall vest in him and his legal representa-
tives in trust for the purpose or purposes so expressed, or in any trustee
nominated in the policy or appointed by separate writing duly intimated to
the assurance office, but in trust always as aforesaid, and shall not otherwise
be subject to his control or form part of his estate or be liable to the diligence
of his creditors, or be recoverable as a donation or reducible on any ground
of excess or insolvency And the receipt of such trustee for the sums secured
:
by the policy or for the value thereof in whole or in part shall be a sufficient
and effectual discharge to the assurance office Provided always, that if it
:
shall be proved that the policy was effected and premiums thereon paid with
intent to defraud creditors, or if the person upon whose Jife the poUoy is
effected shall be made bankrupt within two years from the date of such policy,
it shall be competent to the creditors to claim repayment of the premiums
so paid from the trustee of the policy out of the proceeds thereof.
3. This Act shall apply only to Scotland, and may be cited as the Married
Women's Policies of Assurance (Scotland) Act, 1880.
Stewart v. Hodge (1901), 8 S. L. T. 436
Stewart V. A effected a policy under section 2 of the Married Women's Pohcies of Assur-
Hodge. ance (Scotland) Act, 1880. The policy was on his own lite, and was expressed
to be for the benefit of his wife if she should survive him. A subsequently
became bankrupt, and the trustee in bankruptcy came into possession of the
policy. A's wife called upon the trustee to deliver the policy to her husband,
to be held by him in trust according to its terms. The trustee refused, and
A's wife then brought this action in the Court of Session for a declaration
that there was a valid trust of the policy moneys in her favour and for delivery
of the policy to A as trustee. The trustee pleaded that the policy was effected
by A while insolvent and in fraud of his creditors. It was held that A's wife
was entitled to the relief asked. There was a valid trust in favour of the wife
even if there was fraud as alleged, the remedy of the trustee in bankruptcy
was to be repaid the premiums out of the policy moneys when they became
due, and it afforded no answer to the demand that the policy should be delivered
up to A as trustee and proper custodier of the policy.
It has been suggested that the provisions of the Married Women's Whether
Property Acts protecting settlement poUcies against the assured 's pôiidi^^pro.
creditors do not bind the Crown, and that a policy effected for tected against
the benefit of wife and children might, nevertheless, be made assured due
available for the debts of the assured due to the Crown (fc). In *° Crown,
the case of an Act of New South Wales, which provides that the
property and interest of any person in a policy of insurance shall
be exempt from any law in force relating to bankruptcy or insol-
vency, or from being seized in execution, the Privy Council have
held that the provisions thereof do not bind the Crown, and that
where an assured was confined in a lunatic asylum at the public
expense, and thereby incurred a debt to the Crown, the Crown
was entitled to be paid out of the proceeds of the policy (l).
This decision, however, is hardly applicable to a case under section

11 of the Married Women's Property Act, 1882. The New South
Wales Act protects the estate of the assured against creditors,
and it was held that this protection does not bind the Crown.
The Married Women's Property Acts, on the other hand, provide
that the policy moneys shall not form part of the assured's estate,
and as the Crown cannot, any more than any other creditor, take,
except by express statutory provision, any property or interest
which does not form part of the debtor's estate, it is submitted
that the policy moneys payable under a settled policy for the
benefit of wife and children are not available to satisfy the debts
of the assured even when they are debts due to the Crown.
At the time the Married Women's Property Acts were passed, whether
life^
assured.
'^ •' •'
•111
poUcies were almost always payable on the death of the life endowment
assurance
Since then endowment assurance policies whereby the policies are
whole moneys, or part thereof, are payable at a certain age or protection of
upon death before that age, have become very common, and the the Acts.
question arises whether such policies can be validly effected under

section 11 of the Married Women's Property Act, 1882, so as to
withdraw the policy from the assured's creditors. An endowment
assurance policy might be effected so as to accrue for the benefit
of spouse and children whenever payable or so as to accrue for
their benefit only in the event of the moneys becoming payable
(ifcjThegeneralruleoflawisthatthe {I) A.-O. for New South Wales v.
Crown is not bound by the provisions Curator of Intestate Estates, [1907]

of any statute unless named therein A. C. 619.
or bound by necessary implication.
on the death of the assured. In either case it is doubtful whether

such a poUcy comes within the protection of the Act, and until
the question has been judicially decided few companies will take
the risk of issuing such policies. It should be observed, however,
that an endowment assurance policy is a life policy effected by
a person on his own life (m), and that the operative words of
section 11 appear to cover the. case of such a policy as well

as any other life policy. The real doubt arises upon the clause
at the end of the section, which appears to contemplate the
pohcy being payable only in the case of death. As, however,
this part of the section is directed solely to the provision of
proper machinery for the working of the trust it ought not to
have too much weight on the interpretation of the earlier part of

the section. The Scottish Act contains no words which are
not equally applicable to an endowment assurance pohcy as
to an ordinary life policy. It is submitted that an endowment

assurance policy ought to be held to be within the protection of
both English and Scottish Acts if the pohcy is expressed to be for

the sole benefit of wife and children. On the other hand, it is
submitted that a policy cannot be partly within the Act and

partly outside it, and that therefore a policy cannot be effected
under the Act so as to accrue for the benefit of the assured if he
survives the stated age but for the benefit of wife and children if
he dies under that age.

What bene- Policies are within the Acts when expressed to be for the
ficiaries arc
protected. benefit of spouse and children or any of them. The Act of 1870
only protects a policy effected by a married man on his own life
for the benefit of wife or children. The Act of 1882 extends the
protection to a policy effected by any man or woman on his or her
own life for the benefit of spouse or children (n). The pohcy under
either Act may be for the benefit of a spouse then living, or any
future spouse, or for the benefit of children already born or to be
born of the assured by his then existing marriage or any other
marriage (o). Grandchildren or other issue remoter than children
are not within the protection of the Acts and therefore cannot take
direct benefit under the trust (oo).
(m) Prudential Insurance Company wife, and does not apply to the wife's
V. Inland Revenue, [1904] 2 K. B. policies in favour of her husband.
658. (o) Parker's Policies, In re, [1906]
(n) The Scottish Act, like the 1 Ch. 526.
EngHsh Act, 1870, protects only the {oo) Bowen v. Lewis (1884), 9 A. C.
husband's policies in favour of his 890, 915.
.
The effect of introducing into a policy purporting to be made Effect of
under the Act a beneficiary not included in the class entitled to strange"^
protection, as, for instance, the inclusion of an illegitimate child, '" t™st.
is whole trust of the peculiar protection afforded by

to deprive the
the Act, and not to deprive the beneficiary of his or her interest in
the policy moneys (p).
Parker's Policies, In re, [1906] 1 Ch. 526
In 1879 a having a wife then living effected two policies of assurance Parker's
man
on his own life. They recited that they were made in accordance with the J"<^^^^>
provisions of section 10 of the Married Women's Property Act, 1870, and
provided that under the provisions of the said Act, his widow or widow and
children, or some or one of them in such shares as the assured should appoint,
ahoidd be entitled to receive the moneys payable on his death. Subsequently
the assured's first wife died, leaving three children, and in 1886 he married
again. In 1903 he appointed the policy moneys to hia second wife absolutely
in the event of her surviving him. He died the same year, leaving him sur-
viving his second wife and three children of the
first and one child of the second
marriage. was held that the second wife was within the Act, but that even
It
if she had not been she was on the construction of the policy a beneficiary
thereunder, and as the moneys had been appointed to her she was entitled
to them as against the cliildren.
It seems to be reasonably clear that an unmarried man or an Settlement

unmarried woman or a widower or widow may effect a valid unmarried
Person.
settlement poUcy under the Enghsh Act of 1882 for the benefit of
a future spouse, or children then existing or to be born.
Where a policy is effected under the provisions of the Married Distribution
among wife
Women's Property Act, the poucy alone is to be looked at m order and children.
_ , .
1 •
1 1 1
to ascertain as between spouse and children who is to participate

and in what shares (pp). Frequently the policy is expressed to be
merely for the benefit of the assured's wife and children. Under
the earher Act, Malins, V.C, held that the Court had a discretion
as to the distribution of the fund if the assured had not made any
distribution among the objects named {q) ; but Ohitty, J., held that
where there was a wife and children the wife took a Ufe interest,
and the children as joint tenants in the reversion (r). Later,
North, held that unless there was something in the policy to

J.,
indicate an intention on the part of the assured to give his wife a
(p) Parher's Policies, In re, [1906]

made in pursuance of such power will
1 Ch. 526. be as effective as if contained in the
policy.
(pp) Seyton, In re (1887), 34
Ch. D. 511. The policy may, bow- (?) Mellor's Pohcy Trust (1877),
ever, reserve to the assured or any G Ch. D. 127 ; 7 Ch. D. 200.
other person a power of appointment {r) Adams' Policy Trust (1883),
or distribution, and »n appointment 23 Ch. D, 525,
life interest, she ought to take as joint tenant with the children,
and the fact that the Act of 1870 enacts that the provision in favour
of the wife shall be for " her separate use," is not sufficient to
entitle her to a life interest in the whole fund (s). This decision
was afterwards followed by Chitty, J., in a similar case {t). There
is no doubt that under the Act of 1882, where the policy is simply
declared to be for the benefit of wife and children, all those surviv-
ing take equal shares as joint tenants, and the representatives of
those who die before the policy becomes payable get nothing {it).
Prima facie all children take, even although born of a prior or

subsequent marriage. If the wife is named in the policy, it does
not accrue for the benefit of a second wife. If the policy is simply
expressed as being for the benefit of the assured's wife and
children, a second wife will take the benefit along with the children
of both marriages {u). But where the policy was expressed to
be " for the benefit of his wife, or, if she be dead, between his
children in equal proportions," it was held that a second wife was

not entitled to any benefit, as the policy apparently pointed to the
wife then living, but the children of both marriages were held
entitled to participate as joint tenants {x).
When do The question has been raised as to how far the spougie or
spouse and
children take
children of the assured may during the currency of the policy take
an absolute an absolute vested interest therein, so that they may dispose of
vested
interest in the beneficial interest by surrender or sale during their lives, or so
policy may
that after their death such interest pass to the personal
moneys ?
representative of the survivor of them instead of reverting to the
estate of the assured.

Assured There is no doubt that so long as an object of the trust remains,
cannot
revoke.
the assured cannot revoke the provisions in their favour, and
even although the settlement be purely voluntary, it must be
deemed to be complete and irrevocable the moment the policy
is executed and delivered to the assured.

Interest vests Where the policy is in favour of a class of beneficiaries which
when class of
beneficiaries
cannot be added to, as, for instance, where it is for the benefit of
is determined. a named wife only or for the benefit of the children of a deceased
(«) Seyton, In re (1887), 34 Ch. D. tenancy shall have been severed by a

511. distribution of the fund or by any
(t) Dailies' Policy Trust, [1892] one of the beneficiaries assigning his
1 Ch. 90. or her interest in the fund.
(«) The jus accrescendi incidental to (u) Browne's Policy, In re, [1903]
a joint tenancy will apparently con- 1 Ch. 188.
tinue even after the policy has become (x) Griffiths' Pqlicy, In re, [1903]
payable until such tinie as the joint 1 Ch, 739,
wife, the beneficiary or beneficiaries will prima, facie take a vested
beneficial interest which may be sold or surrendered, and unless

so expressed not contingent upon such beneficiary or benefi-
is
ciaries surviving the assured (y).

By the express terms of the trust vesting may be postponed Vesting may
as when expressed to be in favour of such children as attain
it is
ponâôr
21 or marry under that age, or the capacity of the beneficiary to anticipation
sell or surrender his or her interest may be restricted as where a
married woman is restrained from anticipation.
Where the policy is in favour of a class of beneficiaries which No vesting
may be added to, as, for instance, where it is in favour of wife bt'nefioiiries"''
and children generally, then prima facie there is no vesting until '^ °°*
the moneys have become payable, and when they become

payable the interest vests in the members of the class then
surviving, none survives the period of payment, the
and, if
moneys do not form part of the estate of the last survivor,

but revert as a resulting trust to the assured's own estate.
Where the objects of the trust fail there is a resulting trust in
favour of the assured and his representatives, even although not
named in the policy (z).
Prescott V. Prescott, [1906] 1 Ir. R. 155

A married woman efEected a policy on her own life. The policy purported Prescott v.
to be issued pursuant to the Married Women's Property Act, 1882, and to be Prescott.
in favour of W. P., the husband of the assured. The company promised to

pay the said W. P., his executors, administrators, or assigns, £1000 on tlie death
of the assured. W. P. died, and left his wife surviving him. Upon a summons
to determine whether the beneficial interest in the policy was vested in the
executors of P. or in his wife, it was held that the interest vested in W. P.
W.
absolutely at the date the policy was issued, and that his interest did not
depend upon his surviving his wife. The interest passed to his executors,
but they took it cum onere, and there was no obligation on the wife to keep
the policy alive. If it was to be kept alive, the premiums must be paid out
of the estate of W. P. The Court were of opinion that the addition of the
words " executors, administrators, or assigns " neither added nor detracted
anything. The decision would have been the same if there had been a simple
declaration that the policy was for the benefit of W. P.
Cleaver v. Mutual Reserve Fund Life Assoeiation, [1892] 1. Q. B. 147
A married man effected a policy of insurance on his own life. The policy cleaver v.
was not stated to be issued in pursuance Married Women's Property Mutiml Re-
of the
serve Fund,
(y) Schumann v. Scottish Widows however, contra, Bobb v. Watson,
Fund (1S86), n R. 678; Prescott t^^\°U ^'- ^- ^*^- ,, , , „
(z) Cleaver v. Mutual Reserve,
V. Prescott, [19061 1 Ir, R, 155. See, [1892] 1 Q. B. 14?.
Act, but itwas expressed to be in favour of the assured' s wife, P. M., and the
company promised to pay the policy moneys to her if living at the time of the
death of the assured, otherwise to his legal representatives. The assured died
in May, 1889, leaving his wife surviving. In August, 1889, the wife assigned
her interest to Cleaver, who was afterwards appointed administrator of the
property and effects of F. M. under the Act to abolish Forfeitures for Treason
and Felony. The insurance money was claimed by Cleaver and by the
executors of the assured, and this action was brought by them as joint plaintiffs,
Cleaver claiming alternatively as assignee from F. M. and as her administrator
under the last-mentioned Act. In defence the company alleged that the
assured died from poison intentionally administered to him by his wife, F. M.
The Court held that that was no defence against the claim of the executors.
Apart from the Married Women's Property Act, there was a contract with the
husband upon which his executors, and they alone, could sue. There was no
trust in favour of the wife, and the fact that it was made payable to her was
a mere direction which might have been altered by the assured at any time.
The crime of the wife did not disentitle the executors from claiming the
policy moneys as part of the estate of the assured. The question as to whether
the wife was entitled as a beneficiary was not one which arose as between the
executors and the company. Further, if the Married Women's Property Act
applied there was a trust in favour of the wife, but there was a resulting trust
in favour of the assured's estate if the objects of the trust failed. Here the
rule of public policy prevented the beneficiary named in the trust or any
person claiming through her from taking the money, and therefore the trust
had failed, and the executors were entitled to the money on behalf of the
assured's estate.
Eobb V. Watson, [1910] 1 Ir. E. 243

Rdbi v. A policy of insurance dated March 13, 1882, was expressed to be issued on
Watson. (.j^g application of W. for the sole benefit of his wife, E. W., for her separate
use under the Married Women's Property Act, 1870. The policy provided
that the funds and property of the society should be liable to pay to the
executors, administrators, or assigns of W. the sum of £1000 within three
calendar months after satisfactory proof of his death. W. paid all the premiums.
In October, 1901, W. executed a trust deed for creditors, whereby he assigned
personal estate, "whether in possession,reversion,remainder,orexpectanoy.'"
all
The wife, E. W., died in February, 1907, and letters of administration were
granted to W. The creditors under the trust deed claimed that the policy
was captured thereby as the reversionary property of W., whereas W. claimed
that he had no interest in the policy in 1901, but merely a spes successionh-
The sole beneficial interest was in his wife, and therefore there was no property
of W. which could pass under the trust deed. The judge held that the proper
inference from the provision in section 10, that the policy should not " so long
as any object of the trust remains be subject to the control of the husband or
his creditors, or form part of his estate," was that after the objects of the trust
were satisfied the policy should be subject to the control of the husband and
form part of his estate. There was therefore a reversionary interest in the
husband which passed under the trust deed for creditors, and on the death of
the wife the creditors were entitled to the policy.
The case just cited is open to criticism. It would seem that Sobb v.
if the object of the trust is to give an absolute vested interest to ^tkisld.

the wife named in the policy, and not merely an interest con-
ditional on survivorship, the object of the trust remains notwith-
standing the death of the wife. The meaning of an " object of the
trust " is brought out more clearly in the Act of 1882, where the
words are " so long as any object of the trust remains unper-
formed." Clearly if the object of the trust is to give the property
to the wife absolutely, it remains unperformed until the policy
moneys become payable, and if she has died in the meantime the
trust is performed by transferring the moneys to her personal
representatives. It is submitted that on the facts stated in Bobb
V. Watson there was an absolute vested interest in the wife, and

the husband took only through her upon her intestacy. Nothing,
therefore, passed to the creditors under the trust deed.
Where a policy effected under the Married Women's Property Surrender of
Act is offered for surrender by the trustee or trustees of the policy poUoy.
during its currency, the company has to consider whether it is
within his or their power to surrender and give the company a

good discharge.
The trustee may have express power to surrender conferred Trustee's
on him by the terms of the trust. Apart from such express Surrender,
power it is doubtful whether any power can be imphed. In the
Scottish case of SchumannWidows' Life the Court
v. Scottish
held that the terms of the Scottish Act gave the trustee a power
to surrender. The words of the Act mostly rehed on in support
of this opinion also occur in the EngKsh Act, but notwithstanding
this decision it is submitted that the Act does not confer a power
to surrender, but only provides machinery for the exercise of
such power if otherwise conferred by the trust. As the law now
stands it would not be any company to allow a surrender
safe for
for cash unless the trustee has express power by the terms of the
trust or has obtained the sanction of the Court (a). The most
convenient course in granting such poUcies is to give the trustee
the right to surrender the pohcy in exchange for a paid-up

pohcy. If the poHcy has actually lapsed through non-payment
of premiums the company may safely make an paymentex gratia
of the surrender value, but there must be no express or imphed

agreement to do so before the lapsing of the poUcy unless the
trustee has power to surrender.
(a) SchuUze v. SchuUze (1887), 56 L. J. Ch. 356.
I.L.
36
Surrender for Even where the trustee has power to surrender and give a good
purpose in-
consistent discharge, the company will not obtain a good discharge if it
with object of pays to him with knowledge that he intends to apply the surrender
trust.
money in breach of trust. Thus where the policy is settled upon
a wife without power of anticipation, or is settled generally upon
the assured's wife and children, a company would not be justified
in paying the surrender value to the trustee if they knew, or had
good reason to believe, that the object of the surrender was to
enable the wife to anticipate her benefit, or to give the immediate
benefit of the policy to the wife and children of the then subsisting
marriage, to the possible exclusion of the wife and children of some
future marriage.
Surrender Where a sole beneficiary or all the beneficiaries has or have
where bene-
ficiary has a
acquired a vested interest in the policy, and there is no restraint on
vested anticipation, or where the objects of the trust have failed and the
interest.
beneficial interest has reverted to the assured, such beneficiary or
beneficiaries or the assured, as the case may be, may with the
trustee grant a complete discharge for the surrender value.
Schumann v. Scottish Widows' Life (1886), 13 R. 678
Schumann v, A man effected a policy on his own Ufe under the provisions of
married
Scottish
the MarriedWomen's PoUoies of Assurance (Scotland) Act, 1880. The policy
Widows'
Life. was a paid-up policy issued upon a single premium. It was expressed to be
for the benefit of the assured's wife, M., for her separate use, and in the event
of her predeceasing him for the assured. After the policy had been in force
for some time, the spouses intimated their joint desire to surrender the policy.
The company doubted whether they could get a sufficient discharge, and a
special case was presented to the Court. The Court were of opinion that the
Act contemplates the possibility of surrender. It provides that " the receipt
of such trustee for the sums secured by the policy or for the value thereof in
whole or in part shall be a sufficient and effectual discharge to the assurance
office." The assured in default of appointment was the trustee, and could
therefore, jointly with the wife, give a good discharge to the company. One
member of the Court (Lord Shand) was of opinion that the assured as trustee
could alone have given a good discharge. The surrender of the policy was not
inconsistent with the trust, as the husband as trustee might invest the money
or apply it for the immediate maintenance of the wife.
Schultze V. Schultze (1887), 56 L. J. Ch. 356

Schultze y. The assured effected a policy in 1871 under section 10 of the Married
Schnltze.
Women's Property Act, 1870, expressed to be for the benefit of his wife for
her life, for her separate use, and subject thereto for the benefit of the children
of the marriage. In 1883 the assured became bankrupt, and subsequently
insane, and the policy was in danger of lapsing tor want of payment of premiums.
SETTLEMENT POLICIES 5(53
The assurance society's rules permitted the poUcy to be Surrendered

or ex-
changed for a fully paid-up policy of lower value, but in this case they declined
to do so without the authority of the Court. Accordingly this action was
brought in the'name of the wife against her husband, asking for the appoint-
ment of a trustee and for power to him to exchange the policy for a fully paid-up
policy,and that the costs of the proceedings should be paid by mortgaging
the paid-up policy to the society. As there were infant beneficiaries the
Court appointed two trustees, and directed the exchange of the policy and
payment of the costs as claimed.
In paying the policy moneys or advancing money to pay Company

premiums or accepting a surrender of a policy effected under the with properly
Married Women's Property Act, the company ought to be satisfied constituted
that it is dealing with the properly constituted trustee of the
poHcy, and that such trustee has power to bind all parties
interested in the trust.
Under the Act of 1870 there is no provision constituting the Where policy
assured or his personal representatives a trustee or trustees, or

l^fofisvo.^'
giving the assured a power of appointing trustees, and therefore,
where the policy has been settled under that Act, it is necessary
to apply to the Court for the appointment of a trustee before
the company can get a vaHd discharge for the policy moneys,
or make any arrangement for surrendering or charging the
policy The application may be made either to a judge of
(b).
the High Court or to the judge of the County Court of the district
in which the insurance office is situated. In this instance the
jurisdiction of the County Court is apparently not limited to cases
where the value of the policy is less than £500.
Under section 11 of the Act of 1882 the assured himself, Where policy
and after his death his personal representative, is trustee in ^^t'ôf

1882.*"^
default of appointment of another trustee. During the life of
the assured he may appoint a trustee or trustees, and make provi-

sion for the appointment of new trustees either during his lifetime
or after his death. The assured may from time to time during his
lifetime appoint a new trustee or trustees to act along with those
already appointed or in substitution for those who have died.
Apparently, however, the assured has no power under the Act of

1882 to remove or discharge a trustee and appoint another in his
place. If he has such power at all, it can only be under section 10
of the Trustee Act, 1893. The power of discharging and appointing
trustees under that section is vested in the person or persons
(6) Turnbull, In re, [1897] 2 Ch. 415.

nominated for the purpose of appointing new trustees by the

instrument, if any, creating the trust, or if there be no such person,
then in the surviving or continuing trustees or trustee, for the time
being, or in the personal representatives of the last surviving or
continuing trustee. Although it is open to some doubt, it is
submitted that the assured is the person " nominated for the
purpose of appointing new trustees by the instrument creating the
trust." The policy is the instrument creating the trust, and the
assured is thereby nominated as the person who is to have all the
statutory powers under section 11, including the power of appoint-
ing new trustees. When the policy moneys become payable on
the death of the assured, and there has been no appointment of
trustees, payment may with safety be made to the assured's
personal representatives. If during the life of the assured any
arrangement is to be made for surrendering or charging the
policy, the assured may in default of appointment be dealt with
as trustee. In order, however, to guard against a possible breach
of trust it is usual to take the joint receipt of husband and wife.
Where policy Under the Scottish Act the assured and his personal repre-
effected under ,,. ,.
sentatives are trustees unless
,
some other trustee or trustees are
,i_lj_ j_ l
Scottish Act.
appointed in the policy, or by some other writing made at the
time the policy is effected and intimated to the company. It is
doubtful whether in default of such appointment the assured has
power during the currency of the trust to appoint or assume any
other person as trustee (c). Such an appointment can, at any
time, be made by the Court (c). The assured during his hfe-
time can as trustee make any arrangement for surrendering or

charging the pohcy which is intra vires of the trust (d).
Appointment A trustee of a policy under either of the English Acts may be
Court. appointed on petition {dd) or originating summons (e) or in an

action (ee). On a petition to appoint a new trustee, it was held
that the Court had no jurisdiction to determine any question
relating to the administration of the trust or to give directions
to the trustee (/). An originating summons is, therefore, the
most convenient procedure to adopt when a trustee is to be
appointed, as the cost is less and other incidental matters can be
determined on the same summons if necessary.
(c) 24 & 25 Vict.
c. 84, s. 1 ; 30 (e) Smith's PoKcy Trusts, In re
& 31 Vict. c.
97, ss. 11, 12, 13. (1898), 33 L. J. (Notes of Cases) 187.
(d) Schumann v. Scottish Widows' (ee) Schultze v. Schultze (1887), 56
Life (1886), 13 678.K L. J. Ch. 356.
(dd) Atkinson's Policy Trusts, In re
(/) Adams' Policy Trusts, In re
(1895), 13 Rep. 285. (1883), 23 Ch. D. 625.
MAERIED WOMEN 565
Where the beneficiaries are infants and the moneys are to be Two trustees
held for their benefit, two trustees ought to be appointed (g). ^f^^^t^ê^f
The Act 1870 provides for the appointment of one trustee only,
of ficiary.
but it has been held that even where the insurance is under that
Act the Court has under its general jurisdiction power to appoint
two trustees, where, as in the case of infant beneficiaries, it is
necessary or expedient that that should be done (li).
An application to appoint a trustee in the case of a poHcy Title of

'^pp"<='^*'°«-
effected under the Act of 1870 ought to be intituled in the matter
of that Act, and need not also be intituled in the matter of the
Act of 1882 (i).
As a general rule it is probably unnecessary to demand strict whether

proof that the trust is one protected by the Acts, that is to say, of™amage
that there is, in fact, a vaUd marriage, and that the children are and legiti-
legitimate. The trust may still be a vahd trust although not bTdemanded.
protected by the Acts. If, however, the validity of the appoint-
ment of the trustee or trustees depends upon the terms of the
Act, or if the company has notice that the assured 's estate is
insolvent, strict proof of marriage and legitimacy ought be required

in the form of proper marriage and birth certificates.
Where property is settled on a married woman, and she is Married
restrained from anticipation, she cannot, notwithstanding the restrained

Married Women's Property Acts, dispose of it by act or deed from
1 •
durmg coverture T
may dispose
, /7\ \ni
bhe
of it if afterwards she
(/c).
,. „ 11 anticipation.
becomes discovert, or she may dispose of it by will so as to defeat

her husband's right of survivorship. And under the Conveyancing
Act, 1881 (T), the Court may, with the consent of a married woman,
and provided it is for her benefit, make an order to bind her interest
in property as to which she is restrained from anticipation. If a
married woman effects a policy for her own benefit, and the policy
purports to be unassignable, the effect of the condition against
assignment is to restrain the woman from anticipation (m).
(g) Howson^s Policy Trusts, In re discharge the obligation stante matri-

(1885), W. N. 213 Smith's Policy ; monio, and she is therefore in the
Trusts, In re, supra. same position as a woman in England
{h) Schultze v. Schultze, supra. restrained from anticipation [Barras
(i)Kuypers' Policy Trusts, In re, v. Scottish Widows' Fund (1900), 2
[1899] 1 Ch. 38. F. 1094 ;Scottish Life v. Donald
(A;) Married Women's Property Act, (1901), 9 S. L. T. 200).
1882 (45 & 46 Vict. c. 75), s. 19. In (?) 44 & 45 Vict. c. 41, s. 39.
Scotland, if either before or after (m) Lavender s Policy, In re, [1898]
marriage a policy is settled in trust 1 Ir. R. 175.
for her as a provision, she cannot
—
44 & 45 Vict. Conveyancing Act, 1881, sec. 39

^. 41 s. 39.
(1) Notwithstanding that a married woman is restrained from antiei-
39.
Power for
Court to bind pation, the Court may, if it thinks fit, where it appears to the Court to he for
interest of her benefit, by judgment or order, with her consent, beliind her interest in
married any property.
(2) This section applies only to judgments or orders made after the com-
raenoement of this Act.
Lavender's Policy, In re, [1898] 1 Ir. R. 175
Lavender^s A married woman effected in 1885 an insurance on the life of her husband.
Policy, The policy was headed " Wife's Policy- —Endowment," and the company
In re.
thereby promised to pay to her for her sole use the sum assured if she and her
husband both survived a period of ten years. The policy was expressed to
be subject to the conditions contained therein, and one of these was, " This
policy is not assignable." The Court held that the wife was thereby restrained
from anticipation, and that a charge on the policy purported to be made by
her before the money became payable was void.
Married By the Conveyancing Act, 1881, a married woman may by

rive'power'of power of attorney authorise any other person to do any act -which
attorney. gjjg herself has power to do.
44 & 45 Vict, Conveyancing Act, 1881, see. 40

c. 41, s. 40.
40. (1) A married woman, whether an infant or not, shall by virtue of
Power of
attorney of
this Act have power, as if she were unmarried and of full age, by deed, to
married appoint an attorney on her behalf for the purpose of executing any deed or
woman. doing anj' other act which she might herself execute or do and the pro- ;
visions of this Act relating to instruments creating powers of attorney shall

apply thereto.
(2) This section applies only to deeds executed after the commencement
of this Act.
Effect of Divorce by dissolving the marriage releases the woman from

divorce.
her husband's marital rights, and therefore, except in so far as
her property has already vested in possession and become the

husband's, or been settled hy him. jure mariti, the decree of divorce
terminates every marital right, and she may contract or deal with
her property as a feme sole, and on her death intestate it would
pass to her next of kin.
Judicial Whilst the separation continues a judicial separation has the
separation.
same effect as divorce, that is to say, the woman is in all respects
in the same position as a feme sole with regard to her capacity to
contract and her power of disposing of her property coming into
MARRIED WOMEN 567
her possession after the date of the decree (m). As in the case
of divorce, the marital right is completely extinguished, and even in
the event of her dying intestate the husband would have no
claim to her property (n).
A wife deserted by her husband may obtain a protection Protection

order.
order with regard to all property coming into her possession after
the date of the desertion, and such property belongs to her as a
feme sole in the same way as if there was a judicial separation (o).
A separation order under the Summary Jurisdiction (Married Separation
order.
Women) Act, 1895, has the same effect as a judicial separation (p).
A decree for judicial separation, a protection order, or a separa- Where separa-

tion termi-
tion order may be reversed or discharged (q), or may become nates or order
is discharged.
inoperative by reason of the parties having resumed cohabitation.
The marital right of the husband is thereby revived, but all
dealings with the woman in the meantime, and until the parties
dealing with her have notice that the separation is at end, remain
valid and effectual (r).
The above provisions respecting the property of a wife separated Where wife is
trustee.
from or deserted by her husband extend to property which she
becomes entitled to as executrix, administratrix, or trustee (s).
In any case in which the Court pronounces a sentence of divorce Power of

Court to
or judicial separation for adultery of the wife (t), or makes a decree order guilty
for restitution of conjugal rights against the wife (u), and it appears wife to make
a settlement.
to the Court that the wife is entitled to any property either in
possession or reversion, the Court may order such settlement as
it thinks reasonable to be made of such property for the benefit of
(m) Matrimonial Causes Act, 1857 L. R. 2 P. & D. 274). Choses in

(20 & 21 Vict. c. 85), ss. 25, 26. Pro- action payable but not reduced into
perty previously vested in reversion possession at the time of the deser-
but coming into possession after the tion are released from the husband's
decree, and choses in action payable marital right (In re Coward v. Adaryis
but not reduced into possession, are (1875), L. B. 20 Eq. 179). Property
released from the husband's marital vested in possession before the
right (Insole, In re (1865), L. R. 1 Eq. desertion is not released from the
470; Johnson V. Lander {IS69), 7 Eq. husband's marital right (Hill v.
228). Property vested in possession Cooper, [1893] 2 Q. B. 85).
before the decree is not released from (p) 58 & 59 Vict. c. 39.
the husband's marital right Waiie v.
( (q) An
order improperly obtained
Morland (1888), 38 Ch. D. 135). may be discharged after the wife's
(m) Surman v. Wharton, [1891] 1 death so as to revest the husband's
Q. B. 491. See Cuenod v. Leslie, marital right (Mahoney v. M'Carthy,
[1909] 1 K. B. 880 ; Burdett v. Home [1892] P. 21).
(1911), 27 T. L. R. 402. (r) Matrimonial Causes .îct, 1858
(o) Matrimonial Causes Act, 1857 (21 & 22 Vict. 0. 108), ss. 8, 10.
(20 & 21 Vict. c. 85), s. 21. The order (s) 21 & 22 Viet. c. 108, s. 7.
is retrospective to the date of deser- (t) 20 & 21 Vict. c. 85, s. Hi.
tion {Oookev. Fuller (1858), 26 Beav. (u) Matrimonial Causes Act, 1884
99; In the Goods of Elliott (1871), (47 & 48 Vict. c. 68), s. 3.
the innocent husband, or the children of the marriage, or both.

A settlement so ordered by the Court is valid and effectual, not-
withstanding any disability arising from coverture {x).
Power of After a final decree of nullity or dissolution of marriage the
settlemenir^
Court may inquire into marriage settlements and order any
property comprised in the settlement to be applied as it may
think fit (y).
Stedall V. Stedall (1902), 86 L. T. 124
SiedaU v. A by a husband on his own life in an American company

policy effected
Stedall. was expressed to be payable to his wife if she survived him. On the wife
being divorced on the ground of adultery, it was held that the wife's interest
was property of the wife within the meaning of section 45 of the Matrimonial
Causes Act, 1857, and could be ordered to be settled by her for the benefit of
the children of the marriage. Sir Erancis Jeune was also of opinion that the
policy was a post-nuptial settlement within the meaning of section 5 of the
Matrimonial Causes Act, 1859, and that he could have ordered the policy
moneys to be applied under that section.
Section X. —Infants
Infants' At common law the contract of an infant, that is, a person
contracts at
common law. under twenty-one years of age, is, according to the nature of the
contract, (1) void, (2) enforceable by either party, or (3) voidable
by the infant.
Contracts of an infant which on the face of them are prejudicial
to the infant's interest are void (a).
Certain classes of contract which are necessary for the infant's

maintenance and well-being, such as contracts for a reasonable
supply of food and clothing and contracts of apprenticeship, are

enforceable by either party (&).
Other contracts of an infant are voidable by the infant. If
the contract is one of continuing obligation, that is to say, out of

which rights and liabilities may arise from time to time, the
infant is bound, unless he repudiates the contract within a reason-
able time after he attains full age (c). If there is no continuing
obligation, the infant is not bound unless he expressly ratifies
the contract after he comes of age. If an infant has received no

benefit from a contract which he is entitled to avoid, or can and
Matrimonial Causes Act, 1860

{x) (a) Meakin v. Morris (1884), 12
(23 &
24 Vict. c. 144), s. 6, Q. B. T>. 352.
(y) Matrimonial Causes Act, 1859 (6) Ryder v. Wonibwell, L. B. 4 Ex.
22 & 23 Vict. c. 61), s. 5 ; Matri- 32; Clements L. N. W. Ry-,
v. &
monial Causes Act, 1878 (41 & 42 [1894] 2 Q. B. 482.
Vict. c. 19), a. 3. (c) Edwards v.Carter,llS93]A.C. 360.
—
INFANTS 569
does restore what he has received, he may recover from the other
contracting party anything which he has given or paid mider the
contract (d).
Practically all contracts and deeds of an infant relating to
insurance, such as the contract of insurance, the assignment,
mortgage, or settlement of the policy, are contracts within the
last category, and are, therefore, voidable by the infant at common
law (e).
The status of an infant in relation to his contracts has been

considerably altered by statute.
The disability of an infant to bind himself or herself by an Infants'

ante-nuptial marriage settlement was extremely inconvenient,
^tSent
and the Infants' Marriage Settlement Act, 1855, was passed to Act, 1855,
remedy this inconvenience. It provides as follows :
Infants' Marriage Settlement Act, 1855 18 & 19 Vict.

c. 43.
I. From and after the passing of this Act it shall be lawful for every Infant
infants may,
upon or in contemplation of his or her Marriage, with the Sanction of the
with the
Court of. make a valid and binding Settlement or Contract for
Chancery, to Approbation
a Settlement of any Part of his or her Property, or Property over which
all or of the Court
of Chancery,
he or she has any power of Appointment, whether Real or Personal, and
make valid
whether in Possession, Reversion, Remainder, or Expectancy and every ; Settlements
Conveyance, Appointment, and Assignment of such Real or Personal Estate, or Contracts
for Settle-
or Contract to make a Conveyance, Appointment, or Assignment thereof,
ments of
executed by such Infant, with the Approbation of the said Court, for the their Real and
Purpose of giving Effect to such Settlement, shall be as valid and effectual Personal
as if same were of the full Age of Twenty-one Years
the Person executing the :
Estate upon
Marriase.
Provided always, that tliis Enactment shall not extend to Powers of which it
is expressly declared that they shall not be exercised by an Infant.
II. Provided always. That in case any Appointment under a Power of In case
Appointment, or any disentailing Assurance, shall have been executed by any Infant die
under Age,
Infant Tenant in Tail under the Provisions of this Act, and such Infant shall
Appointment,
afterwards die under Age, such Appointment or disentailing Assurance shall &c., to be
thereupon become absolutely void. void.
III. The Sanction of the Court of Chancery to any such Settlement or The Sanction
Contract for a Settlement may be given, upon Petition presented by the of the Court
of Chancery
Infant or his or her Guardian, in a summary Way, without the Institution of
to be given
a Suit ; and if there be no Guardian, the Court may require a Guardian to be upon Petition.
appointed or not, as it shall think fit ; and the Court also may, if it shall
think fit, require that any Persons interested or appearing to be interested
in the Property should be served with Notice of such Petition.
[d) Hamilton v. Vaughan-Sherrin, ofan assurance society was held to be

etc. [1894] 3 Ch. 589. enforceable against him as part of his
(e) An agreement, however, by an contract of service (Clements v. L. d-
infant workman to become a member N. W. Ry., [1894] 2 Q. B. 482).
—
Not to apply IV. Provided always, That nothing in this Act contained shall apply to
to Males Infant under the Age of Twenty Years, or to any Female Infant
j^jjy jijj^jg
PenTales under "^der the Age of Seventeen Years.

17 Years of
^^^'
It will be observed that the sanction of the Court of Chancery
(since 1875 of the Chancery Division of the High Court of Justice)
is necessary to the validity of an infant's marriage settlement.
Ante-nuptial settlements made without such sanction, and all
other settlements, are still voidable by the infant settlor.
Infants' The next statutory interference with the common law relating
Relief Act,
^^ infants' contracts is the Infants' Belief Act, 1874(a). That
Act provides as follows :
37 & 38 Vict. Infants' Belief Act,' 1874

c. b2.
Contracts by 1. AH contracts, whether by specialty or by simple contract, henceforth

infants, entered into by infants for the repayment of monev lent or to be lent, or for
i v "
6XC6T)t for
necessaries
goods supplied or to be supplied (other than contracts for necessaries (6)),
to be void. and all accounts stated with infants, shall be absolutely void Provided :
always, that this enactment shall not invalidate any contract into which an
infant may, by any existing or future statute, or by the rules of common law
or equity, enter, except such as now by law are voidable.
No action to 2. No action shall be brought whereby to charge any person upon any
be brought on pjomige made pay any debt contracted during infancy, or
after full age to
of infant's upon any ratification made any promise or contract made

after full age of
contract. during infancy, whether there shall or shall not be any new consideration
for such promise or ratification after full age.
The precise meaning of this Act has been the subject of much
discussion. Briefly the effect of the two sections appears to be
as follows : The first section applies only to the two classes of
contracts there specified, that is (1) contracts for the repayment of
money lent or to be lent ; (2) contracts for goods supplied or to

be supplied, and to accounts stated with infants. These transac-
tions are absolutely void, instead of being only as theretofore
voidable at the instance of the infant. Neither the infant nor the
other contracting party can under any circumstances sue upon
them (c). The second section applies to all contracts (d), and
(a) 37 & 38 Vict. c. 62. to the effect that the Act makes
(6) And
see Sale of Goods Act, these transactions void only as
1893 (56 & 57 Vict. c. 71), s. 2. against the infant.
(c) It is impossible to agree with {d) Coxhead v. Mullis (1878), 3
the suggestion made in Simpson's C. P. D. 439.
Law of Infants (3rd edition), p. 4 (d),
INFANTS 571
operates to prevent parties contracting with an infant from taking

proceedings against him on the ground that he has ratified the
contract after attaining his majority. Thus voidable contracts,
which formerly could not be enforced against the infant unless
ratified, are now, so far as the right of the other party to enforce
them is concerned, in the same position as contracts absolutely

void. Butmust be remembered that the section only defeats the
it
and that the contract

right of the other contracting party to sue,
remains valid and subsisting. The infant may sue upon it, or
the other contracting party may derive benefit from it if he can
do so without having to bring an action against the infant or persons
representing his estate, as, for instance, where money belonging to
the infant comes into his hands, and he retains it to satisfy his
debt. Where the contract is one of continuing obhgation, so
that at common law it would have been binding upon the infant
unless repudiated within a reasonable time after attaining
majority, it is not affected by this section. The other contract-
ing party does not require to rely on ratification as part of his
cause of action. He relies on the absence of repudiation, and is in
the same position after as before the Act.
Applying the above general statements of the law relating to
infants' contracts to contracts made by infants with reference to
an insurance policy, the following observations may be made.
Where a policy is issued to an infant it is clearly enforceable Infant's right
by the infant, and the only question of practical importance aVoÛcy 'and
appears to be whether he can, on attaining full age, repudiate the recover
premnimp.
contract within a reasonable time thereafter and claim a return
of the premiums paid. The point is a nice one, and does not appear
to have been judicially decided in this country. Mr. Bunyon
stated that an infant could not recover premiums paid (e) but ;
the authorities cited by him hardly support the proposition (/).

The question as to whether an infant can recover money paid
upon his contract depends upon whether he has derived any
intermediate advantage from it which he cannot restore. If he
has he cannot get back what he has paid, but otherwise he can.
Thus where an infant took a lease of premises, and on attaining
full age repudiated it and claimed a return of a premium which
(e) Bunyon on Life Insurance latter, a decision of Lord Kenyon at

(2nd edition), p. 346. Nisi Prius, is practically overruled
(f) Holmes v. Blogg (1818), 2 by Corjje v. Overton (1833), 10 Bing.
Moo. J. B. 552 Wilson v. Kearse
; 252.
(1800), Peak. Ad. Cas. 196. The
he had paid, it was held he could not recover because he had had
the benefit of the occupation of the premises in the meantime {g).
And where an infant made an agreement to enter into partnership
and paid a deposit by way of guaranteeing his fulfilment of the
contract, and during his minority carried on the business and
received a weekly allowance under the agreement,
it was held he
could not recover the deposit upon repudiating the agreement

when he But where there was a similar
attained majority Qi).
agreement and the infant had paid a deposit,

for partnership,
but the agreement had not been acted upon, the infant was held
entitled to recover his deposit on the ground that he had derived
no intermediate advantage {%). And where a company had issued
shares to an infant, and his name was placed on the register and
he received certificates, but had neither received any dividend nor
attended any meetings, it was held that on attaining full age he
could repudiate his shares and recover the money paid (fc). The
fact that his name was on the register was not an advantage
within the meaning of the rule. Thus it may be questioned
whether the fact that an insurance company has issued a policy
and been on the risk is an advantage to the infant in this sense.
The point is very much the same as arises when the assured seeks
and recover premiums on the ground of innocent
to cancel the policy
misrepresentation by the company or its agent. In Kettlewell v.
Refuge (l) the majority of the Court of Appeal was of opinion that
a contract of insurance could be cancelled ab initio, notwithstanding
that the company had been on the risk. It has already been
submitted that this case was rightly decided, and if so, it seems
to follow on principle that an infant who repudiates his policy
could cancel the contract ah initio and recover his premiums.
Policy mort- If ^^ infant borrowed money upon the security of a policy
gaged by an ^.j^g whole transaction would be void under section 1 of the Infants'
mrant.
Belief Act as a contract for the repayment of money lent or to be
lent. The lender could neither sue the infant nor enforce his
charge upon the policy (m). The severity of this enactment may
j-ometimes be mitigated by the equitable rule that where money
borrowed by an infant has been applied by him in payment of a
{g) Holmes v. Blogg. (1818), 2 (7c) Hamilton v. Vaughan-Sherrin

Moo. B. 552
J. Valentini v. Oanali
; Co., [1894] 3 Ch. 589.
(1889), 24 Q. B. D. 166. ,,. ryari'^^ 2 K
B ^*^-
242
Taylor, Ex parte (1856), 8 ^''
^^^^^^ ^ ^- ^-
(70
De G. M. & G. 254. i™") Nottingham Building Society
{i)'corpe v. Overton (1833), 10 v. T7iMraton, [1903] A. C. 0.
Bing. 252.
INFANTS 573
debt which could have been enforced against the infant, the lender
may stand in the shoes of the person whose debt has been paid
off. Therefore if the money borrowed was expended in paying
for necessaries, the lender could recover from the infant {71). And
where an infant purchased land and borrowed money on mortgage
to pay the vendor, it was held that, although the mortgagee could
not recover on the covenants in the mortgage which was void,
he was entitled to be subrogated to the vendor's lien for unpaid
purchase money, and therefore had a charge upon the land for
the money advanced (0). This doctrine of subrogation will
seldom affect the right to any policy moneys ; but where an infant
requires money for necessaries a valid security upon a life policy
might be effected by assigning the policy in security to the
person supplying the necessaries, so that the person advancing the
money to pay him off would be subrogated to his right to the
policy moneys.
An assignment of a policy by an infant by way of sale is not Policy sold or
void, but is voidable and within section 2 of the Infants' Belief an'^faifarft.
Act. If there is an intention to assign de jncesenti, there is a
complete assignment in equity, however informal the expression

of the intention may
The contract is one of continuing
be.
obligation and will be valid and binding on the infant if not
repudiated within a reasonaHe time after he attains majority.
If there is merely a promise or covenant to assign at a future time,
then there merely an executory promise and no contract of
is
continuing obligation, and the infant is not liable even although

he purports to ratify the promise after he has attained his
majority. On the other hand, the infant may enforce the con-
tract, and upon tendering an assignment sue for the purchase
price. Similarly if an infant agrees to purchase a policy and
there is an assignment de prcesenti, the property passes to him
subject to his right of repudiation on attaining majority. If
there merely a promise to assign to him, the contract is

is
executory and cannot be enforced against him, although he may

enforce upon attaining majority. No action for specific per-
it
formance can be brought by an infant, because until he has attained

majority he cannot forgo his right to repudiate the bargain (p).
A settlement of a policy by an infant, if made upon marriage PoUoy
r ^ -z
by an
settled
infant.
(n) Marlow v. Pitfield (1719), 1 ip) Hargrave v. Hargrave (1850),

P. Wms. 558. 12 Beav. 408 ; Flight v. Bolland
(0) Thurstanv.NoUinghamBuilding (1828), 4 Russ. 298.
Socisty, [1902] 1 Ch. 1.
with the sanction of the Court, is as binding as if made by a settlor

of full age. Otherwise a settlement by an infant cannot be enforced
against him if incomplete ; that is to say, a mere promise to settle
is not binding, and cannot be ratified. But a complete settlement
is binding subject to the infant's right of repudiation on attaining
full age (q). The repudiation must be made within a reasonable
time (r). In deciding what is reasonable, regard must be had to
all the circumstances of the case (s) ; but the infant settlor is held
to have full knowledge of the contents of the settlement, and
cannot excuse his delay on the ground of ignorance (t) ; nor does
the fact that the interest settled is a reversionary interest justify
the settlor waiting until the interest comes into possession before
making up his mind (i). Where an infant had settled all property
to which he might become entitled under the will of his father, and
his father died nearly four years after the settlor attained his
majority, and the settlor did not purport to repudiate until more
than a year after his father's death, it was held that the lapse of
time was unreasonable and that the settlor was bound by the
settlement (<).
Charge on Although a trustee may, with the consent of the Court, raise
contingent
reversion for
money for the maintenance of an infant beneficiary by charging
future main- his contingent reversion and insuring against the failure of the
tenance of
infant. contingency (it), an infant entitled to a contingent reversion not
being part of a trust estate cannot effectively charge his reversion
so as to secure repayment of a loan for future maintenance and
the premiums on a policy to provide against the failure of the
contingency.
Howarth, In re (1872), L. E. 8 Ch. 415

Howarth, Aninfant entitled to a freehold estate in possession applied to the Court
In re.
by next friend, and obtained an order charging the property in favour of
liis
his mother, who had maintained him, with the cost of past maintenance and
the costs of the proceedings. The Court held that as judgment could have been
recovered against the infant for past maintenance and execution levied on his
property, they had jurisdiction to make an order charging his property.
(q) Duncan v. Dixon (1890), 44 Jones, and the dicta in the House
Ch. D. 211 ; Smith's Trust, In re of Lords go far to overrule that
(1890), 25 L. R. Ir. 439. decision, which was to the efifeot that
(r) Cooper v. Cooper (1888), 13 a settlement made by an infant in
A C 88 contemplation of marriage could be
(«) Jones, In re, [1893] 2 Ch. 461. repudiated by her forty years later,
(«) Edwards v. Carter, [1893] A. C. when the property settled had at
360. This case was decided in the length come into possession.
House of Lords a few months after (m) Ante, p. 533.
the decision of North, J., in In re
INFANTS 575
Hamilton, In re (1885), 31 Ch. D. 291

Two infants were entitled to successive estates tail in
remainder after the Hamilton,
life estate of their father. The father had become bankrupt and liis life In re.
estate had been sold,and there was no fund applicable to the maintenance of
the infants. A case was submitted to an actuary to calculate what sum
should be paid at the death of the tenant for life in consideration
of £200 a
year until the first of the children attained twenty-one, provided that at
least one of the children should be living at the death of the
father and attain
twenty-one ; if neither chUd survived the father and attained twenty-one,
or
ifthe son died under twenty-one leaving issue, the lender to lose his
money,
the calculations to be made on the understanding that the infants'
lives were
insured. An
actuary advised that an insurance company might be found
to undertake the risk for £13,500 payable on the father's death subject
to the
above contingencies, the sum to carry interest at 5 per cent, from the death
of the father until one of the children attained majority, in the event of the
father's dying before either attained twenty-one. A summons was taken
out on behalf of the infants by their grandfather as next friend, asking that
£200 a year might be allowed for their maintenance, and that it might be
raised by charging their reversionary interest with the sum necessary to
purchase that allowance and pay the premiums on a policy providing against
the failui'e of the contingency. The Court of Appeal held that they had no
jurisdiction tomake such an order. The principle of In re Howarth was not
applicable because, firstly, though an action would lie against the infants for
necessaries supplied, no action could ever be brought against them for the
sum of £13,500 or for premiums on the policy, and that was what was sought
to be charged ; and, secondly, no execution could be obtained against an estate
in remainder. The Court could not make an order charging the estate which
would have a wider effect than a judgment at law against the infant.
Cadman v. Cadman (1886), 33 Ch. D. 397

There were death Cadman
five infants entitled to successive estates tail after the v.
of their grandmother, who was tenantThere was no fund applic- Cadman.

for life.
able for their maintenance, and they desired to raise it on their reversionary
interests. In order to meet the difficulty arising from the judgment in
In re Hamilton, the grandmother proposed to release her life interest so
that the first infant should have an estate in possession, the proposal for
insurance was dropped, and the Court was asked to make an order charging
the estate with £1000 for past maintenance of the five children and £800 per
annum for their future maintenance. The Court of Appeal refused to make
the order on the ground that no judgment could ever be obtained against
an infant for a sum advanced for future maintenance, nor could judgment be
obtained against the first infant in possession for necessaries supplied not
only for himself, but for Ms brothers and sisters. They doubted whether the
order made in In re Howarth was within the jurisdiction of the Court, but the
order now asked for was far beyond that, and could not be made.
An infant may by deed exercise a power of appointment, Infant may

provided the exercise of the power does not diminish or extinguish
;
power of some interest of his own in the property {y). In so far as the
appointment.
exercise of the power affects his own interests, it is voidable by
him in the same way as if it had been a disposition of his own
property.
Infant's will No will made by any person under the age of twenty-one
invalid.
years is valid {z), except that a will of personalty made by any
soldier on active service, or by any mariner or seaman at sea, is
valid if the testator was over the age of fourteen (a).
Infant's Where moneys such as policy moneys become payable to an

capacity to
give a valid infant who is beneficially entitled to it, caution must be observed
discharge for in making the payment. In so far as the infant's right in equity
policy
moneys. to receive the money is concerned, payment to him, upon his own
receipt, of the whole claim is a sufficient answer to any further
claim by him or his representatives (&). But an infant cannot
give a legal discharge (c). If he is the person legally entitled to
sue, the company should not pay to him until he is of full age,
because if they were to pay on his sole receipt as an infant, that
receipt would be no answer to some other claimant who had an
equitable charge on the policy moneys, of which the company
had no notice, and who afterwards instituted proceedings in the
infant's name against the company. Where the infant is only
entitled in equity and has not the legal title to sue in his own name,
the company are probably safe if they pay to him on his own receipt
and obtain a discharge from the person legally entitled to sue in
his own name. But the company cannot safely settle a claim
made by an infant for less than the full amount of the claim,
because his settlement would, like any other contract made by
him, be voidable. Where as indicated the company cannot get
a good discharge from an infant, they should pay into Court.
Infant Where an infant is entitled as beneficiary under a trust, the
beneficiary
under a trust.
company may safely pay the claim to the trustees on their receipt
alone, or they may settle the claim with the trustees if the settle-
ment is apparently a hona fide and reasonable settlement.
Infant Where an infant is entitled as trustee or executor, payment
trustee.
cannot safely be made to him on his sole receipt, but if there are
other trustees or executors acting with him, payment may be
made on the receipt of those who are sui juris.
(y) D'Angibau, In rb (1880), 15 ieev.Brown(1798), 4VeB. 362.
(6)
Ch. D. 228, 235. Dobbs V. Brain, [1892] 2 Q. B.
(c)
(z) Wills Act, 1837 (7 Will. 4 & 207, 209 Ledward v. Hassells (1856),
;
IVict. o. 26),s. 7. 2 V. & J. 370; Cory v. Qertchm

(a) 7 Will. 4 & 1 Vict. o. 26, s. 11 (1816), 2 Madd. 40.
Inthe Goods of Hiscock, [1901] P. 78.
LUNATICS 577
If an action is commenced or other proceedings are instituted Action by

infant.
by an infant, they ought to be in the name of the infant by his
" next friend " (d). If proceedings are commenced in the infant's
name without a next friend, the defendant may apply to have
the proceedings dismissed or the process amended by adding
a next friend (e), and the infant's solicitor may be ordered to
pay the costs of the application or of the action if dismissed (J).
The object of insisting on a next friend being joined is to have
a responsible person who will be liable for costs in the event of
the defendant being successful. If the defendant appears and
defends an action brought by an infant in his own name, and
takes no objection that a next friend has not been joined, he
waives the irregularity and cannot afterwards object No (gi).
action brought by an infant plaintiff, whether in his own name

or by a next friend, can be compromised without the consent of
the Court (k).
Section XI. —Lunatics

In considering the acts of persons of unsound mind it is im- Lunatics so
portant to note the distinction between lunatics as to whose inquisition,
property an order has been made by the Judge in Lunacy, and ^^^ lunatics
lunatics m respect of whose property no

.,...,,,
order has been
judicial
not so found.
made.
Where no order has been made by the Judge in Lunacy, the Lunatics not
management and control of his property and affairs still remains

with the lunatic. His legal position is as follows. His voluntary
acts purporting to dispose of his property are void (i). Thus a
voluntary settlement could not be enforced against a lunatic or Voluntary
^^ ^™^" ^'
his estate if it was proved that at the time he made it he was so
insane as to be unable to manage his affairs. Contracts and dis- Contracts or
positions of property for value are voidable by the lunatic or for^°aiue."^

those responsible for his estate, if it can be shown that he was so
insane as to be unable to manage his affairs, and that the other
party knew of his condition (k). A contract made by a person
(d) R. S. C, Order XVI. r. 16. (h) Brooke v. Lord Mostyn (1864),

(e) J'Zioîv. BoZZand (1828), 4 Russ. 2 De G. J. & 415 R. S. C,
S. 373, ;
298. Order XVI. r. 21.

(/) Oeilinger v. Gibbs (1897), 1 Ch. (i) Elliot v. Ince (1857), 7 De G.
479. M. & G. 475.
(g) Brocklebank, Ex parte (1877), (h) Imperial Loan Co. v. Stone,
6 Ch. D. 358. [1892] 1 Q. B. 599.
I.L. 37
of unsound mind is not voidable on the ground of insanity, if the

other party to the contract beheved at the time he made the con-
tract that the person with whom he was dealing was of sound
mind (k). The acts of a sane person are not affected by his sub-
Lucid sequent insanity, and the acts of a person generally insane are
intervals.
binding if done during a lucid interval (T). There is a presumption
Presumption
of sanity. in favour of sanity ; but if general insanity be proved, the onus
of proving a lucid interval rests on the person alleging it (Z).
Return of It may be observed as a deduction from the law stated above

premiums to
lunatic that a lunatic having insured his life or effected any other
insurer. insurance such as fire or accident could not afterwards claim
a return of premiums unless the company knew of his insanity
when they received the premiums. If they or their agent did
know of the insanity, it is submitted that the lunatic or those
representing his estate could elect to avoid the policy and recover
the premiums.
Discharge for The receipt of a lunatic for policy moneys due to him would
policy moneys
payable to be a sufficient discharge if the company did not know of his con-
lanatic.
dition ; but if they did, his receipt would not bind him, and the
company could not safely make payment to him, but should wait
until a committee or other person legally entitled to receive the
money is appointed, or else pay the money into Court.
Drunkenness. If a man is too drunk to know what he is about, he is legally
in a position similar to that of a lunatic ; his voluntary disposi-

tions are probably void, but his contracts and dispositions
for value are not void, but voidable if the other contracting
party knew his condition (m). His contracts may be ratified so
as to bind him if when sober he confirms them by word or deed (m).
Lunatics so A whose property an order has been made by a
lunatic as to
found.
Judge Lunacy is in a different position. Under the Lunacy
in
Act, 1890 (n), when a person is believed to be insane a near relative
may apply to the Judge in Lunacy for an order directing an in-
quisition whether such person is of unsound mind and incapable
of managing himself and his affairs (o). The alleged lunatic is
then examined before a jury in the High Court or before a Master
in Lunacy, and upon being found a lunatic the Judge in Lunacy
makes an order for the custody of his estate, and if necessary of
his person (p). The order for the custody of the lunatic's estate
(k) Imperial Loan Co. stone. (n) 53 & 54 Viet. c. 5.
[1892] 1 Q. B. 599. (o)53 & 54 Vict. c. 5, s. 90.
[1) Hallv.Warren{1804:),QV6a.G05. ip) 53 & 54 Vict. V. 5, s. 108.
(m) Matthews v. Baxter (1873),
L. R. 8 Ex. 132.
LUNATICS 579
has the effect of taking all property of the lunatic, whether real Control of
or personal, and whether in possession, reversion, remainder, con- passes^ to

tingency, or expectancy, out of the lunatic's control, and placing Crown repre-
it under the control and protection of the Crown (g). The Court committee.
appoints a committee, who represents the Crown and manages
the property subject to the direction of the Court. In certain
cases also the Judge in Lunacy may, without ordering an in-
quisition, but on beingby affidavit or otherwise, that a
satisfied,
person is a lunatic and unable to manage his affairs, make an

order appointing some person to manage his affairs for him, or
generally to exercise all power which might be exercised by a
committee (r).
Where a committee has been appointed, or where any order Lunatic
has been made as to the management of a lunatic's property, the p^ge of his'
whole property of the lunatic, or the property affected by the property,
order, having been taken away from the lunatic's control, cannot
be dealt with by him. In the case of In re Walker (s) it was held
by the Court of Appeal that a lunatic so found by inquisition,
and whose property was in the hands of a committee, could not
make a valid voluntary disposition of his property, even although
made during a Incid interval. The absolute control of the pro-
perty was for his protection vested in the Crown, and the lunatic
had absolutely no disposing power over it. Although this was
a voluntary disposition, the principle of the case seems to apply
equally to a disposition for value, and it is submitted that a
lunatic so found cannot, until the inquisition has been superseded
and the order for the protection of his property rescinded, do any
act, whether voluntary or for good consideration, which will bind
the estate in the hands of the committee, and that the ignorance
of the party contracting with the lunatic is immaterial.
It is submitted that the committee of a lunatic has power by Power of
his sole receipt to give a good discharge for any money which is
g°™™'good°
payable to the lunatic, and is paid in full to him. This has been discharge for
doubted, and as there is no actual decision to the effect that it is able to the
^'°^^^^°-
would probably be wiser for an insurance company to decline
so, it
to pay without an order from the Judge in Lunacy authorising

the committee to give a discharge for the money. Certainly
the company could not safely make a compromise with the com-
mittee without the sanction of the judge. The judge has power
(g) Weaker, In re, [1905] 1 Ch. 160. [s) [1905] 1 Ch. 160.
(r) 53 & 64 Vict. c. 5, s. 116.
to authorise the committee to sell any property belonging to the

lunatic, and to deal with his property in other ways specified in
the Act and there can be little doubt that the general powers
(i),
of management given to the Court are sufficient to unable the judge
to authorise a compromise for the lunatic's benefit.
Section XII. —Bankruptcy (u)
Petition, The property of a debtor, whether legal or equitable, including

his choses in action, passes on his bankruptcy to the trustee in
bankruptcy. When a petition in bankruptcy is presented, the

Receiving Court first makes a receiving order, which places the Official
order.
Eeceiver in the possession and control of the debtor's property
so as to protect it pending the meetings of creditors, and their
decision as to whether they will acceptsome scheme of arrangement
Adjudication, or make the debtor bankrupt (w). If no scheme of arrangement
is accepted, the debtor is adjudged bankrupt, and then the debtor's
property vests in the Official Eeceiver as trustee in bankruptcy

until a trustee is appointed by the creditors, when the property
Official passes to him (x). The position of the Official Eeceiver before
Receiver.
adjudication, and that of the Official Eeceiver or trustee after
adjudication are totally distinct. The receiving order does not
divest the debtor of his property, and he may continue to bring
actions in his own name {y). The Official Eeceiver cannot take
any proceedings in his own name to recover the estate (z), nor
need he be joined as plaintiff in an action brought by the debtor {a).
The Official Eeceiver's duty is confined to management and

protection {a). He is entitled to take possession of all the debtor's
property for this purpose, and if the debtor recovers anything
by action he must hand over the proceeds to the Official Eeceiver(2).
But although the Official Eeceiver cannot sue, he can apparently
give a good discharge to any debtor of the debtor who thinks fit
to pay directly to him instead of to the debtor (z). The Official
Eeceiver before adjudication could not, however, settle any claim
so as to bind himself or the trustee after adjudication.
(t) 53 & 54 Vict. 0. 5, s. 120. (w) Bankruptcy Act, 1883 (46 & 47
(m) Williams on Bankruptcy (9th Vict. c. 52), ss. 5, 9.
edition), 1908 Wace on Bankruptcy,
; {x) B. A. ss. 20, 54.
1904 ; Chalmers and Hough on Bank- iy) Rhodes v. Dawson (1886), 16
ruptcy (6th edition), 1906 ; Ring- Q. B. D. 548.
vpood on Bankruptcy (10th edition) ; {z) Sartoris,In re, [1892] 1 Ch. 11.
May on Fraudulent and Voluntary (a) Berry, In re, [1896] 1 Ch. 939.
Conveyances (3rd edition), 1908.
—
BANKRUPTCY 581
Upon adjudication the whole property, including all choses All property
in action, passes to the Official Eeceiver, and, upon the appoint- troaTee."
ment of a trustee, to the trustee, without any conveyance, assign-
ment, or transfer whatever (b).
The Official Eeceiver takes his title as trustee from the date Trustee's title,
of adjudication (c), the trustee appointed by creditors takes his

titlefrom the date when his appointment is certified by the
Board of Trade {d).
Bankruptcy Act, 1883, sees. 44, 50 (5), 54

44. The property of the bankrupt divisible amongst his creditors, and in 46 & 47 Viot.
this Act referred to as the property of the bankrupt, shall not comprise the "• ^2> ^s- '^^'
^'^ ^^^' '''"^^*-
following particulars :-
(1) Property held by the banki'upt on trust for any other person ;
(2) The tools, if any, of his tradeand the necessary wearing apparel and
bedding of himself, his wife, and children to a value inclusive of tools and
apparel and bedding not exceeding £20 in the whole.
But it shall comprise the following particulars :
(i) All such property as may belong to or be vested in the bankrupt at the
commencement of the bankruptcy, or may be acquired by or devolve
on him before the discharge and ;
(ii) The capacity to exercise and take proceedings for exercising all such
powers in or over or in respect of property as might have been
exercised by the bankrupt for his own benefit at the commencement
of the bankruptcy or before his discharge, except the right of nomina-
tion to a vacant ecclesiastical beneiice and ;
(iii) All goods being at the commencement of the bankruptcy in the pos-
session, order, or disposition of the bankrupt in his trade or business
by the consent or permission of the true owner under such circum-
stances that he is the reputed owner thereof Provided that things
:
in action other than debts due or growing due to the bankrupt in

the course of his trade or business shall not be deemed goods within
the meaning of this section.
50. — (5) Where any part of the property of the bankrupt consists of things
in action, such things shall be deemed to have been duly assigned to the
trustee.
54. — (1) Until a trustee is appointed the official receiver shall be the
and immediately on a debtor being adjudged
trustee for the purposes of this Act,
bankrupt the property of the bankrupt shall vest in the trustee.
(2) On the appointment of a trustee the property shall forthwith pass
to and vest in the trustee appointed.
(3) The property of the bankrupt shall pass from trustee to trustee, in-
cluding under that term the official receiver when he fills the office of trustee,
(6) B. A. 1883, ss. 44, 54, 50 (5). of an office copy of the adjudication
(c) B. A. 1883, s. 54 (1). order and a copy of the Board of
(d) B. A. 1883, s. 21 (4). The Trade certificate' under the seal of
trustee's title is proved by production the Board sa. 138, 140.
:
and shall vest in the trustee for the time being during his continuance in office
without any conveyance, assignment, or transfer whatever.

(4) The certificate of appointment of a trustee shall, for all purposes of
any law in force in any part of the British Dominions requiring registration,
enrolment, or recording of conveyances or assignment of property, be deemed
to be a conveyance or assignment of property, and may be registered, enrolled,
and recorded accordingly.
Every Practically every beneficial right or interest which a man may

interest in
policy passes. have in or in relation to a policy of insurance passes to his trustee
in bankruptcy for the benefit of his creditors.
Powers of Where the bankrupt has a general power of appointment, the

appointment.
trustee in bankruptcy may exercise the power for the benefit of
creditors.
Powers of And so where a settlor has reserved absolute power to revoke

revocation.
a settlement, the trustee in bankruptcy may equally revoke it (e).
Powers But where the power of appointment or revocation is only

exercisable
only with exercisable jointly by the bankrupt and another, or where it
consent. requires the consent of some other person, the trustee in bank-
ruptcy caimot claim the benefit of the power or interfere with
the bankrupt's exercising it jointly or with the necessary consent(/).
Contingent If a bankrupt has any contingent interest in a policy which
interests,
is of any realisable value, that interest passes to the trustee, and
but not a may be realised by him. But where there is a mere possibility
mere possi-
bility of
of an interest accruing, and the possibility is of no realisable
interest.
value whatever, the prospective interest does not pass to the
trustee.

Dever, Ex A American insurance company had been issued on the appli-
policy in an
parte.
cation of a married woman on the life of her husband for the benefit of her
and her children, and failing them, for the benefit of the husband's repre-
sentatives. The policy was subject to a condition that after the premiums had
been paid for ten years the owner might elect to take the surrender value.
The husband paid the premiums until he became bankrupt, and then the wife
paid them out of her separate property. Some time after the husband had
obtained his discharge the wife elected to take the surrender value of the
policy. The amount was claimed by the husband's trustee in bankruptcy,
but the Court held that even although the husband might be entitled to the
surrender value, as to which there was a difference ot opinion, yet it was only
available in the event of the wife, to whom the policy belonged, exercising her
option as owner, and therefore as the interest of the husband in the policy, if
(e)Dunlop v. Johnston (1867), Sim. 150 ; Lane Fox, In re, [1900]

L. R. 1 So. App. 109. 2 Q. B. 508.
(/) Jones V. Winwood (1841), 10
BANKRUPTCY 583
any, was that of a mere possibility depending on the exercise of a power by

another person, that was not an interest which passed to the trustee in bank-
ruptcy.
Watson, In re (1890), 7 Mor. 65

A policy on the married woman was effected by the husband in
life of a Watson, In re.
her name before the Married Women's Property Acts. The policy, being a
chose in action, was therefore the property of the wife, but her husband was
entitled to he survived her. The husband paid all the premiums until
it if
he became bankrupt. His trustee in bankruptcy claimed the benefit of his

contingent interest in the policy. The Court directed that the policy should
remain in the possession of the trustee on his undertaking to pay the premiums
during the joint lives of the spouses. If the wife died first the trustee would
then be entitled to the policy moneys, and if the husband died first the wife
would be entitled to the policy without having to repay the premiums to the
trustee.
Property held by a bankrupt in trust for any other person Property held
does not pass to his trustee in bankruptcy, and the legal title, if iif trust.'^
vested in the bankrupt, remains in him notwithstanding the

bankruptcy (g). Property in trust within the meaning of this
provision includes all property as to which the beneficial owner-
ship is not in him, but in another. Thus where a chose in action,
such as a policy of insurance, has been assigned by the bankrupt
so as to pass the equitable title, not merely by way of charge or
mortgage, but absolutely, the trustee in bankruptcy takes nothing,
notwithstanding that the legal right to sue in law remains with
the bankrupt (h).
And where the assignment is not absolute, but by way of Trustee takes
charge or mortgage, the trustee takes the same rights only as equitable
<=l^™3-
ihe bankrupt had, that is, subject to all equitable mortgages and
charges. Even since the PoHcies of Assurance Act, 1867, the Notice to
trustee cannot defeat equitable assignees or incumbrancers by trusteem

giving notice of his title to the office before they have given notice bankruptcy.
of their assignment or incumbrance (i). If such assignments or

incumbrances are impeachable by the trustee as having been
made before adjudication, but after the first act of bankruptcy,
or as being voluntary or fraudulent assignments, his title to im-
peach them does not depend on giving notice to the office (k).
But the trustee in bankruptcy ought to give notice to the office
ig) B. A. 1883, s. 44. 719 ; Ibhetson, Ex parte (1878), 8

(h) Irving, In re (1877), 7 Ch. D. , Ch. D. 519.
419. (Jc) Caldwell, Ex parte (1871), L. R.
(i) Wallis, In re, [1902] 1 K. B. 13 Bq. 188.
;
in order to protect himself against assignments and incumbrances

made subsequent to the adjudication, for if the company has no
notice of the bankruptcy, any lond fide purchaser for value may
acquire priority by giving prior notice {I).
Trustee dis- The trustee in bankruptcy becoming entitled to the bank-

claiming
policy or rupt's policy of insurance may realise it by sale or surrender for
failing to keep the he may keep up for the benefit
benefit of the creditors, or it
it on foot.
of the estate in the event of the bankrupt's death. But where the
trustee refused to pay the premiums on the bankrupt's policies
and disclaimed in them, and the bankrupt died, his
all interest
representatives were held entitled to the policy moneys as against

the trustee (m). Apparently, however, the trustee in bankruptcy
is neither bound to pay the premiums nor disclaim the poHcy
but if a third person has kept the pohcy on foot during the bank-
rupt's insolvency, and the trustee afterwards claims the benefit
of the policy may compel the trustee to repay
moneys, the Court
out of the policy moneys the sums expended in so keeping the
policy on foot (n).
Where third Where a third person has kept the policy on foot by pay-
person has
paid the
ment of premiums before the bankruptcy, and at the request of
premiums. the bankrupt, such person will have a lien on the policy as against
the bankrupt, and the trustee will take subject to the equity.
Where with the knowledge of the trustee in bankruptcy a third
person has voluntarily paid premiums after the date of the bank-
ruptcy, the trustee, although not bound in law or equity to repay
the premiums, may be directed as an officer of the Court to do so,
on the principle that the Court will not allow its officer, the trustee
in bankruptcy, to retain moneys for distribution amongst creditors
where it would be contrary to fair deahng to do so (n).
Tyler, In re, [1907] 1 K. B. 865
Tyler, In re. A debtor was adjudicated bankrupt on August 27, 1896. A trustee was
appointed, but was subsequently released, and the Oflfioial Receiver became
ex officio trustee. At the commencement of the bankruptcy the bankrupt

was entitled to two policies of insurance for £300 and £500. In 1893 he
mortgaged the policies to his bankers to secure an overdraft of £400, and
covenanted to pay the premiums. In 1895 the bankrupt was financially
embarrassed, and requested his wife to pay the interest on the overdraft and
{I) BuaselVs Policy Trusts, In re (m) Learmouth, In re (1866), 14

(1872), L. R. 15 Eq. 26; Lloyd v. W. R. 628.
Banks (1868), L. B. 3 Ch. 488; {n) Tyler, In re, [1907] 1 K. B.
Palmer v. Locke (1881), 18 Ch. D. 865 ; Hall, In re, [1907] 1 K. B. 875.
381 ; Stone, In re, [1893] W. N. 50.
BANKRUPTCY 585
the premiums in order to save the poUoies, and promised to repay her. The
wife accordingly made these payments from December, 1895, until the bank.
rupt's death in March, 1906, a total of £481 lis. 2d. The insurance company
paid the policy moneys to the bank, and they, after paying off the overdraft, ^
had a balance in their hands of £514 16s. 8d. The Official Receiver claimed the
whole of this sum as the property of the bankrupt. The widow claimed a
return of the moneys expended by her. Bigham, J., held that although the
widow had no legal right, and probably also no equitable right, to recover
the money, the trustee, as officer of the Court, must do what was just and right,
and as it would be a great injustice to retain the whole fund without refunding
to the widow the moneys she had paid to keep the policies on foot, he ordered
that she should be paid £481 14s. 2d. It appeared that neither the trustee nor
the Official Receiver had any knowledge that the payments were being made,
but the bankrupt had stated in liis preliminary examination, taken in 1901 by
a clerk of the Official Receiver's predecessor in office, that his wife had always
paid the premiums and interest. On appeal the Court of Appeal affirmed the
judgment of Bigham, J. They indorsed the principle that the trustee in
bankruptcy as an officer of the Court must act as a high-minded man, and
not always strictly on his legal rights, and having regard to the circumstances
of the case, and especially to the fact that it came to the knowledge of the
trustee for the time being that the wife was paying the premiums and that
she was allowed to go on paying the premiums, the Court would be allowing
its officer to do, from a moral point of view, a dishonest thing if it allowed the
trustee to keep the moneys without refunding what the wife had paid. The
Court also thought that in this case there was a promise by the
sufficient
husband before the bankruptcy to make the premiums and interest paid by
the wife, on the faith of that promise, a charge upon the policy enforceable in
equity against the bankrupt and his trustee quite apart from the other ground
of their decision.
If a bankrupt does not he has a poHcy where bank-

disclose the fact that
on his hfe, and continues to pay the premiums thereon after he ™P' ^^^ "°*
has obtained his discharge, the trustee in bankruptcy may claim policy,
the policy or its proceeds whenever he becomes aware of its
existence, and is not bound to allow the bankrupt or his repre-

sentatives anything in respect of premiums paid.
Tapster v. Ward (1909), 101 L. T. 503

In 1879 A effected a policy on his own life. He paid one premium upon Tapster v.
it, and then, during the currency of the first year, proceedings for the liquida- Ward.
tion of his affairs were commenced by him under the Bankruptcy Act, 1869.
A trustee was appointed, and he made an arrangement with his creditors, and
the liquidation was closed in 1880. The existence of the policy was never
disclosed to the trustee. A continued to pay premiums until his death in 1907.
The Official Receiver then claimed the policy moneys aa trustee in the liquida-
tion, and it was held that he was entitled to the whole proceeds.
Rights which the bankrupt acquires during bankruptcy do Property

not pass to the trustee unless and until they are claimed by him ; bankrupt
after adjudi- and as regards personal property and choses in action so acquired,
cation.
any transactions with any person dealing with the bankrupt
bond fide and for value, whether with or without knowledge of the
bankruptcy, are valid against the trustee (o). But the assignee
for value of a chose in action must perfect his title against the
trustee by giving notice to the debtor or holder of the fund before
the trustee has given notice to such debtor or holder that he
claims the money on behalf of the estate (p). As between the
trustee in bankruptcy and an assignee for value of an after-
acquired chose in action, priority depends on priority of notice (p).

Persons taking from the bankrupt as personal representatives,
legatees, or voluntary assignees acquire no better title than the
bankrupt, and the trustee can follow the after-acquired property
and recover it from them, so long as it remains in their possession
and can be identified (g). Until the trustee intervenes the bank-
rupt or his voluntary assignee may sue in his own name in respect
of after-acquired choses in action, but if the trustee has given

notice that he claims the right no further proceedings can be
taken except in his name, and 'the trustee is entitled to be joined
as a party in any proceedings then pending (r).
Bennett, In re, [1907] 1 K. B. 149

Bennett, A debtor was adjudicated, bankrupt in 1896. There were then no assets
In re.
of any value, and the liabihties were £300. In 1904 the bankrupt efEeoted
two policies of life insurance on his own life. He died in 1905 intestate, and
his brother, without knowledge of the bankruptcy, took out letters of adminis-
tration and swore the estate at £304 15.s., being the amount due on the two
policies. The brother received the policy moneys, and after deducting the
costs of the administration distributed it among himself and six others as
next of kin, retaining in his own hands his own share and the shares of the
infants. It was held that the trustee in bankruptcy was entitled to recover
from the brother as administrator the shares which he retained, and was
entitled to recover from each of the next of kin the share which they had
received.
Title to When a bankrupt receives his discharge, the property which

bankruptcy ^las vested in the trustee does not ipso facto revest in the bank-
closed, j-upt. In so far ^g it has not been reaHsed, it is still available for
(o) Cohen v. Mitchell (1890), 25 688 ;Mercer v. Vans Colina, [1900]

Q. B. D. 262 ;New Land Develop- 1 Q. B. 130 n.
ment, In re, [1892] 2 Ch. 138 ; Clayton (q) Bennett, In re, [1907] 1 K. B.
and Barclay's Contract, In re, [1895] 149 ;Ball, In re, [1899] 2 Ir. R. 313.
2 Ch. 212 ; Hunt v. Fripp, [1898] 1 (r) Carter, Ex parte (1876), 2
Ch. 675. Ch. D. 806 Emden v. Carte (1881),
;
ip) Beall, In re, [1899] 1 Q. B. 17 Ch. D. 768.

BANKRUPTCY 587
the benefit of creditors until they have been paid in full. Where a
bankruptcy and the trustee has been discharged, the pro-
is closed
perty which has not been realised and distributed vests in the
Official Eeceiver, and it is his duty to get in and distribute it
when he can (s).
Property once vested in the trustee does not revest in the

bankrupt until either the bankruptcy is annulled and the property
is revested in the bankrupt by order of the Court (i), or until the
trustee or Official Eeceiver reassigns the property to the bankrupt,
which he may do either because the property is of no value to
the estate, as in the case of a policy with no surrender value, or
because the creditors have been satisfied either by a composition
or by payment in full.
Sometimes difficulty arises from the fact that a policy was of
no value at the time of the bankruptcy, and was therefore dis-

regarded and the bankruptcy wound up without any order of
the Court or assignment revesting the title in the bankrupt. It
is clear from the decision in Tapster v. Ward that the policy,
although of no value at the time, vests in the trustee in bank-
ruptcy. No doubt the conduct of a trustee who was aware
of the existence of a policy might be such as to amount to an
abandonment of it to the bankrupt (m), but an abandonment would
only revest the purely equitable right to the policy. It is sub-
mitted that the right to sue at law can only be revested in the
bankrupt by an order of the Court, or a written assignment from
the trustee or Official Eeceiver.
By the reputed ownership clause in the Bankruptcy Act, all Reputed
°'^^^^^ 'P'
goods which at the date of the bankruptcy are in the possession,
order, and disposition of a bankrupt in his trade or business with
the consent of the true owner, pass to his trustee on the ground
that the true owner must suffer for having allowed him to have
false credit. Choses in action, including poHcies of insurance,
originally came within the reputed ownership clause, but since 1869
are expressly excepted from its operation (w). In Ireland, however,
choses in action are not excepted from the order and disposition
clause in the Irish Bankruptcy statutes, and the law on this
point is still the same as it was in England before 1869. In view
(s) B. A. 1883, s. 160. Learmonih, In re (1866), 14 W. B.

(t) B. A. 1883, s. 35. 628.
(u) Whyie v. Northern Heritable (w) Ibbetson, Ex parte (1878), 8
Securities Co., [1891] A. C. 608 ; Ch. D. 519.
;
of this fact, the Enghsh decisions before 1869 may be dis-
cussed. These decisions are still useful even in England, because
(1) the notice of an assignment required to be received by the

holder of a fund in order to take the chose in action out of the
order and disposition of the assignor is probably just the same
kind of notice as is required to fix the holder with the liability
which follows from having notice of an equity, and to prevent

any subsequent assignee from obtaining priority by giving an
earlier notice, and (2) where circumstances formerly warranted
a finding that a chose in action was in the order and disposition

of a bankrupt with the consent of the true owner, there will now
be at least prima facie evidence of fraud to support an apphcation
by the trustee in bankruptcy to have it set aside under the 47th

section of the Bankruptcy Act or under 13 Eliz. c. 5.
What is In order to take a chose in action out of the order and dis-
leputed
position of a bankrupt, notice to the holder of the fund was
absolutely necessary, notwithstanding that the assignment was by
formal deed and that the documents of title had been deposited
(x)
with the assignee (y). The notice of the assignment had to be

definite, and a mere vague or ambiguous statement to the holder
of the fund which might put him on inquiry was not suffi-
cient (z). The notice was not required to be in writing (a), nor
to be given with the intention of perfecting the assignment (&).
Primarily the holder of the fund would receive notice from the
assignee, but if he had obtained elsewhere definite information
that the chose in action had been assigned, that was sufficient (c).
It was not necessary that he should have notice of the precise

nature of the assignment, as, for instance, whether it was a sale
or a mortgage (d). Notice to an agent of the holder was

sufficient if he received it under circumstances which made it
his apparent duty as agent to communicate it to his principal (e)
(x) Pfe66, Zn re (1867), 36 L. J. Ch. Ch. 555; Edwards v. Soott (1840),

341 ; Tennyson, Ex parte (1832), 2 Scott N. R. 266.
Mont. & Bli. 67. (6) Smith v. Smith (1833), 2 Cro. &
Williams v. Thorp (1828), 2
(y) M. 231.
Sim. 257 ; Thompson v. Tomkins (c) Stewart, Ex parte (1865), 11
(1862), 2 Dr. & Sm. 8 ; Oihson v. Jur. N. S. 25 ; Tibbits v. George
Overbury (1841), 7 M. & W. 555. (1836), 5 A. & E. 107.
(z) West V. Reid (1843), 2 Hare, (d) Alletson v. Chichester (1875),
249; Carbis, Ex parte (1834), 4 L. R. 10 C. P. 319 ; Stright, Ex parte
Dea. & Ch. 354; Edwards w. Martin (1832), 2 Dea. & Ch. 314; Bamett,
(1865), L. R. 1 Eq. 121 . Ex parte (1845), De G., Bey. Cas. 194.
(a) Alletson Chichester (1875),
v. (e) NoHh British v. Hallett (1861),
L. R. 10 C. P. 319 North British v. ; 7 Jur. N. S. 1263 ; Tibbits v. George
Hallett {1S61), 7 Jut. N. S. 1263; (1836), 5 A. & E. 107.
Agra Bank, Ex parte (1868), L. R. 3
BANKRUPTCY 589
except where the agent receiving notice was himself a party to

the assignment, or where it was to his interest not to communicate
the matter (/). Where an insurance company's agent acted as
sohcitor for both assignor and assignee of a poHcy in their office,
it was held that they had notice of the assignment (g) and where ;
a director of an insurance company held a policy in the company,

and deposited it with a bank to secure advances, and one of the
bankers was the company's auditor, it was held that the company
had sufficient notice of the assignment to take the policy out of
the order and disposition of the director Qi). This, however,
seems a doubtful decision, because, in so far as the knowledge of
the director was concerned, it was in his interest as assignor to
conceal the assignment, and as to the knowledge of the banker,
he had as auditor no apparent duty to communicate the matter
to the insurance company. Where a director or other servant
or agent of a company is the assignor of a policy, or acts as solicitor
for an assignor, his interest on his own or his client's behalf is to
conceal the assignment, and therefore some further notice to
the company is necessary in order to take the policy out of the
order and disposition of the assignor (i). Where such director,
servant, or agent is himself an assignee of the policy, he cannot be
heard to say that notice to himself is notice to the company, because,
although it was his duty as agent to communicate it, he cannot
so completely sever his identity as to say that as assignee he is
in no way answerable for his breach of duty as agent. Where

such director, servant, or agent is a solicitor for an assignee, his
knowledge is probably sufficient notice to the company.
In the case of a mortgagee or assignee becoming bankrupt
after having sub-mortgaged or sub-assigned his chose in action,
notice of such sub-mortgage or sub-assignment must have been
given to the holders of the fund in order to take the chose in
action out of the order and disposition of the bankrupt. For
this purpose notice to the mortgagor or assignor is not necessary (k).
In Ireland it has been held that since the Policies of Assurance Reputed
Act, 1867, notice of an assignment must be in writing, and that
™
i^kn^^'''
(/) Thompson v. Speirs (1845), De G. & J. 163 ; Thompson \. Speirs

13 Sim. 469 BusselVs Policy Trusts,
; (1845), 13 Sim. 469 ; Russell's Policy
In re (1872), L. R. 15 Eq. 26. Trusts, In re (1872), L. R. 15 Eq. 26 ;
(g) Gale v. Lewis (1846), 9 Q. B. Henessy, Ex parte (1842), 5 Ir. Eq.
742. 259.
{h) Waithman, Ex parte (1835), 4 (fc) Barnett, Ex parte (1845), De
Dea. & Ch. 412. G., Bey. Gas. 194 ; Jones v. Gibbons
(i) Boulton, Ex parte (1857), 1 (1804), 9 Ves. 407.
an oral notice is ineffective to take the policy out of the order

and disposition of the assignor (Z), and as a logical extension of
this principle it might also be held that unless the notice is a

formal notice addressed to the principal office named in the policy,
it would be equally ineffective. The correctness of this decision
is, however, extremely doubtfuL It has also been held in

Ireland that where a notice addressed to the secretary of the-
insurance company at the principal office is posted, that is suffi-
cient to protect the assignee, although the notice may never have
been received by the company (m). And this, it is conceived,
is right, because the assignee having done everything he could be

expected to do, the policy, if it remains in the order and disposi
tion of the bankrupt, does not do so with the consent of the true
owner.
Reputed Where goods belonging to A were in the order and disposition
ownership of
goods and
of B,and so passed to B's trustee in bankruptcy, it was held that
fire insurance, the benefit of afire insurance policy effected by A did not pass
to the trustee, and on the goods being destroyed by fire and the
company paying the loss to A, the trustee had no right to the
policy moneys (n).
Right of After adjudication the trustee (or Official Receiver acting
b™ikru T ^^ trustee (o)) may any of the bankrupt's property (p), including
sell
to sell policies policies of assurance, and claims then in existence and in respect
upon or of which actions are pending (g), and his receipt is a good dis-
settle olainjs, charge for any debt due to the bankrupt (r). With the consent
of the committee of inspection the trustee may bring an action
or make a binding compromise in respect of any claim (s), and
with the same consent he may mortgage or pledge any of the
bankrupt's property (<). The bankrupt himself cannot during
bankruptcy sue in respect of any property or chose in action
which has passed to the trustee (m). If before adjudication an
action in respect of such property has been commenced by the
{I) Young, In re (1890), 25 L. R. Ir. (?) Scear v. Lawson (1880), 15

372. Ch. D. 426 ; Guy v. Churchill (1888),
(m) Hickey, In re (1875), Ir. R. 10 40 Ch. D. 481.
Eq. 117. (r) B. A. 1883, s. 56 (2).
(n) Smith, Ex parte (1818), 3 (s) B. A. 1883,8. 57 (2) (6).
Madd. 63. (t) B. A. 1883, s. 57 (5).
(o) Turquand v. Board of Trade (m) Motion V. Moojen (1872), 14
(1886), 11 A. C. 286. Eq. 202.
(p) B. A. 1883,8. 56(1).
— —
BANKRUPTCY 591
bankrupt, and is pending at the date of the adjudication, the

bankrupt cannot continue the proceedings (x). The defendant
must give notice to the trustee, who may elect to continue the
action, and apply to be made a party (y), and if the trustee decHnes
to proceed with the action it may be stayed, and if stayed, the
stay caimot afterwards be removed at the instance of the bank-
rupt when he has obtained his discharge (z). The trustee, although
he has declined to proceed with the action commenced by the
bankrupt, may bring a fresh action in his own name in respect
of the same matter (a).
Bankruptcy Act, 1883, sees. 58 (1) (2), 57

56. Subject to the provisions of this Act the trustee may do all or any of Powers of
the following things : trustee to
deal with
(1) Sell all or any part of the property of the bankrupt (including the
property.
goodwill of the business, any, and the book debts due or growing
if
due to the bankrupt) by public auction or private contract, with

power to transfer the whole thereof to any person or company,
or to sell the same in parcels.
(2) Give receipts for any money received by him, which receipts shall
effectually discharge the person paying the money from all responsi-
bility in respect of the application thereof.
57. The trustee may, with the permission of the committee of inspection, Powers
do all orany of the following things : exercisable by
(1) Carry on the business of the bankrupt so far as may be necessary for '''^"^ .° .".
the beneficial vnnding-up of the same. thecommittee
(2) Bring, institute, or defend any action or other legal proceeding relating of inspection.
to the property of the bankrupt.
(3) Employ a solicitor or other agent to take any proceedings or do any
business which may be sanctioned by the committee of inspection.
(4) Accept as the consideration for the sale of any property of the bank-
rupt a sum of money payable at a future time, subject to such stipu-
and otherwise as the committee think fit.
lations as to security
(5) Mortgage or pledge any part of the property of the bankrupt for the
purpose of raising money for the payment of his debts.
(6) Refer any dispute to arbitration, compromise all debts, claims, and
liabilities, whether present or future, certain or contingent, liquidated
or unliquidated, subsisting or supposed to subsist between the bank-
rupt and any person who may have incurred any liability to the
bankrupt, on the receipt of such sums payable at such times and
generally on such terms as may be agreed on.
(7) Make such compromise or other arrangement as may be thought
(x) JachsonY. North Eastern (19,11), (z) Selig v. Lion, [1891] 1 Q. B. 513.
6 Ch. D. 844. (a) Bennett v. Oamgee (1876), 2
{y) Rules of Supreme Court, Order Ex. D. 11.
XVII. r. 4.
expedient with creditors or persons claiming to be creditors in

respect ofany debts provable under the bankruptcy.
(8) Make such oomproniise or other arrangement as may be thought ex-
pedient with respect to any claim arising out of or incidental to the
property of the bankrupt, made or capable of being made on the
trustee by by the trustee on any person.
an3' person or
(9) Divide in form amongst the creditors according to its esti-
its existing
mated value any property which from its peculiar nature or other
special circumstances cannot be readily or advantageously sold.
The permission given for the purposes of this section shall not be a general
permission to do all or any of the above-mentioned things, but shall only be
a permission to do a particular thing or things for which permission is sought

in the specified case or oases.
Trustee's title The trustee in bankruptcy succeeds to the rights of the bank-
to first act of ^'ip* subject to equities ;

that is to say, with certain exceptions
bankruptcy, hg takes no better title than the bankrupt himself, and he takes
it subject to the same charges. The title of the trustee, however,
relates back to the first act of bankruptcy committed by the
debtor within the three months immediately preceding the pre-
sentation of the petition (b), and consequently the act constituting
such first act of bankruptcy, if a conveyance of or charge upon the
bankrupt's property, and all transactions with the property after

that date, are, subject to certain exceptions, void as against the
trustee in bankruptcy (c). The principal exceptions are executions
and attachments completed before the date of the receiving
order (d), and payments made to the bankrupt or by the bank-
rupt to his creditors, and all transactions by or with the bankrupt
for valuable consideration made before the date of the receiving
order and in good faith, without notice of an act of bankruptcy (e).
Bankruptcy Act, 1883, sees. 43, 45, and 49

Relation back 43. The bankruptcy a debtor, whether the same takes place on the
of
of trustee's debtor's own petition or upon that of a creditor or creditors, shall be deemed
t'*^l^-
to have relation back to and to commence at the time of the act of bank-
ruptcy being committed on which a receiving order is made against him, or
if the bankrupt is proved to have committed more acts of bankruptcy than
one, to have relation back to and to commence at the time of the first of the
acts of bankruptcy proved to have been committed by the bankrupt within
three months next preceding the date of the presentation of the bankruptcy
petition; but no bankruptcy petition, receiving order, or adjudication shall
(6) B. A. 1883, s. 43. (d) B. A. 1883, s. 45.

(c) Carl Hirth, In re, [1899] 1 Q. B. (e) B. A. 1883, s. 49.
612.
; — ; —
BANKEUPTOY 593
be rendered invalid by reason of any act of bankruptcy anterior to the debt of

the petitioning creditor.
45. — (1) Where a creditor has issued execution against the goods or lands Restriction
of a debtor, or lias attached any debt due to him, he shall not be entitled to ° "B}"'^ o\
crGciiiJor unciGi"
retain the benefit of the execution or attachment against the trustee in bank- execution or
ruptcy of the debtor unless he has completed the execution or attachment attachment,
before the date of the receiving order and before notice of the presentation
of any bankruptcy petition by or against the debtor, or of the commission of
any available act of bankruptcy by the debtor.
(2) For the purposes of this Act an execution against goods is completed by
seizure and sale and an attachment of a debt is completed by receipt of the
;
debt, and an execution against land is completed by seizure, or in the case of

an equitable interest by the appointment of a receiver.
49. Subject to the foregoing provisions of this Act with respect to the effect Protection of
of bankruptcy on an execution or attachment, and with respect to the avoidance ^°"" *"5
of certain settlements and preferences, nothing in this Act shall invalidate in without
the case of a bankruptcy notice.
(A) Any payment by the bankrupt to any of his creditors ;
(B) Any payment or delivery to the bankrupt

(C) Any conveyance or assignment by the bankrupt for valuable considera.
tion
(D) Any contract, dealing, or transaction by or with the bankrupt for
valuable consideration.
Provided that both the following conditions are complied with, namely
(1) The payment, delivery, conveyance, assignment, contract, dealing, or
transaction, as the case may be, takes place before the date of the
receiving order ; and
(2) The person other than the debtor to, by, or with whom the payment,
delivery, conveyance, assignment, contract, dealing, or transaction
was made, executed, or entered into has not at the time of the pay-
ment, delivery, or conveyance, assignment, contract, dealing, or
transaction, notice of any available act of bankruptcy committed by
the bankrupt before that time.
Transactions with the debtor, such as receiving payment of a Even an act

of bankruptcy
debt (J), or taking security for an unpaid debt (g), or purchasing
the debtor's property (h), are protected under section 49 if the tected if
°^^^^-
party dealing with the debtor acts in good faith, and the fact
that the transaction is in itself an act of bankruptcy or in fraud
of creditors does not affect the right of the party dealing with the
debtor Qi). If, however, the party dealing with the debtor acts in
bad faith, that is to say, with knowledge of the debtor's intention
to defraud his creditors, he cannot claim protection under this
section, even although the transaction was before the receiving
order and without notice of an act of bankruptcy (i).
U ) Badham, In re (1%QZ), IQ M.OT. (h) Shears v. Goddard, [1896] 1

252. Q. B. 406.
{g) Dunkley and Son, In re, [1905] (i) Juices, In re, [1902] 2 K. B. 58.
2 K. B. 683.
I.L. 88
What consti- Notice of an act of bankruptcy must be notice that an act of

tutes notice of
an act of
bankruptcy has in fact been committed. Notice that the debtor
bankruptcy. intends to commit an act of bankruptcy is not sufficient, as where
the party deahng with the debtor had notice that the debtor had
signed a declaration of insolvency and intended to file it (/c), or
where he had notice that the debtor had instructed his solicitors
to prepare a notice to creditors that he was about to suspend

payment (Z) or to prepare a bankruptcy petition (m). Notice
of facts which do not amount to an act of bankruptcy, but which
might suggest the possibility and put the party on further inquiry
from which he would have ascertained that an act of bankruptcy
had been committed, is not sufficient notice if the party does not
make any inquiry (n). On the other hand, parties dealing with the
debtor must be presumed to know the bankruptcy law, and know-
ledge of facts which do in law amount to an act of bankruptcy is
sufficient notice and where a party has notice of facts from which
;
a Court or jury would naturally and properly infer that an act

of bankruptcy has been committed, he will be held to have notice,
and the Court will not inquire whether he did in his own mind
draw the inference (o). Again, the notice need not be notice of
the specific facts which constitute the act of bankruptcy. Notice
in general terms that an act of bankruptcy has been committed
is sufficient. Thus notice that a bankruptcy petition has been
presented by a creditor is notice of an act of bankruptcy, because
such petition would naturally contain a statement of some act
of bankruptcy (p). But notice that a petition has been dismissed
is not notice of an act of bankruptcy, because it might have been
dismissed on the ground that no such act had been committed (g).
Position of During the period between the commission of an act of bank-
company
which has
ruptcy and an adjudication upon a petition presented within
notice of an three months, the position of parties owing money to the debtor
act of
bankruptcy is very anomalous. The debtor still retains the legal and beneficial
committed by interest in all his property, but
this interest is contingent on no
claimant.
bankruptcy petition being presented within three months. If
the debtor brings an action to enforce his claims against others,
(k) Conway v. Nail (1845), 1 C. B. (o) Snowball, Ex parte (1872), 7

643. Ch. 534 ; Sloiodinshy, In re, [1903]
(Z) Morgan, In re (1895), 2 Mans. 2K. B. 517.
508. (p) Lucas V. Dicker (1880), 6
(m) Wright, In re (1876), 3 Ch. D. Q. B. D. 84.
70. (q) 0' Shea's Settlement, In re, [1895]
(n.) Evans v. Hallam (1871), L. R. 1 Ch. 325.
6 Q. B. 713.
BANKKUPTOY 595
it is no defence to that action for the party owing the money to

say that the debtor has committed an act of bankruptcy, and at
the same time the party owing the money and having knowledge
of the act of bankruptcy, dare not pay the debtor except under
legal process, because a voluntary payment and a discharge from
the debtor would not be a defence against the subsequent demand
of the trustee in bankruptcy (r). Where a claim is made upon a
company by a claimant who to its knowledge has committed an
act of bankruptcy, its only course is to pay into Court or await
proceedings being taken against it. If the claimant sues the
company and it makes no defence except its inability to obtain

a discharge, it will probably be entitled to its costs. The Court
will direct the money which has been recovered under the judgment
to be paid into Court and kept there until it shall be seen whether
the debtor is made bankrupt or not (s). Where a debtor has
executed a deed of assignment of all his property for the benefit
of his creditors, that is an act of bankruptcy, and after notice of
such assignment payment cannot be safely made to him or his
assignee, or on their joint receipt, until three months after the
date of the assignment (t). The trustee in bankruptcy would not
be bound by any payment made to or discharge given by the trustee
under the deed, and even where the trustee in bankruptcy has
called upon the trustee under the deed to hand over all the property
collected by him, that is not an adoption of his acts, and payment
made to the trustee under the deed can only be deemed a pay-
ment in discharge of the debt if the money does in fact come
into the hands of the trustee in bankruptcy (u).
Transactions with a debtor after notice of an act of bank-
ruptcy will not be protected merely on the ground that they are
done in pursuance of an existing contract which is valid as against
the debtor. Thus the completion of a contract of sale (x), or the
redemption of a security given by the debtor (y), would be void
against the trustee unless carried out under the order of the
Court. If the debtor sought to enforce his rights by legal pro-
cess, the Court would make such order as might be necessary in
the best interest of the estate.
(r) Ponsford Baker v. Union of (u) Davis v. Peirie, [1906] 2 K. B.

London and Smith's Bank, [1906] 2 786.
Ch. 444. (a) Powell v. Marshall Parkes and
(s) Ponsford and Baker v. Union of Co., [1899] 1 Q. B. 710.
London and Smith's Bank, [1906] 2 {y) Ponsford and Baker v. Union of
Ch. 444. London and Smith's Bank, [1906] 2
(t) Dawav.Pe<ne,[1906]2K.B.786. Ch. 444.
Payments Payments made to a bankrupt up to the date of the receiving
™anûpt^ order are protected by section 49 of the Bankruptcy Act if the

after the date person making the payment has at the time no notice of an
ing order but available act of bankruptcy. Payments made after the date
'^
th""'^™''^
°^ ^^^ receiving order are not protected by any specific provision
bankruptcy, in the Act ; but in the present state of the authorities it may be
assumed that a person making payment to a bankrupt, or to
the personal representatives of a bankrupt, after the date of the
receiving order, but without notice of any act of bankruptcy,
is protected under the equitable doctrine of notice which
regulates the liability of a debtor in dealing with equitable
assignees of the chose in action. There is, curiously enough, no
decision directly in point, but in several cases it has been decided
that the trustee in bankruptcy takes no better title to an equitable
chose in action than any other assignee under a deed of assign-
ment, and that his title against subsequent assignees depends on
priority of notice to the debtor (z). In the case of Russell's
Policy Trusts (a) Mahns, V.C., applied the same doctrine of notice
to the case of a pohcy which was mortgaged by the holder
life
after he had become bankrupt, and he held that priority of

notice by the mortgagees gave them priority over the trustee
in bankruptcy. The authority of this decision no doubt justifies
the assumption that the principle would be extended to the case
of an insurance company making a payment to a bankrupt or
his representatives without notice of a bankruptcy. The case
is, however, open to criticism on the
of BusselVs Policy Trusts (a)
ground that what passed to the trustee in bankruptcy was not
an equitable chose in action, but apparently the right to sue in
law upon the policy and if so, the trustee's priority might not
;
depend on notice in the same way as if he had acquired only an

equitable chose in action. It is certainly open to argument that
a trustee in bankruptcy being entitled by operation of law
to the legal right of action on any policy belonging to the bank-
rupt cannot be defeated by any dealing with the policy after the
date of the receiving order, and is not bound, as he would be in
the case of an equitable chose in action, to perfect his title by
notice to the company. At present, however, the law must be
accepted as laid down in the case of BusselVs Policy Trusts (a),
and it follows from this that a trustee in bankruptcy must be
(z) Palmer v. Locke (1881), 18 W. N. 50.

Ch. D. 381 ; Stone, In re, [1893] (a) (1872), L. R. 15 Eq. 26.
; ;
BANKRUPTCY 597
regarded in the same light as any other assignee of the policy,

and that if the company has no notice of the bankruptcy, pay-
ment to the bankrupt as apparent holder of the policy will
discharge it (6).
A bond fide settlement made by an insurance company with Settlements

an assured or his representatives without notice of any act of
"anlfriT't^*
bankruptcy would probably bind the trustee to the same extent
as payment of the claim in full. But if the company makes what
purports to be an ex gratia payment without obtaining a discharge
from all further claims, the trustee in bankruptcy would still be en-
titled to proceed against the company for the full amount of the
claim (c).
Knowledge of what is or is not an act of bankruptcy is of what oonsti-

'"'*
considerable importance to insurance companies. An act of *j*jP^ ^^
bankruptcy committed by the debtor is the necessary foundation ruptcy.
of a bankruptcy petition. The title of the trustee relates back

to the first act of bankruptcy within the three months before the
presentation of the petition, and no transaction with the debtor
after knowledge of an act of bankruptcy is protected under
section 49. The various acts of bankruptcy are defined in the
Act.
Bankruptcy Act, 1883, see. 4, amended by Bankruptcy Act, 1890,

see. 1
(1) A debtor commits an act of bankruptcy in each of the following cases Acts of : —
(A) If in England or elsewhere he makes a conveyance or assignment of bankruptcy.
his property to a trustee or trustees for the benefit of his creditors
generally (cc)
(B) If in England or elsewhere he makes a fraudulent conveyance, gift,

delivery, or transfer of his property or of any part thereof ;
(0) If in England or elsewhere he makes any conveyance or transfer of his

property or any part thereof, or creates any charge thereon which
would under this or any other Act be void as a fraudulent preference
if he were adjudged a bankrupt
(6) See also Sowerhy v. Brooks absence of notice. It is incumbent,

(1821) 4 B. & Aid. 523; Atkinson, In therefore, upon companies to search
re (1852) 2 De G. M. & G. 140 ; Barr's for bankruptcies in Ireland and Scot-
Trusts, In re (1858), 4 K. & J. 219; land.
Bright's Trusts, In re (1880), 13 Ch. D. (c) Wills v. Wells (1818), 8 Taunt.
413 ; in Ireland under the Irish Act 264.
of 1857 and in Scotland under the (cc) No
creditor who has acquiesced
Scottish Bankruptcy Act, 1856, the in the execution of such a deed can
law is apparently otherwise and avail himself of it as an act of bank-
the title of the trustee in bankruptcy ruptcy (Stray, Ex p. (1867), L. R. 2
s absolute notwithstanding the Ch. 374).
—
(D) If with intent to defeat or delay Ms creditors he does any of the following
things, namely, departs out of England, or being out of England
remains out of England, or departs from his dwelHng-house or other-
wise absents himself or begins to keep house
(E) If execution against him has been levied by seizure of his goods under
process in an action inany Court or in any civil proceeding in the
High Court, and the goods have been either sold or held by the sheriff
for twenty- one days ;
(P) If he files in the Court

a declaration of his inability to pay his debts, or
presents a bankruptcy petition against himself ;
(G) If a creditor has obtained a final judgment against him for any amount,
and execution thereof not having been stayed has served on him a
bankruptcy notice requiring him to pay the judgment debt in
accordance with the terms of the judgment or to secure or compound
for it to the satisfaction of the creditor or the Court,
and he does not
witliinseven days after service of the notice either comply with the
requirements of the notice or satisfy the Court that he has a counter-
off, or cross demand which equals or exceeds the amount
claim, set
judgment debt, and which he could not set up in the action in
of the
which the judgment was obtained ;
(H) If the debtor gives notice to any of his creditors that he has suspended
or that he is about to suspend payment of his debts.
Voluntary The relation back of the title of the trustee to the first act
and fraudu-
lent disposi- of bankruptcy within three months of the petition avoids, with
tions.
certain exceptions, transactions completed after that date. But
in addition to the transactions so avoided, certain other transactions
which are or are deemed to be in fraud of creditors are voidable
by the trustee in bankruptcy. These are

(1) Voluntary or fraudulent settlements under the Bank-
ruptcy Act, 1883, section 47.
(2) Fraudulent conveyances under the statute of Ehzabeth,
13 Eliz. c. 5.
(3) Fraudulent preferences under the Bankruptcy Act, 1888,

section 48.
Bankruptcy Act, 1883, sec. 47

Avoidance of
voluntary
47. — (1) Any settlement of property not being a settlement made before
settlements. and in consideration of marriage, or made in favour of a purchaser or iacuni-

branoer in good faith and for valuable consideration, or a settlement made
on or for the wife or children of the settlor of property which has accrued to
the settlor after marriage in right of his wife, shall, if the settlor becomes bank-
rupt within two years after the date of the settlement, be void against the
trustee in bankruptcy, and shall, if the settlor becomes bankrupt at any
subsequent time within ten years after the date of the settlement, be void
.
BANKRUPTCY 599
against the trustee in the bankruptcy, unless the parties claiming under
the settlement can prove that the settlor was at the time of making the settle-
ment able to pay all his debts without the aid of the property comprised in
. the settlement, and that the interest of the settlor in such property had passed
to the trustee of such settlement on the execution thereof.
(2) Any covenant or contract made in consideration of marriage for the
future settlement on or for the settlor's wife or children of any money or pro-
perty wherein he had not at the date of the marriage any estate or interest,
whether vested or contingent, in possession or remainder, and not being money
on his becoming bankrupt before
or property of or in right of his wife, shall,
the property or money has been actually transferred or paid pursuant to the
contract or covenant, be void against the trustee in the bankruptcy.
(3) Settlement shall for the purposes of this section include any con-
veyance or transfer of property.
For the purpose of section 47 " settlement " includes any Meaning of
conveyance or
,
jj!
transier ot
ii-j.ij
property by the donor
1-1
which contem- J.
"settlement."
plates the retention of the property by the donee, either in its

original form or in such form that it can be traced (d). It does
not extend to a gift of money or property where it is intended
that the money or proceeds of the property shall not be retained (d),
but shall be expended at once.
Section 47 avoids voluntary settlements and settlements What settle-
which although not voluntary are fraudulent, as being designed

™j^°*ij ^r
to defeat the application of the bankruptcy laws. It strikes at
all settlements which are not made for good consideration and
bond fide. The settlement is not absolutely void ah initio, but
voidable by the trustee in bankruptcy as from the time his title
accrues, that is, from the first act of bankruptcy within three
months prior to the presentation of the petition. If before that
time the property or any interest therein passes to a bond fide Bmdfide
purchaser for value, such purchaser acquires a good title which valuemay°'^
is unimpeachable by the trustee in bankruptcy, and which a acquire good
vendor can compel a purchaser to accept, (e). The purchaser donee,
is a purchaser in good faith if he is ignorant of any pro-

babiUty of the settlor's insolvency, and knowledge that the
settlement was voluntary does not affect his title (/). The
trustees of a settlement who have properly incurred costs,
charges, and expenses in connexion with property the subject of a

voluntary settlement which is afterwards declared void against
the trustee in bankruptcy are purchasers for value in respect of
(d) Plummer, In re, [1900] 2 Q. B. 377 ; Carter, In re, [1897] 1 Ch.

790. 776.
(e) Vansittart, In re, [1893] 2 Q. B. ( / ) Brail, In re, [1893] 2 Q. B. 381
their claim for such costs, and are entitled to a lien on the pro-
Settlement perty {g). A voluntary settlement which has been declared void
only voidable
as against against the trustee in bankruptcy is only void as against him, and
trustee.
therefore, except in so far as the property is necessary to satisfy
the creditors of the bankrupt, it stands good and any surplus
belongs to the settles Qi). The trustee in bankruptcy is only
entitled to treat the settlement
and cannot claim to
as void,
stand in the place of the settlee so as to acquire any priority
on behalf of the general creditors over mortgagees and incum-
brancers on the property subsequent to the date of the settle-
ment {i).
Who are In order to take a transfer or conveyance of property out of

purchasers
for value. the operation of the section, it must be made to a purchaser who
takes for value and in good faith. A purchaser means any one
who acquires the property or an interest therein for a valuable
consideration. Any person who for advances or other valuable
consideration acquires a charge or lien on the property is a pur-
chaser for value (l).
Hance v. Harding (1888), 20 Q. B. D. 732

Hance v. A having effected a policy of insurance on his own life made a post-nuptial
Hardvng. settlement for the benefit of his children, to which settlement his father, B,
was a party. A assigned his life policy to the trustees,
and B assigned certain
leasehold interests on similar trusts for the children. A became bankrupt
all
within two years from the date of the settlement. The Co\iit came to the
conclusion that the settlement was made without regard to any contemplated
probability that A would become insolvent or bankrupt, but with regard to
the fact that the son had become involved in an unfortunate connexion, and
had contracted intemperate habits. They therefore held that the settlement
was iona fide and not in fraud of creditors, and they further held that B was
a purchaser for valuable consideration, having given something, that is to
say, his leasehold interests, to get something, that is, the policy, for the benefit
of his son's children. " Purchaser " is not to be limited to a purchaser in the
mercantile sense of the term, that is, a person who has bought something by
contract of purchase and sale.
Pope, In re, [1908] 2 K. B. 169
Pope, In re. A wife, having 6o7ia^(ie threatened divorce proceedings against her husband,
agreed not to take proceedings upon the husband consenting to make a post-
nuptial settlement in favour of her and her children. The settlement made in
pursuance of this agreement purported to be made " in consideration of natural
(g) HoZcien,/nre(1887),20Q. B.D. (i) Sanguinetti v. Stuckey'a Bank-

43. ing Co., [1895] 1 Ch. 176.
(h) Pa/rry, In re, [1904] 1 K. B. {I) Naylor, In re (1893), 62 L. J.
129. Q. B. 460.
BANKRUPTCY 601
love and affection," and no other consideration was expressed in the deed.
Upon the husband becoming bankrupt within two years of the date of the
settlement, was held by the Court of Appeal that the settlement was made
it
in favour of a purchaser in good faith and for valuable consideration, and could
not be set aside by the trustee. It was not necessary that there should be
either money or physical property given by the purchaser in order to bring
the case within the exception. A release of a right or a compromise of a claim,
not being a merely colourable right or claim, was sufficient to constitute a
person a purchaser within the meaning of section 47. Buckley, L. J., dissented
from the majority of the Court, being of opinion that the word " purchaser "
imported something more than one who gave " valuable consideration," and
meant a person who would be properly described as a purchaser or buyer, that
is,one who has given valuable consideration in the form of money or property,
or something capable of being measured by money.
Parry, In re, [1904] 1 K. B. 129
A settlor made a voluntary settlement which, being made more than two Parry, In re.
years before his bankruptcy, was unimpeachable. This settlement was re-
vocable by the settlor with the consent of the trustees of the settlement.
Within two years of becoming bankrupt the settlor, with consent of the trustees,
withdrew £1600 from the settlement, and settled as an equivalent a reversionary
interest in certain property. The Court held that the second settlement was
void against the trustee in bankruptcy. The trustees of the settlement were
not purchasers for value. Although a sum of money was withdrawn from
the settlement, the settlement was revocable by the settlor, and the trustees
had given nothing but their consent to the transaction.
The document conveying or charging the property is not con- Instrument

elusive of the question as to whether the settlement is voluntary conclusive ot
A deed of settlement in form voluntary, but appear- ''^ voluntary
or for value. ^
or onerous
ing from extrinsic evidence to have been made for valuable nature,
consideration, is good against the trustee (m). On the other hand,

a conveyance purporting to be made for a valuable consideration
is void if The consideration must be sub-

in fact voluntary.
stantial and not merely illusory and where, for instance, the
;
settlor settled a life policy upon his sister in consideration of five

shillings, the Court held that the settlement was voluntary even
although the nominal consideration had in fact passed {n).
In order to escape the operation of the section, the transfer Who are
or conveyance must be taken in good faith on the part of the purchasers.
purchaser. Good faith means absence of notice of the settlor's

insolvency or of any intention on his part to defeat the bankruptcy
laws by withdrawing the settlor's property from the reach of
(ot) Pott v. Todhunter (1845), 2 (n) Naylor, In re (1893), 62 L. J.

Coll. C. C. 76 ; Pope, In re, [1908] 2 Q. B. 460.
K. B. 169.
creditors, or by giving any creditor or creditors an undue prefer-
ence. Bad faith on the part of the settlor is immaterial if the

purchaser acted in good faith (o).
Period Settlements are voidable against the trustee in bankruptcy if

measured
from first act
made within ten years of the settlor becoming bankrupt, uncon-
of bank- ditionally if within two years, and otherwise conditionally on the
ruptcy.
party claiming under the settlement, being unable to prove that
the settlor was at the time able to pay all his debts without the
aid of the property settled. These periods of two years and ten
years respectively are to be calculated from the date of the first
act of bankruptcy within three months of the petition, that being

for the purposes of the trustee's title the time of the debtor
becoming bankrupt (y).
Each pre- In the case of Harrison and Ingram {q) the question arose on
mium paid the settlement of a life policy as to whether the payment of each
on poUoy is
not a new premium by the settlor was to be deemed a new settlement of
settlement.
the amount of the premium or of a proportionate part of the policy
moneys, or whether the original settlement of the poKcy was to
be deemed to be the settlement of the whole policy moneys. If
the payment of each premium was a new settlement the trustee
in bankruptcy would be entitled to avoid the settlement to an
extent proportionate to the amount of premiums paid within the
impeachable periods, but if there was no new settlement the
whole pohcy moneys would be beyond the reach of the trustee,
provided that the original settlement of the policy was unim-
The Court of Appeal, reversing Wright, J., held that
peachable.
the payment of each premium was not a new settlement capable
of being impeached by the trustee in bankruptcy.
No right to In Lister v. Hooson (r) it was held that where a voluntary

setoff amount settlement is set aside by the trustee in bankruptcy the person
of settlement
against debt claiming under the settlement cannot set off the amount of the
due by
settlement against any debt due by the bankrupt to him, but must
settlor.
account for the whole of the property voluntarily settled, and
prove in the bankruptcy in respect of his claim against the bank-
rupt. The reason is that the settlement is not void against the
bankrupt, but only against his trustee in bankruptcy, and there
was therefore never any debt due from the donee to the bankrupt
which could be set off against a debt due from the bankrupt to
(o) Mackintosh v. Pogose, [1895] 1 (q) [1900] 2 Q. B. 710.

Ch. 605. (r) [1908] 1 K. B. 174.
(p) Beis, In re, [1904] 1 K. B. 451.
BANKRUPTCY 603
the donee. A fortiori the donee under a voluntary settlement

which has been set aside by the trustee in bankruptcy cannot
claim to retain the property as security for any debt due by the
bankrupt to him.
A disposition of property which cannot be set aside by the lYaudulent
trustee in bankruptcy as a fraudulent settlement under section ^fthinis"

49 of the Bankruptcy Act may, nevertheless, be set aside in Eliz. o. 5.
favour of creditors as a fraudulent disposition of property under
the statute 13 Eliz. c. 5. This statute provides in effect that
any alienation of property to the end, purpose, and intent to delay,
hinder, or defraud creditors and others of their just and lawful
actions shall be void as against them, except in respect of any
upon good consideration and bond fide lawfully
estate or interest
conveyed or assured to persons taking without knowledge of
the fraud.
Statute of Elizabeth, 1570, sees. 1, 2, and 6

For the avoiding and abolishing of feigned, covinous, and fraudulent Fraudulent
feoffments, gifts, grants, alienations, conveyances, bonds, suits, judgments, deeds
^^^^
and executions as well of lands and tenements as of goods and chattels,
^f
more ^^^^^
commonly used and practised in these days than hath been seen or heard of others shall
heretofore. Which feoffments, gifts, grants, alienations, conveyances, bonds, be void,
suits, judgments, and executions have been and are derived and contrived of
malice, fraud, covin, collusion, or guile, to the end, purpose, and intent to delay,
hinder, or defraud creditors and others of their just and lawful actions, suits,
debts, accounts, damages, penalties, forfeitures, heriots, mortuaries, and
reliefs, not only to the let or hindrance of the due course and execution of law
and justice, but also to the overthrow of all true and plain dealing, bargaining,
and divisance between man and man, without the which no commonwealth
or civil society can be maintained or continued.
2. Be it and enacted by the authority of this All fraudu-
therefore declared, ordained,
present parliament, that and every feofiment, gift, grant, alienation, ^^^^ convey-
all
bargain, and conveyance of lands, tenements, hereditaments, goods, and

^^ avoid the
chattels, or of any of them, or of any lease, rent, common or other profit or debt or duty
charge out of the same lands, tenements, hereditaments, goods, and chattels, of others
or any of them, by writing or otherwise, and all and every bond, suit, judgment,
and execution at any time had or made sithenoe the beginning of the Queen's
Majesty's Reign that now is or at any time hereafter to be had or made to or
for any intent or purpose before declared and expressed, shall be from hence-
forth deemed and taken (only as against that person or persons, his or their
heirs, successors, executors, administrators, and assigns, and every of them
whose actions, suits, debts, accounts, damages, penalties, forfeitures, heriots,
mortuaries, and reliefs by such guileful, covinous, or fraudulent devices and

practices as is aforesaid are, shall, or might be in any ways disturbed, hindered.
delayed, or defrauded) to be clearly and utterly void, frustrate, and of none

efEect ; any pretence, colour, feigned consideration, expressing of use, or other
matter or thing to the contrary notwithstanding.
* * ;ii :(: * :ic
Estates made 6.Provided also, and be it enacted by the authority aforesaid, that this
upon good Act or anything therein contained shall not extend to any estate or interest
consideration
in lands, tenements, hereditaments, leases, rents, commons, profits, goods,
and bond fide.
or chattels had, made, conveyed or assured, or hereafter to be had, made, con-
veyed or assured, which estate or interest is or shall be upon good consideration
and bona fide lawfully conveyed or assured to any person or persons or bodies
politick or corporate, not having at the time of such conveyance or assurance
to them made any manner of notice or knowledge of such covin, fraud, or
collusion as is aforesaid ; anjrthing before mentioned to the contrary hereof
notwithstanding.
13 Eliz. 0. 5 The distinguishing features of the statute 13 EUz. c. 5, as

compared
with Bank-
compared with the provisions of section 47 of the Bankruptcy
ruptcy Act, Act are—
1883, s. 47 (2).
(1) It is available for the benefit of creditors at all times, and
not only on bankruptcy.

(2) It is available against all fraudulent transactions, how-
ever remote in point of time.
(3) It strikes at transactions which are fraudulent against the
creditors as a body, but not at transactions which merely
give an undue preference to one creditor over another.
(4) It does not avoid transactions on the ground that they

are voluntary, unless they are also fraudulent against
creditors.
When avail- The statute 18 Eliz. c. 5 is available for the benefit of all
able for the creditors, and a fraudulent disposition may be set aside although
benefit of
creditors. the debtor has not been made bankrupt. If the debtor has become
bankrupt the trustee in bankruptcy may take proceedings to
have the disposition declared void as against him, and if there is
no bankruptcy any creditor may obtain a declaration that the

disposition is void against creditors ; but unless the creditor taking
the proceedings has a Hen or charge on the property he cannot
have it appUed for his sole benefit (s). It must be appHed for
the benefit of all the creditors, and therefore the creditor suing
ought to sue on behalf of himself and all other creditors (s). If
the debtor has died the assignee holding the property under a
fraudulent disposition is apparently in the position of an executor
de son tort, and a creditor's administration action may be brought
(«) Beese River Co. v. Atwell (1869), 7 Eq. 347.

BANKRUPTCY G05
against him by any creditor suing on behalf of himself and all
other creditors.
The property may be followed by the creditors so long as it How far the
remains in sfecie in the hands of the assignee or any one taking b6°fol[oweX^
it from him except a purchaser for value without notice of the
and where a voluntary assignee of a policy

infirmity, of insurance
had obtained the policy moneys and invested them in mortgage
security, it was held in a creditor's administration action, brought
to try the question as to whether the assignment was void against
creditors, that although the property had changed its form it
did remain in specie in the hands of the assignee, and the Court
exacted an undertaking from the assignee not to deal with the
money pendente lite (t).
The statute of Elizabeth is aimed at every kind of disposition, What disposi-

whether a conveyance, exercise of a power of appointment, g};°{îfat
or any other act whereby the debtor places beyond the reach of
creditors property which would otherwise be available to satisfy
their debts.
The statute appUes to all property which would but for the includes dis-
fraudulent disposition be available to satisfy the debt of the ^ho9es°^n°^

creditors at the time the application is made. At common law action.
no chose in action could be taken in execution, and therefore
during the lifetime of a debtor who had not become bankrupt a
voluntary or fraudulent disposition of his choses in action could
not be assailed. But by the Judgment Act, 1838, money, bank
notes, cheques, bills of exchange, promissory notes, bonds,
speciahties, or other securities for money may be taken in execu-
tion, and since the Common Law Procedure Act, 1864, all debts
owing or accruing due to the debtor may be attached by the
creditor to satisfy his judgment. Those provisions seem to bring
policies of insurance, which are securities for money, and claims
due thereunder, which are choses in action, within the statute
13 Eliz. c. 5, so as to make fraudulent dispositions impeachable
by creditors at any time and not only on death or bankruptcy {u).
No disposition of property is void under 13 Eliz. c. 5 unless it Intent to

^^^^^^ •
is fraudulent within the meaning of the statute. The aim of the

statute is to prevent a debtor removing his property from the
reach of creditors, but it has nothing to do with the theory of
(t) Mouat, In re, [1899] 1 Ch. 831. Ch. 831; Barrack v. M'CuUoch
(u) Stokoe V. Cowan (1861), 29 (1857), 3 Jur. N. S. 180.
Beav. 637 ; Moiiat, In re, [1899] 1
equal distribution of assets among creditors, which came later
with the sequestration and bankruptcy Acts, and therefore a' dis-
position may be fraudulent within the meaning of section 49 of

the Bankruptcy Act, in that it seeks to give an undue preference
and yet not fraudulent under the statute of Elizabeth;
to a creditor,
in that no property is withdrawn from the reach of creditors {x).
Intent to A deed, therefore, transferring a man's whole property for the
prefer is not
fraudulent. benefit of his creditors is not void under 13 Ehz. c. 5, even although
he is hopelessly insolvent and the deed is for the benefit of some
creditors only to the exclusion of the others (y). Such a deed
is only void under the statute if it is a cloak whereby in reality
the debtor reserves some benefit to himself (a).
Voluntary A disposition which is designed to withdraw property from the

disposition by made voluntarily
reach of creditors is fraudulent and void whether
person in-
debted con- or for valuable consideration, but where the disposition is voluntary
clusive
evidence of and the debtor is " indebted " at the date of the transaction,
fraud,
the Court assumes that the disposition was fraudulent, and mere
innocence of intention to defraud on the part of the debtor will
not save the transaction.
rreeman v. Pope (1870), L. E. 5 Ch. 538
Freeman A clergyman had a life policy of £1000 and livings worth some £800 a year,
V. Pope. and had incurred debts of some £500. He assigned the life policy voluntarily
to a stranger in blood. On Ms death some time afterwards the assignment
was declared void as against his creditors, because, although the Court were
satisfied that the assignment was made purely out of benevolence towards
ultimately be
the assignee and without any thought that his creditors might
deceased was in fact substantially indebted at the time, and
defeated, yet the
liabilities has no
they were of opinion that a person who has incurred serious
and the creditors were entitled to come
right ifi be generous before he is just,
before a voluntary assignee.
"
if any The rule that a voluntary conveyance by a person " indebted
creditor
is conclusive evidence of fraud is probably appHcable only when
existing at
the date of some creditor or creditors existing at the date of the settlement
the settle-
ment is BtUl are still unpaid. It has been decided that if there are such
unpaid when of any
creditors the settlement may be set aside at the instance
the settle-
ment is future creditor (b). It has never been definitely decided that
chaUergeil, unless
the presumption does not arise in favour of future creditors
(1879), 12 Ch. D. 314 Qillo, In re
(X) Middleton v. Polloch (1876), 2 ;
Ch. D. 104 -AUor... Harrison (1869), (IJJiyj-^l^J; p„,„,, (^gê), 2

L.R.4Ch.622. Ch. D. 104.
(j/)
MasheVyne and Cook v. Smith, (ft) Jenkyn v. Vaughan (1856), 3
[1903] 1 K. B. 671
; Games, Ex parte Drew. 419.
BANKRUPTCY 607
some existing creditors are still unpaid, but the better opinion
appears to be that it does not (c).
A disposition is voluntary unless made for valuable considera- What disposi-
tion, in the sense of some actual benefit accruing to the grantor, voluntary so
The fact that the consideration is inadequate does not make it as to let in
1 ,
voluntary so as to
_Li-i -1.1.111
let m the presumption of fraud when the grantor
^^^ presump-
tion of fraud,
was indebted (e), although inadequacy of consideration may,
together with other circumstances, be evidence of actual fraud.
Neither natural affection nor moral obligation is a valuable con-
sideration (/ ), and therefore a post-nuptial settlement upon wife
and children is a voluntary settlement, if there is no other con-
sideration.But where a relative of the settlor's wife agreed to
advance him the interest due upon a mortgage if he would settle
the property on his wife and children, the advance was held to be
a good consideration and the settlement was not voluntary (g).
Marriage is always a valuable consideration (h), and therefore an

ante-nuptial settlement can never be set aside under the statute
of EHzabeth as a voluntary settlement merely on the ground that
the grantor was insolvent at the time he made it. But where a
marriage settlement goes beyond the immediate objects of the
marriage and there are provisions for collateral relatives from
whom no valuable consideration moves then quoad these objects,
the settlement has nothing to do with the marriage, but is to be
considered as a voluntary settlement purely for the purpose of
providing for those relatives (i). A disposition is not voluntary
if made to satisfy a subsisting legal obligation under a previous
contract for value. Thus where on marriage a man promised
orally to settle certain property on his prospective wife and some
time after marriage executed a deed of settlement in which he
recited the oral promise, it was held that the post-nuptial settle-
ment was not voluntary (k). The recital of the oral promise in
the deed was a sufficient memorandum of the agreement to satisfy
the Statute of Frauds, and so the agreement was admissible in
evidence (k). But for the recital it would not have been admis-
sible and the settlement would have stood as a voluntary settle-
ment. Where, again, in an ante-nuptial contract, the husband

(c) May's Fraudulent and Volun- {g) Bayspoole v. Collins (1871),
tary Conveyances (3rd edition), p. L. R. 6 Ch. 228.
42. (/i) Kevan v. Crawfurd (1877), 6 Ch.
(e) Bayspoole v. Collins (1871), D. 29 ; i?ew,/nre, [1904] 2K. B. 769.
L. R. 6 Ch. 228. (i) Smith v. Cherrill (1867), L. R.
(J)Penhall v. Elwin (1853), 1 4 Eq. 390, 395.
Sm. & G. 258. (k) Holland, In re, [1902] 2 Ch. 360.
covenanted to assign all his after-acquired property except business

assets to the trustees of the settlement, and after marriage having
purchased a house with his savings conveyed it to his trustees, the
conveyance was held not to be voluntary (1).
A disposition made by way of further security for an existing

debt is voluntary unless there is some fresh consideration moving
from the creditor at the time the disposition is made. An agree-
ment to give time or to forbear from taking proceedings to enforce
the debt is sufficient consideration, and such an agreement may
be implied from the circumstances without any express promise
on the part of the creditor ; but where an assignment was made
under seal in favour and was never communicated to
of a creditor
the creditor, it was held that the assignment was voluntary and
void under the statute (m).
Unless the grantor receives some actual benefit it is not a
disposition for value within the meaning of the statute, even
although there may be consideration sufficient to support a
contract. For instance, a conveyance of property which is
subject to an onerous obKgation is not a conveyance for value
merely because the grantee promises to perform the obhgation

attached, as where the assignee of a lease promises to pay
the rent or the assignee of a policy promises to pay the
premiums {n).
When the apparently not necessary to prove actual insolvency of

It is
settlor is
deemed to be the grantor of a voluntary settlement in order to raise the pre-
indebted. sumption of intent to defraud (o). Comparatively small debts
with an apparently ample margin of funds will not justify any
such presumption (p), but if, on a reasonable estimate of con-
tingencies, the debtor's immediately available assets, exclusive
of the amount settled, are not sufficient to meet his debts which
are due or which may become due within a short period of time,
the debtor not justified in makiag a voluntary disposition of

is
property, and such a disposition will be held void against creditors,

whatever his actual intention may have been (q). And if shortly
after having made a voluntary disposition a debtor does in fact
become insolvent, the onus is on the party claiming under the
(I) Beis, In re, [1904] 2 K. B. 769. (o) Townsend v. Westacott (1840),

{m) Barker's Estate, In re (1875), 2 Beav. 340.
44 L. J. Ch. 487 ; and see Wigan v. (f>) Scarf V. (1849), 1
English and Scottish Lam Life, [1909] Mac. &G. 364.

1 Ch. 291. {g) Holmes v. Penney (1856), 3
(n) Riddler, In re (1882), 22 Ch. D. K. & J. 90 ; Ridler, In re (1882), 22
74. Ch. D. 74.
BANKRUPTCY 609
disposition to show that the debtor was not at the time of the
disposition " indebted " in the sense just indicated (r).
Where the grantor of a voluntary disposition is not proved to If not in-
have been " indebted " at the date of the disposition, a fraudulent
settlor's
intention to defeat his creditors must be proved (s). If it is proved fraudulent
that the debtor in fact intended to defeat his creditors, the bona must be
proved.
fides of the grantee is immaterial.
The existence of a fraudulent intention is a question of fact Evidence of
which the Court must, in each particular case, decide upon all the intention,
circumstances (t). The fact that a man makes a voluntary settle-

ment of practically all his property is suspicious, and if he is a Large di-sposi-
trader or a man engaged or about to engage in hazardous trans- trader,
means is conclusive of
actions, a voluntary settlement of all his
fraudulent intention, unless explained by other circumstances
which disclose an innocent intention (m). The fact that heavy Pending
and perhaps unknown habilities are likely to fall upon a man in

the immediate future, as where legal proceedings are being taken
against him, raises a suspicion that any voluntary disposition of
property is made for the purpose of defeating or delaying the
creditors. Thus a voluntary settlement by a man on his daughter (a;),
and in another case a settlement for the benefit of the settlor, his
wife and children {y), were set aside when the settlements were
made after legal proceedings had been taken against the settlor
and there was a probability of heavy liability. But a voluntary
settlement made while legal proceedings are pending against the
settlor is not necessarily void, unless there was a serious prospect
of insolvency. It is only a suspicious circumstance which may
be explained.
Mercer, Ex parte (1886), 17 Q. B. D. 290
The was a master mariner. He had become engaged to be married Mercer, Ex

settlor
in England, but afterwards went to Hong Kong, and there married another p<^''^^-
woman. After his marriage, and while still in Hong Kong, he received inti-
mation that an action for breach of promise had been commenced against him,
and at the same time the information that he had become entitled to a legacy
of £500. He made a voluntary settlement of the legacy for the benefit of
his wife, self, and children. He had no other means except some £50 which
(r) Crosaley v. Elworthy (1871), (m) Russell, Ex parte (1882), 19

L. R. 12 Eq. 158. Ch. D. 588 ; Ware v. Gardner (1869),
(s) Holloway v. Millard (1816), 1 L. R. 7 Eq. 317.
Mad. 414. (x) Barling v. Biahopp (1860), 29
{t) Edmunds
Edmunds, [1904]
v. Beav. 417.
P. 362; Lane Fox, In re, [1900] 2 (y) Reese River v. Atwell (1869),
Q. B. 508. L.R.7Eq. 347.
I.L. 39
would become due to him as wages on returning to England. Judgment for

£500 was recovered against him in the breach of promise action, and the judg-
ment creditor sought to set aside the settlement. The Court held that the
settlement was bond fide, and not in fraud of creditors. The settlor was not
a trader likely to incur large liabilities, and there was no reason for him to
suppose that such heavy damages would have been awarded against him in
the action the damages recovered might have been no more than he could
;
have met out of his wages which were accruing due.
Dispoaition If circumstances justify it, a voluntary settlement of a debtor's

of debtor's
whole
whole property is not in fraud of creditors.
property.
Lane Fox, In re, [1800] 2 Q. B. 508
Lane Fox, A young \ôman oftwenty- one came into considerable property free from
In re. any trust, and was advised by her relatives to make a settlement. She accord-
ingly conveyed her whole property to trustees in trust to apply the income
absolutely at their discretion, either by paying it to her, paying her debts, or
accumulating it and adding She retained power to revoke the
it to capital.
settlement with consent of her trustees. She afterwards incurred large
liabilities by extravagant living, and her trustees having refused to pay
certain debts, the creditors sought to set aside the settlement. It was held
that the settlement was not in fraud of creditors, but was a most prudent and
proper settlement for a young woman to make.
Reservation In the case of voluntary settlements, the more the settlor

of benefits
for settlor
reserves for the benefit of himself and near relations, the greater
and family. the suspicion that the settlement is not honest. But, as may be
seen by cases already cited, the reservation of life interests for
self and large iaterests for wife or children is not in itself proof of
fraud (z). And even a provision that the settlor's interest shall
terminate on bankruptcy is not conclusive of fraud (a). The
Power of power of revocation by the settlor has been dubbed a badge of
revocation.
fraud (b), and where the power is absolute in the settlor, the power
must be exercised for the benefit of creditors, if necessary but a ;
power of xfivocation with consent of trustees is, as appears from

the case just cited, by no means conclusive evidence of fraud.
Inadequacy Inadequacy of consideration may be an important factor in
of considera-
tion. determining whether or not a disposition of property is bond fide
or fraudulent, but it is not sufficient to stamp a transaction as
fraudulent which otherwise appears to be bond fide and honest (c).
{z) Holloway v. Millard (1816), 1 (1861), 1 J. & H. 410 ; Jenkyn v.

Mad. 414. Vaughan (1856), 3 Drew. 419.
(a) Holmes v. Penney (1856), 3 (c) Johnson, In re (1881), 20
K. & J. 90 ; Holland, In re, [1902] 2 Ch. D. 389 ; Smith v. Tatton (1879),
Ch. 360. 6 L. R. Ir. 32 ; Gopis v. Middleton
(6) Peacock v. Monk (1748), 1 (1817), 2 Mad, 410.
Ves. Sen. 126 ; Acraman v. Oorbett
BANKRUPTCY 611
111 Stokoe V. Cowan (d) a man, having deposited a policy of insur-

ance on his Ufe for £800 with his mother to secure an advance of
£174, within a month of his death and with the knowledge that
he was in extremis, assigned the policy to his mother absolutely
in consideration of the debt. The Court set aside the assignment
except as a security for the debt.
A sale or mortgage of property for adequate consideration is intent to
° the avowed object is to defeat execu-

'I'^f^^*
not voidable even although
.
execution.
tion at the instance of a particular creditor (e), but if a sale or
mortgage is made for the purpose of withdrawing the property or
its proceeds from the reach of creditors in general, it will be set
aside (/).
The fact that the vendor of chattels remained in possession Reputed
and enjoyment them has always been considered prima facie,
of
evidence^/^
but by no means conclusive, proof of fraud (g). The same principle fraud,
will apply to assignments of choses in action made secretly without

notice to the holder of the fund (li).
In the case of dispositions for good consideration, the dis- Onerous dis-
position
^ cannot be set aside under 13 Ehz. c. 5,' unless it is shown P°si*'°"f
cannot be set
.
that the grantor intended to defeat his creditors and that the aside unless
grantee was party or privy to the fraudulent scheme (T). Ante- |rivyWthe
nuptial settlements can seldom be successfully attacked, because, i'^^^^-
even although the husband may have settled far more property
than he was justified in doing, having regard to his circumstances,
it is very diiScult to prove that the wife was privy to any fraudulent
intention (m). In the case of hi re Reis (n) the husband being
engaged in business settled his whole property and covenanted to
convey all property subsequently acquired, and yet
it was held
that the settlement was not fraudulent on the face of it, and even
although the intention of the husband was to defeat his creditors,
the wife was not necessarily privy to any such intention. Even
the fact that the husband's life interest is to cease on his becoming
insolvent does not make the settlement ipso facto a settlement in
fraud of creditors (o). But where a marriage is not a bond fide
(d) (1861), 29 Beav. 637. {h) Jenkyn v. Vaughan (1856), 3

(e) Wood
V. Dixie (1845), 7 Q. B. Drew. 419.
892; DarviU v. Terry (1861), 6 (Z) Jo/snson, In re (1881), 20 Ch. D.
H. & N. 807. 389, 394.
(/) Edmunds v. Edmunds, [1904] (m) Keevan v. Crawford (1877),
P. 362. 6 Ch. D. 29.
{g) Arunddl v. Phi-pps (1804), 10 (n) [1904] 2 K. B. 769.
Ves. 139 ; Latimer v. Batson (1852), (o) Holland, In re, [1902] 2 Ch. 360.
4 B. & C. 652.
marriage, but is merely part of a fraudulent scheme to defeat

creditors, the settlement may be set aside, as where a man having
lived many years with a mistress became involved in legal pro-
ceedings, and thereupon married the woman and settled all his
property upon her by ante-nuptial contract and the Court was
satisfied that the woman was privy to the scheme
(p).
Formerly, where a policy was claimed by the trustee in bank-
ruptcy under the reputed ownership clause against a purchaser
for value who had not given notice to the office, such purchaser
was held premiums paid by him (5), and
entitled to a refund of
although the reputed ownership clause no longer apphes to choses
in action in the case of an English bankruptcy, the principle may
be appUed so as to entitle any innocent party, such as a grantee
under a voluntary settlement, to a refund of premiums paid by
him to keep ahve a policy afterwards claimed by the trustee in
bankruptcy.
Fraudulent Section 47 of the Bankruptcy Act, 1883, and the statute of

preferences.
Elizabeth, both strike at dispositions which are designed to place
the debtor's property beyond the reach of any of the creditors.
As, however, the policy of the bankruptcy law is to provide a dis-
tribution of the debtor's property among the creditors, a further
provision is made avoiding as against the trustee in bankruptcy
dispositions of property to one creditor whereby he would obtain

an unfair advantage over the others.
Bankruptcy Act, 1883, sec. 43
Avoidance of 48. —(1) Every conveyance or transfer of property or charge thereon

preferences made, every payment made, every obligation incurred, and every judicial
in certain
proceeding taken or suffered by any person unable to pay his debts as they
become due from his own money in favour of any creditor or any person in
trust for any creditor with a view of giving such creditor a preference over
the other creditors shall, if the person making, taking, paying, or suffering
the same is adjudged bankrupt on a bankruptcy petition presented within
three months of the date of making, taking, paying, or suffering the same,
be deemed fraudulent and void as against the trustee in bankruptcy.
(2) This section shall not affect the rights of any person making title in
good faith and for valuable consideration through or under a creditor of the
bankrupt.
(v) Bulmer V. Hunter {1869),!,. B,. Camp. 487; Webb's Policy, In re

8Eq.46. (1867), 36 L. J. Ch. 341.
{g) Schondler v. Wace (1808), 1
BANKRUPTCY 613
The word "preference" as used in the Act, imports a voluntary What ia a
act on the part of the debtor to prefer one creditor to another (r). myment?
Payments made in the ordinary course of business (s), payments
made under threat of proceedings (t) or for any other reason made
for the benefit of the debtor himself, are not fraudulent preferences
because, although in fact they give an undue preference, they are
not made with that intention, but for the purpose of putting the
debtor himself in a better position than he would be in if they
had not been made. Unless the dominant view of the debtor in
making the payment is to prefer one creditor to another, there is
no fraudulent preference (m). If the debtor does make the pay- Bonafiaesoi
ment with the dominant intention to prefer the creditor, the state "înateriai.
of mind of the creditor is immaterial, and a bond fide acceptance
of the payment by him does not save the transaction (x). Only
the trustee in bankruptcy is entitled to set aside an assignment
on the ground of fraudulent preference, and where the result of
doing so would be solely for the benefit of an individual creditor When it may
who claims a security on the propertj^ assigned and not for the
benefit of creditors generally, the trustee ought not to take pro-
ceedings (y).
Where a policy is subject to a mortgage or charge valid against Right of
the trustee in bankruptcy the creditor is a secured creditor. If creditors
the security is adequate the creditor may rest upon it and need
not prove in the bankruptcy, the trustee being entitled only to
the equity of redemption (yy). If the security is inadequate
the creditor may either surrender the policy to the trustee and
prove in the bankruptcy for his whole debt, or realise it and
prove for the balance, or value it and prove for the balance (2).
If he values it, the trustee may redeem it by paying him the

assessed value ; but if the trustee is dissatisfied with the valua-
tion he may require it to be realised as may be agreed or as the
Court may direct and the creditor may, by notice in writing,
;
(r) Sharp v. Jackson, [1899] A. C. restored the law to what it was before
419. 1809. See Butcher v. Stead (1875),
(a) Clay, In re (1895), 3 Man. 31. L. R. 7 H. L. 839, 846.
[t] Sharp V. Jackson, [1899] A. C. {y) Cooper, Ex parte (1875), L. R.
419. 10 Ch. 510.
{11) Vaulin, In re, [1900] 2 Q. B. (yy) Le Feuvre v. Sullivan (1855),
325 ; Blackhurn, In re, [1899] 2 Ch. 10 Moore, P. C. 1 ; Elder v. Beamont
725. (1857), 8 EI. &B1. 353.
[x) The Act of 1883 in this respect {z) B. A. 1883, Sch. II. (12).
require the trustee to elect whether he will redeem or require a

reaUsation, and if he does not within six months signify in writing
his election, the equity of redemption or other interest in the
pohoy vested in the trustee by reason of the bankruptcy passes
to the creditor and his debt is diminished by the amount of the
assessed value.
^^ ^^^ Sometimes happen that after a mortgagee of a policy has
mort*a*eo
who has valued his security at the then surrender value of the policy and
Ind p'ioved"^
proved for the balance of his debt, the policy falls in or is otherwise
for balance, largely increased in value shortly afterwards, and the question
arises whether the estate of the bankrupt mortgagor is entitled to
benefit from the sudden increase of value or whether it is the sole
property of the mortgagee. Before the Act of 1883, the bank-
ruptcy rules provided that the creditor assessed the value of his
if
security and proved for the balance of his debt, he " shall be bound
to pay over to the trustee the amount which his security shall
produce beyond the amount of such assessed value, and the trustee
shall be entitled at any time before realisation of such security to
redeem the same on payment of such assessed value." Under
that rule it was held that a mortgagee having valued and proved
for the balance of his debt could never retain out of the proceeds
of the policy more than the assessed value and the amount of any
premiums which he had paid since the bankruptcy, with interest
at 4 per cent., and any excess had to be handed over to the bank-
rupt's estate, even although the trustee never objected to the
valuation nor offered to redeem (a). This was no doubt a hard-
ship on the mortgagee who continued to pay the premiums and
might have been a loser by keeping up the policy on a long hfe,
although he would derive no compensating benefit if the life fell
prematurely. The present rules provide a remedy in this respect,
because the mortgagee who has valued can call upon the trustee
to elect whether he will redeem or require a realisation, and if he

does neither within six months the trustee's equity of redemption
is foreclosed and all future benefit of the policy falls to the mort-
gagee. If the mortgagee neglects to exercise his right of caUing
upon the trustee to elect, the position is practically the same as
under the old rules, because the trustee can elect to redeem at
any time after the policy moneys have become payable.
Separate Where separate securities are held by one creditor in respect of
securities
(a) King, Mx parte (1875), L. R. 20 Eq. 273.

—
BANKRUPTCY 615
separate debts, the creditor, unless he has the right of consolida- to be valued
^
^^P^''*
tion, should value the securities separately and prove for the
total unsecured balance. A trustee in bankruptcy has no right
to give a secured creditor the benefit of consolidation to which he
is not entitled by allowing him to value the securities in a single
lump sum and to prove in respect of the difference between their
aggregate value and the total debt.
Pearce, In re, [1909] 2 Ch. 492
B. and Co. were creditors of P. for £6497, and for different portions of that Pearce, In re.
total debt they held two securities, (1) a vendor's lien in respect of certain
shares, (2) a mortgage on a freehold property, a debt, and certain policies of

insurance. was adjudicated bankrupt in August, 1899, and B. and Co. sent
P.
in a proof valuing their security at a lump sum of £3806, and claiming to prove
for the balance. At the request of the trustee they afterwards gave details of
their valuation as follows :
Vendor's lien on shares, £1325

policies £205
Mortgage \
freehold 1
£0276 (
^^^^
debt /
3806
In February, 1901, a composition of 12s. in the pound was agreed to.

Shortly afterwards the trustee, having received a larger amount than was
expected on the debt, paid B. and Co. £2276 and the 12^. dividend on the balance
of the aggregate debt for which they had proved. In March, 1901, the bank-
ruptcy was annulled, and an order made revesting his property in P. In 1 903
the policies were sold, and B. and Co. received some money on them. In 1904 P.
created further charges on the freehold propert}'. The subsequent mortgagees
now claimed against B. and Co. an account of what was due on their mortgage
and redemption. B. and Co. claimed to hold both their securities as a con.
solidated mortgage for the whole balance of the £3806, at which the securities
had been valued. At first they claimed to have the right to consolidate
apart from the bankruptcy proceedings, but during the argument abandoned
this claim, and relied solely on the bankruptcy proceedings as having in effect
consolidated the two securities. They maintained that a trustee in bank-
ruptcy might allow a creditor, who had a small debt charged on a property of
large value and a large debt charged on a property of small value, and had no
right to consolidate, to prove for one aggregatesum and value the securities as
one aggregate security, and thus in effect to get the benefit of consolidation.
The Court of Appeal held that a trustee had no power to allow a secured creditor
to obtain in this way a greater advantage over unsecured creditors than he
was entitled to. In this case, after the bankruptcy had been annulled, the
securities must be treated as if there had been no bankruptcy, except that the
debt must be taken to be reduced by the amount for which B. and Co. had
proved and received a dividend. The securities must stand separately, and
a subsequent mortgagee of the freehold was entitled to redeem the mortgage
upon payment of what was due upon that deed only. B and Co. were held
entitled to cbarge in account against the mortgage the total debt of £2481,
with interest and premiums paid on the policies after the date of the receiving
order. On the other side of the account they must credit the £2276 on the
date when received and the money received on the sale of the policies.
Debts prov- Generally all debts and liabilities present or future, certain or
able in bank-
ruptcy. contingent, to which the debtor is subject at the date of the re-
ceiving order or to which he may become subject before his dis-
charge by reason of any obligation incurred before the date of the
receiving order, are deemed to be debts provable in bankruptcy,
and the trustee is bound to estimate the value of future or con-
tingent liabilities, subject to the review of the Court, if the creditor
is dissatisfied with his valuation (c).
Covenant to Under the Bankruptcy Act, 1849, covenants by a debtor or

pay future
premiums. other person to pay the annual premiums on a hfe policy were
held not to be contingent habihties within the meaning of that
Act, and therefore not debts provable in bankruptcy (d). Under
the Bankruptcy Act, 1861, express provision was made for
liabilities of this kind, and the person entitled to the benefit of
the covenant might, if he thought fit, apply to the trustee for a

valuation and prove in the bankruptcy
(e). Under the Act now
in force hability to pay an annual premium comes within the
general definition above cited of debts provable in bankruptcy,
and therefore the party entitled to the benefit of the covenant
must prove in the bankruptcy, because the liability will be ex-
tinguished on the discharge of the bankrupt (/). A surety for
the principal debtor on a covenant to pay premiums cannot, after

the bankruptcy and discharge of the debtor, recover from him
premiums which the creditor has after the discharge compelled
the surety to pay to him. The debtor's liability to creditor and
surety are both debts provable in bankruptcy, and are therefore
discharged on the debtor obtaining his certificate (3). On the
bankruptcy of a surety his contingent liabihty to the creditor is
also a debt provable in bankruptcy, even although the

principal
creditor is absolutely solvent, and therefore if the surety has
become bankrupt and has obtained his discharge the creditor can
no longer resort to him.
37. (e) B. A. 1861, s. 154.

(c) B. A. 1883, s.
(d) Warburg v. Tucker (1858), 1 (/) B. A. 1883, ss. 37, 30.

E B. & E. 914 ; Mitcalfe v. Hanson (g) Saunders v. Best (1864), 17
(1866), L. B. 1 H. L. 242 ; Amott v. C. B. N. S. 731.
HoUer (1852), 17 Jur. 318.
BANKRUPTCY 017
On a life policy the value of a covenant to pay future premiumf? Value of siioh
''°^®"*" •
has been held for the purpose of proof in bankruptcy to be the

sum which the Insurance Company would take as a single pay-
ment in commutation of the remaining premiums {h).
Miller, In re (1877), 6 Ch. D. 790
A
settlor covenanted to pay £5000 to his marriage settlement trustees on Miller, In re.
hisdeath and to insure and keep insured his life for that sum. He paid the
premiums on such a policy for some years and became bankrupt, and the
marriage settlement trustees paid the premiums for some years. The trustee
in bankruptcy admitted a proof on behalf of the trustees for £2052 as the value
of the covenant based upon an estimate of the amount required to purchase
a paid-up policy. After a dividend of 10 per cent, had been declared, but
before it had been and the trustees of the settlement
paid, the bankrupt died,
received the policy moneys. The Court held that they were not entitled to
receive the dividend on the proof as admitted, but, on the other hand, the Court
refused to expunge the proof, and ordered the trustee in bankruptcy to pay
the full loss actually sustained by the trustees owing to the breach of covenant,
that is the premium in fact paid by them amounting to £766.
But where a mortgagee holds a policy as security for a debt Proof by

and the debtor has covenanted to pay the premiums, the mort- ^°^ g^sê-
gagee having valued the policy and proved for the balance of the
debt cannot also prove for the value of the covenant to pay the
premiums because the debt is treated as extinguished fro tanto by
the value of the security and as to the balance by the proof in

bankruptcy (i).
At any time after a receiving order is made, the debtor may Composition
°'' scheme
submit a scheme of arrangement for payment of a composition, or ^°^^^^ °^
of
arrangement
and if at a meeting of creditors a majority in number and three
fourths in value ofall the creditors who have proved, resolve to
accept the proposal, the scheme becomes binding subject to the

approval of the Court (j). A scheme so accepted and approved
binds all the creditors so far as relates to any debts due to them
and provahle in bankruptcy (j). A certificate of the official
receiver that a composition or scheme has been duly accepted and
approved is, in the absence of fraud, conclusive as to its vaUdity (j).
If the debtor makes default in complying with the provisions of
[h] Bank of Ireland, Exparte (1886), (1886), 12 A. C. 20.

17 L. R. Ir. 507. B, A. 1890, s. 3.
( ;)
(i) Deering v. Bank of England
the composition or scheme it may be annulled and the debtor
adjudged bankrupt without prejudice to anything already done

under the scheme (fc). Sometimes a composition or scheme is
accepted after the debtor has been adjudged bankrupt, and where
that is the case the bankruptcy continues until the debtor has
fully satisfied his obligations under the scheme and then the
bankruptcy is annulled by order of the Court.
Prima facie Prima facie a scheme of arrangement only vests in the trustee
does not
include after- such property as the debtor is entitled to at the date when the
acquired scheme was sanctioned by the creditors. After-acquired property
property.
is not included in the scheme unless there an express stipulation
is
to that effect (Z). The approval of the scheme by the Court is

equivalent to an order of discharge of the debtor {!).
Property dis- The provisions of the Bankruptcy Act relating to the proof of
tributed as in
bankruptcy. debts and the realisation and distribution of property apply to the
administration of a scheme of arrangement except in so far as the
scheme provides otherwise (m). Thus the rights of secured
creditors are prima, facie the same as if they were proving in
bankruptcy, but the express terms of the scheme may enlarge or
restrict their rights (n).
Small bank- In the case of small bankruptcies where the property of the
ruptcies
under £300. debtor is not likely to exceed in value £300, the Court may order
the estate to be administered in a summary manner. In such
cases the official receiver acts as trustee (o).
Administra- Where judgment has been obtained in a county court and the
tion order in
Countv Court.
debtor is unable to pay the amount forthwith and alleges that his
whole indebtedness amounts to a sum not exceeding £50, inclusive
of the debt for which the judgment is obtained, the judge may
make an administration order under which the registrar of the
County Court administers the estate of the debtor in favour of
such creditors as are scheduled by the debtor or have come in and
proved their debt before the registrar. An administration of the
debtor's estate in a County Court is different from a bankruptcy.
(k) B. A. 1890, s. 3. D. 171 ; Pearce, In re, [1909] 2 Ch.

{!)Groom, In re, [1891] 1 Ch. G95. 492.
(m) B. A. 1890,8.3(17). (o) B. A. 1883, r.. 121.
\n) Bolton v. Ferro (1880), U Ch.
SUCCESSION ON DEATH 619
Although the registrar may, for the purpose of administration,

issue execution against the debtor's goods, the whole property of
the debtor does not vest in the registrar as in the trustee in bank-
ruptcy, and the debtor is not discharged from all debts provable in
bankruptcy, but only from the debts of the scheduled debtors (jp).
When in the administration of the estate of a deceased person Administra-

^
the estate proves insufficient for the payment in full of all debts of°deoeased
the rules of bankruptcy as to the rights of secured creditors insolvent,
and as to the debts and liabilities provable will be observed (jpp).
The estate of a deceased insolvent may be administered accord-

ing to the law of bankruptcy upon the petition of a creditor.
No such petition may be presented after any proceedings have
been commenced for the administration of the estate, but a judge
of the Chancery Division may, on proof that the estate is insufficient
to pay its debts, transfer the proceedings to the Bankruptcy Court,

and that Court may make an order for administration according
to the law of bankruptcy, and thereupon the whole estate shall
vest in the official receiver who shall realise and distribute the
estate (q). The estate to which the official receiver is entitled under Bankruptcy
an order for administration includes only the estate which belonged ^°^'^
^^°l
'
to the deceased at his death. The rules of bankruptcy which apply,
entitle the trustee in bankruptcy to take in certain cases the

property of persons other than the bankrupt do not apply, and
therefore the 47th section does not apply, and the official receiver
cannot procure the setting aside of voluntary settlements under
the provisions of that section (r). If a settlement is void or
voidable at common law or under the Statute of 13 Elizabeth, he
may have it set aside but not otherwise.
Section XIII. —Succession on Death (s)
The right of succession to the personal property of a deceased Succession to

person depends upon the law of his domicile at the date of death, property
ip) B. A. 1883, s. 122. 10th edition (1905) ; Ingpen on Exe-

(pp) Judicature Act 1875, s. 10. cutors (1908) ; Theobald's Law of
iq) B. A. 1883,3. 125. Wills, 7th edition (1908); Under-
(V) Gould, In re (1887), 19 Q. B. D. hill and Strahan on the Interpreta-
92. tion of Wills and Settlements, 2nd
(«) See Williams on Executors, edition (1906).
depends on If he leaves a will its validity is, subject to the exceptions contained
deceased's
domicile.
in Lord Kingsdown's Act (f), to be determined by that law, and if
he dies intestate his personal property will be distributed according

to that law. A will disposing of personal property is construed
primarily according to the law of the testator's domicile at the date
of death, but if the testator expresses an intention that it shall be
construed otherwise, that intention must prevail and the fact that
a will is framed in the form and language of a foreign country may
be a sufficient indication of the testator's intention to have it
construed according to the law of that country.

Wills Act, The law of England relating to the validity of a will is con-
1837.
tained in the Wills Act, 1837 (u), and amending Acts of 1852 (x)
and 1861 (y).
Infant's will. No will made by any person under the age of twenty-one years
is valid (a).
Married A married woman can dispose of her separate property by will

woman's will.
in the same manner as if she were a feme sole. The concurrence
of her husband is not necessary, and the will does not require to
be re-executed or republished after his death. It speaks from the
death of the testatrix and passes all property of which she was
then capable of disposing {&).
Lunatic's A will made by a person of unsound mind or procured by

will.
undue influence, is invalid.
Pormalities By the Wills Act, 1837 (c), the following formalities are essential
essential to
valid execu-
to the vahd execution of a will in England.
tion of a will.
(1) the will must be in writing ;
(2) the will must be signed at the end by the testator or by

some person in his presence and by his direction ;
(3) the signature must be made or acknowledged by the

testator in the presence of two witnesses ;
(4) each witness must subscribe the will as such in the presence
of the testator.
The Wills Act Amendment Act, 1852 (d), defines more parti-
cularly how the signature at the end of the will may be placed
(t) Infra, p. 021. sailorover the age of fourteen may

(u) 7 Will. 4 and 1 Vict. c. 20. thus be valid {Hiacock, In the Ooods
{x) 15 &
16 Vict c. 24. of, [19011 P. 78).
(y) 24 &25 Vict. c. 114. (6)7 Will. 4 and1 Vict. c. 26, s. 8, is
(a) 7 Will. 4 and 1 Vict. c. 20, s. 7. in effectrepealed by Married Women's
But as the wills of soldiers on active Property Act, 1882 (45 & 40 Vict.
service and of marines and seamen c. 75),andMarried Women's Property
at sea are excepted from the Wills Act, 1893 (50 & 57 Vict. c. 03).
Act, a, will disposing of personalty (c) 7 Will. 4 and 1 Vict. c. 20, ^. 9.
and made by an infant soldier or (d) 15 & 16 Vict. c. 24, s. 1.
and enacts specifically that nothing written below the signature

or after the signature has been made shall have any effect.
The signature of the testator or witnesses may be by mark (e) Signature;
or initials (/), and proof that the party subscribing could not
write is not essential to the validity of a signature by mark (g).
If the will is signed by some other person for and by the direction
of the testator, it is equally a good execution whether that other

person signs his own name on the testator's behalf (h) or writes
the testator's name or stamps it with a rubber stamp (i).
The testator's signature is sufficiently acknowledged by the Acknowledg-
testatot in the presence of the witnesses if the will bearing the witnesses,
testator's signature is placed before the witnesses and they are

asked in the presence of the testator to sign as witnesses, even
although the witnesses do not know the document is a will and
may not have actually seen the signature (k).
Under the Wills Act, 1861 (l) (Lord Kingsdown's Act), wills Lord Kings-
""^"^^ "*
made by British subjects are in certain cases valid, as regards
personal estate, although not made in the form required by the
law of the place where the testator was domiciled at the time of
his death. made out of the United Kingdom, a will of a British
If
subject is vaUd if made according to the form required either by

the law of the place where the same was made or by the law of
the place where the testator was domiciled when the same was
made or by the laws then in force in that part of the British
Dominions where he had his domicile of origin. If made within
the United Kingdom a will of a British subject is valid if made
according to the forms required by the laws for the time being in
force in that part of the United Kingdom where the same was made.
No will is revoked or made invalid or altered in construction
by reason of any subsequent change of domicile of the person
making the same (m).
When a will upon the face of it is properly executed, the pre- Presumption
^^^
gumption is in favour of due execution. Definite proof is necessary oution.
to rebut that presumption, and the defective memory of the
witnesses alone is not sufficient (n).
(e) Clarke, In the Goods of (1858), (i) Jenkins, In the Goods of (1863),
1 Sw. & Tr. 22. 3 Sw. & Tr. 93.
(/) Blewitt, In the Goods of {1880), (&) Daintree v. Butcher (1888), 13
5 P. D. 116. P. D. 102.
(g) Baker v. Dening (1838), 8 (i) 24 & 25 Vict. c. 114, ss. 1, 2.
Ad. & E. 94. (m) S. 3.
{h) Clark, In the Goods of (1839), (w) Thomson v. Hall (1852), 2
2 Curt. 329. Rob. E. 426.
Nuncupative The WiUs Act, 1837, does not affect the validity of wills made
^^'^
or sailor" ^^ soldiers on actual military service or mariners or seamen at
sea (o). By Common law, such persons, if over the age of 14,
could make a nuncupative will disposing of personal property
either orally or by some informal and unattested writing and this
right is still preserved.
Attesting If an attesting witness, or the wife or husband of an attesting
no benefit.'^^
witness, takes any benefit under a will, the attestation is vahd but
the gift is void (p).
Revocation Every will made by a man or woman is revoked by marriage
by marriage.
m so
•
j. i -i ,. . ,
except lar as it exercises a power of

,
appointment over pro-

perty which would not in default of the exercise of appointment
pass to his or her representatives (q).
Revocation No will or codicil can be revoked otherwise than as aforesaid
will. by another will or codicil executed in manner above specified
01'
orby some writing declaring an intention to revoke the same and

executed in the manner in which a will is required to be executed
or by burning, tearing, or otherwise destroying the same by the
testator, or by some person in his presence and by his direction,
with the intention of revoking the same (r).
Whether or not a will or codicil is revoked by a subsequent

will or codicil is a question of the testator's intention to be gathered
from all the testamentary writings.
Simpson v. Foxon, [1907] P. 54
Simpson V. The testator made a will on March 15, 1898, whereby he appointed his
Foxon. daughter sole executrix and trustee, and devised and bequeathed all his real
and personal property to her upon trust. On September 11, 1903, he insured
his life in the British Workmen's and General Assurance Company for £4 13«.,
and executed a printed form of will provided by the company. This will
began, " This is the last and only mil and testament of mc, John Foxon."
It purported to bequeath the policy to H. B., who was appointed the executor
of the will. It did not deal with the testator's general estate, nor did it
expressly revoke the earlier will. On April 11, 1905, the testator executed
a codicil which was described as " a codicil to the last will." The codicil
purported to revoke all previous appointments of executors and trustees, and
appointed H. S. and W. B. to be joint trustees and executors " of my will."
By the codicil the testator gave a legacy to W. B. and H. B. jointly and another
legacy to his daughter. The President, Sit Gorell Barnes, decided that the
testator did not intend to revoke his first will, and accordingly granted probate
of all three documents.
(o) 7 Will. 4 and 1 Vict. 0. 26, s. 11. (q) S. 18.
ip) S. 15. (r) S. 20.

No alteration made in a will after execution has

any effect Alteration o£
'"^^'
unless executed as a will and no will or codicil which has been
(s),
revoked can be revived otherwise than by re-execution of the will

or codicil or by the execution of a codicil showing an intention to
revive it, the will to be revived being actually in existence (i).
On the question whether any property is or is not comprised wiii speaks

^''°^ death,
in a bequest, the will is to be construed so as to speak and take
effect as if it had been executed immediately before the death of
the testator unless a contrary intention shall appear by the will {u).
Where any person being a child or other issue of the testator Bequest to
to whom any property is bequeathed dies in the lifetime of the
taUir does not
testator having issue, and any of such issue of such person are lapse by death
hving at the time of the testator's death, the bequest does not hefetves
lapse but takes effect as if the death of such person had happened '^^"^•
immediately after the death of the testator unless a contrary
intention shall appear by the will (a;).
If the deceased dies intestate as to the whole or part of his Succession on

'" ^^ ^^''
personal property, such property passes to his administrator or
executor and is divisible in accordance with the Statutes of Dis-
tribution (y). If the deceased leaves a widow (z) and issue, the
widow takes one-third, unless her right has been barred by ante-
nuptial settlement. Subject to the widow's share the property is
divided equally among the issue, but no child except the heir at
law may participate unless he brings into hotch pot
any settle-
ment advancement which he may have received from the
or
deceased in his Hfetime. The issue take per stirpes, that is to
say, the issue of a deceased child take the parent's share. If
the intestate leaves issue and no widow, the issue take the
whole. If the intestate leaves no issue the widow takes the
whole of the net real and personal estate up to £500 (a).
Beyond that amount she takes half of the personal property.
(s) 7 Will. 4 and 1 Vict. c. 26, s. 21. of Frauds (29 Car. 2, c. 3), s. 2i ; 1
[t) S. 22. Jac. 2, c. 17, s. 7.
(u) S. 24 applies to the will of a (z) A divorced wife has no interest
married woman made during cover- on intestacy (Nares, In the Goods of
ture, whether she is or is not posses- (1888), 13 P. D. 35).
sed of any separate property at the (a) Intestates Estates Act, 1890
time of making it, and the will does (53 & Where the
54 Vict. c. 29).
not require to be re-executed or widow takes
estate exceeds £500 the
republished after the death of her her £500 rateably from realty and
husband (Married Women's Property personalty. The provisions of this
Act, 1893 (56 & 57 Vict. c. 63), Act do not apply to cases of partial
s. 3). intestacy {In re Twigg's Estate, [1892]
(x) 7 Will. 4 and 1 Vict. c. 26, s. 33. 1 Ch. 579).
(y) 22 & 23 Gar. 2, c. 10 ; Statute
If the estate includes property of the nature of a contingent

reversion, its value for the purpose of determining what the
widow is entitled to must be estimated as at the death of the
intestate (fe). Thus, if the intestate's whole estate was a policy
on the hfe of another not exceeding £500 surrender or market
value, the widow would take it absolutely, and the fact that
the life dropped and £2000 became payable on it before
another premium was paid would not entitle the next of kin
to claim any part of it. Subject to the claim of the widow,
if any, the personal property goes to the next of kin of the
deceased. If the father is aUve he takes it all. If the father
is dead, but the mother or any brother or sister is hving, they
and any children of a deceased brother or sister take in equal
shares, the children taking per stirpes. If the deceased leaves
neither father, nor mother, nor brother nor sister, the property is
divided between all the next of kin of equal degree, that is counting
up from the deceased to the common ancestor and down to the
next of kin. The next of kin thus ascertained take in equal
shares per capita and there is no representation in the case of one
who has died leaving issue (c).
Intestacy of The estate of a woman is divisible on intestacy in the same

married
manner as the estate of aman except that in the case of a married
woman her husband, on survivmg her, takes the whole of her pro-
perty as to which she has died intestate (c). In the absence of a
will, personal property ia possession passes to him directly by
operation of law without the necessity of administration {d), but
the husband taking such property is liable for his wife's debts to
the extent of the separate estate which he takes from her (d).
Where the property is not in possession but is a chose in action,
the husband, although entitled jure mariti, must take out letters
of administration in order to complete his title (e). If a married
woman has made a will and appointed executors and is only partly
intestate, all her property passes to her executors who, to the
extent of the intestacy, take it subject to debts in trust for the
husband (/).
All interests All interests in a policy, whether legal or equitable, pass on
pass on death They represent the person
(jg^^jj ^q the personal representatives.
representa-
tives (6) Heath, In re, [1907] 2 Ch. 270. (e) Partington v. A.-G. (1869),
(c) Statute of Frauds (29 Car. 2, L. R. 4 H. L. 100 ; Harding, In the
u. 3), s. 24 ; 1 Jac. 2, o. 17, s. 5. Goods of (1872), L. R. 2 P. & D. 394.
(d) Surman v. Wharton, [1891] 1 (/) Smart v. Tranter (1899), 43
Q. B. 491. Ch. D. 587.
of a deceased with respect to all his rights and Uabilities upon his
contracts even although not mentioned in the contract (g).
If the deceased had the right to sue at law upon a policy that Right to sue
^* ^^^^"
right passes to his legal representatives, and the company must
look to them for a legal discharge, even although the deceased had
no right in equity to the policy. Once the right to sue in law has
vested in the representatives of a deceased person it doe^. not pass
from them except by an assignment in writing sufficient to satisfy
the Policies of Assurance Act, 1867, or the Judicature Act, 1873.

Where, therefore, a right to sue in law is traced from a deceased
person through his personal representatives, the claimant must
show that the representatives were properly constituted and that
they executed a written assignment of the policy. Even a specific
legatee under the will of the deceased must show an assignment
to him from the personal representatives, for otherwise he cannot
give a legal discharge (h). In the case of chattels, including lease-
holds, a specific legatee acquires a legal title upon the assent of
the executor to the legacy, and such assent need not be in writing
but may be implied from the conduct of the executor (i). It is
submitted that this rule does not extend to legal choses in action.
Before the Policies of Assurance Act, 1867, and the Judicature
Act, 1873, an executor could not pass the legal chose in action to
a legatee either by assent or express conveyance, and there is
nothing in those Acts which enables him to do so except bj^ an

assignment in writing.
Purely equitable interests in a policy also pass to the legal Equitable
'"*^'^'^'^*^-
representatives of a deceased person : but as no assignment in
writing is necessary to pass such interests, the assent of the
executors to a legacy is sufficient to give the legatee an inde-
feasible title in equity (j).
The duty of an executor or administrator is to apply the Application

property first in payment of the debts of the deceased. All estateTo ply
obhgations, present or contingent, which were binding upon a ^bU^-
testator during his life even although created by a voluntary deed
are debts which must be paid before the claims of beneficiaries
(g) Wills V. Murray (1850), 4 Elliott v. Elliott {184:1),QM. &W. 23 ;
Ex. 843, 865. Culverhouae, In [1896] 2 Ch. 251.

re,
{h) Brandt v. Heatig (1818), 2 (/) If, therefore, some considerable
Moore, 184 Canham v. Rust (1818),
;
time has elapsed since the death it is
STaunt. 227 Bishop v. Curtis(1852),
; better not to pay the personal repre-
18 Q. B. 878. sentatives without the concurrence of
(i) Cray v. Willis (1729), 2 P. W. the legatee.
529 ; Doe v. (?wj/(1802), 3 East, 120;
I.L, 40
under the will can be considered. Debts are first paid out of
residue. If that is not sufficient they are paid out of general
pecuniary legacies which are abated in proportion (k). A specific
legacy, as, for instance, certain named stock or a certain insurance
policy specifically bequeathed, is only liable to abatement to pay
debts after the general pecuniary legacies have been exhausted (T).
How rights of The equitable claim of a legatee or next of kin ultimately

beneficial
owners may entitled to the benefit of the policy moneys can only be enforced
be enforced. through the deceased's personal representatives or, if the personal
representatives refuse to take proceedings, by suing in his own
name and joining the personal representatives as defendants, and
the Court will only allow proceedings to be taken in this form if
satisfied that there is a reasonable cause of action which the

personal representatives themselves ought to have enforced (l).
If the personal representatives have in the exercise of a bond fide

discretion settled a claim against an insurance company, the
beneficiaries cannot question the settlement.
Title of Personal representatives are either executors or adminis-
executors,
trators. An executor takes his title by appointment in the
will of the deceased. His title is complete as to every interest
from the death of the testator, and all acts done by him either
before pro- before or after probate are binding on the estate (m), and even the
bate.
death of an executor before probate does not invalidate his acts (n).
An is granted and although a

executor cannot sue until probate
receipt givenby him before probate is a good discharge to the
debtor, no debtor ought to pay an executor before probate (o).
There is always the chance of an apparent executor turning out
to be no executor by reason of a subsequent will or invalid execu-
tion of the will or otherwise, and a discharge given by an apparent

executor without probate would not bind the real executors when
probate was granted to them (o).
after probate. But when probate is granted the acts of the executors to whom
it has been granted are valid and bind the estate, even although it
turns out that the will under which the grant was made was
forged and the probate is afterwards revoked and letters of ad-
ministration granted (p).
(it) testator has made

Where the (n) Johnson v. Warvnch (1856), 17
his real estate a fund to pay debts C. B. 516.
that may relieve the general or Newton
(o) v. Metropolitan Ry.
specific legacies.
{I) Yeatman v. Yeatman (1877),
(1861), 1 Dr. & Sm. 583.
7 Ch. D. 210. (p) Allen V. Dundas (1789), 3

(to) Wanhford v. Wankford (1799), T. B. 125.
1 Salk. 299.
Administrators take their title by a grant of letters of ad- Title of ad-

™"'^*rators.
ministration which is made either in cases of intestacy or where
the will appoints no executors or having appointed executors the
executors renounce probate or die before probate, or die after
probate without leaving an executor. Acts done by an adminis-
trator before the grant do not bind the estate (g) unless con-
firmed by him subsequently to the grant (r). If letters of ad-
ministration are granted in the belief that there is no executor
and afterwards a will is found appointing executors the grant of
administration is void ah initio and all acts done by the adminis-
trator are void as against the estate except acts done in the due
course of administration, that is, acts which the administrator
was compellable to do (s). Where letters of administration are
revoked for some other reason than the existence of an executor,
as, for instance, when the administrator had obtained the grant by
suppressing a will which did not appoint an executor, the grant
is not void ab initio, and notwithstanding the subsequent revoca-
tion all acts of the administrator bind the estate (i).
Where there are two or more executors, the title passes to Survivorship
the survivors or survivor upon the death of one or more of them. eS^cutors.
Upon
the death after probate of a sole executor or of the sole Death of sole
survivor of several executors, the title passes to his executor who, executor after
if he proves his own testator's will, cannot renounce the subsisting
probate of the first testator's will (w).
Where an executor survives the testator but dies without before pro-
having taken probate or renounces probate, the right of such

person in respect of the executorship wholly ceases and the re-
presentation devolves in like manner as if he had never been

appointed an executor (x).
The title of an executor does not pass to his administrator nor Death of
does the title of an administrator pass to his executor or ad- ^tôuT

ministrator (y) ' and therefore on the death of an executor without leaving exe-
cutor.
leaving an executor who accepts probate or upon the death of an
administrator if in either case the estate has not been fully ad-
ministered there must be a grant of letters de bonis non to a new
administrator who alone can give a discharge.
(q) Wankford v. Wankford (1799), (u) Brooke v. Haymes (1868), L. R.

1 Salk. 299. 6 Eq. 25 ; Eeid, In the Goods of, [1896]
(r) Foster v. Bates (1843), 12 P. 129.
M. & W. 226. {x) 21 & 22 Vict. c. 95, s. 16.
,(s) Ellis V. Ellis, [1905] 1 Ch. 613. (y) Moseley v. Rendell (1871), L. B..
(t) Boxall V. Boxall (1884), 27 6 Q. B. 338.
Ch D 220.
Personal Where an executor appointed by a will or a person entitled

representa-
tive beyond
to administer is beyond the jurisdiction, the Court may appoint
the jurisdic- some other person to administer the estate until the proper
tion.
person shall return and apply for a full grant of probate or
administration {z), and after a full grant of probate or adminis-
tration has been made if the executor or administrator is beyond
the jurisdiction at, or at any time after, the expiration of twelve
calendar months from the death of the testator the Court may
make a limited grant in favour of a creditor or legatee, or next
of kin (a).
Infant exe- Where an executor is an infant under twenty-one years of age,
cutor.
he cannot act until he attains full age, and if he is a sole executor
the Court will not make a grant of probate to him until then, and
meanwhile administration with the will annexed is granted to
the guardian of the infant executor (&). If one of several executors
is an infant, the others may act and probate will be granted to
them, and to the infant when he attains full age. When the
next of kin or person who, but for minority, would be entitled to
a grant of administration is under age, a grant may be made to
his guardian during infancy.
Temporary Other temporary grants of administration may be made during

grants.
the mental incapacity of the person entitled or in the case of a
lost will until the will be found.
Married A married woman has now full capacity to act as executrix or
woman as
administratrix, and can as such give a complete discharge without
representa-
tive. the concurrence of her husband (c).
Settlement of From the above it will be seen that an insurance company is

claims with
safe in paying to or settling with an executor after he has obtained
personal
representa- probate. Payment to an administrator must be more carefully
tives.
considered. Apparently the company are safe in paying the full
claim to an administrator, whether permanent or temporary, if
they are satisfied that the administration has not been revoked
at the time of payment. A receipt given for the full claim would
be an act done in due course of administration and would bind
the estate even if the administration was subsequently revoked.
A settlement of a claim under the same circumstances would
probably not bind the estate, and therefore, if a large sum is
(z) Court of Probate Act, 1857 (6) 38 Geo. 3, c. 87.

(20 & 21 Vict. 0. 77), s. 73 ; Suarez, Married Women's Property Act,
(c)
In the Goods of, [1897] P. 82. 1882 (45 & 46 Vict. e. 75, s. 18) ; 1907
(a) 38 Geo. 3, X!. 87; 20 & 21 Vict. (7 Edw. 7, 0. 18), s. 1.
c. 77, 3. 74.
involved, a settlement of a disputed claim with an administrator

should not be made company should allow
out of Court, but the
proceedings to be brought and make a reasonable payment into
Court.
Where there are several executors of a will or several ad- One personal
miuistrators in a grant ef administration the receipt of one only uve^Tyâct
is a sufficient discharge for money due to the estate and paid f°'' ^^l-
before the administration is complete (d). But if the administra-
tion is complete and executors have become trustees, the receipt
of all the trustees is necessary to discharge a debtor to the estate (e),
and where a person is employed by executors to collect the estate

on their behalf he can only be discharged on the receipt of all the
executors who employed him(/). A company paying policy
moneys should, if possible, obtain the receipt of all the executors
if more than one.
If in an action brought by an executor or administrator it Insufficient
appears that the stamp on the grant is not sufficient to cover the probate"i'
value of the subject matter of the action, the title of the executor letters of
or administrator is defective and he cannot recover. An insur- tion.
ance company should not pay policy moneys unless the probate
or administration is upon the face of it sufficiently stamped, that
is to cover the net value sworn.The gross value sworn should
be at least sufficient to cover the amount of the policy moneys :
but otherwise there is probably no duty on the part of the

company to make any inquiry as to the accuracy of the amounts
sworn.
Where a creditor with an equitable charge upon a policy was Executor's
^^^
appointed executor of the assured and after his death claimed the tfe'^tas a^
policy moneys, the office, as they were bound to do in order to personal
interest.
T n T T , • 1 ,. , T
obtam a legal discharge, insisted on a receipt from the creditor
qua executor. The creditor signed in this form under protest,
and in a question between him and the assured's general creditors
itwas held that he had not surrendered his charge on the policy
and only the balance after payment of his own debt was assets in
his hands qua executor (g).
Subject to a statutory exception mentioned below, no title to Foreign

grants of
{d) Huntv. Stevens (lS10),ZT:a,v.nt. v. Harwood (1751), 2 Ves. Sen.

113 ; Nail v. Punter (1832), 5 Sim. 265.
555. (/) Lee v. Sanlceij (1872), 15 Eq.
Charlton v. Earl of Durham
(e) 204.
(1869), L. R. 4 Ch. 433 Smith v. ; {g) Olaholm v. Rowntrce (1837), 6
Everett (1859), 27 Beav. 446 ; Jacomh Ad. & El. 710.
representa- sue in an English Court can be based on a probate or administra-

tion.
tion obtained in a foreign country. If a domiciled foreigner has
property in England his representatives must obtain a grant from
an English Court (h). But where the representatives have ob-
tained probate or letters of administration in Ireland (i) or con-
firmation of executors in Scotland (k) or probate or letters of
administration in any British possession to which the Colonial
Probates Act, 1892, applies (2), the grant may be made effective
in England by being sealed by the Court of Probate in England.
Payment of If a company pays direct to a beneficiary under a will or to a
policy moneys
in absence of
representative who has not obtained an English grant, the company
proper grant. constitutes itself an executor de son tort and is liable to the creditors
of the deceased in respect of his debts and to the Crown in respect

of death duties (h).
English pro- In the case of moneys payable in respect of a poUcy upon the
bate not
necessary life of a person dying domiciled outside the United Kingdom,
where assured there is a statutory exception to the above rules to the effect that
died domi-
ciled out of the title to the policy moneys on such a policy be established may
the United
Kingdom. without a grant of representation in the United Kingdom. The
following are the statutory provisions.
Revenue Act, 1884, see. 11, as amended by Revenue Act, 1889, sec. 19
47 & 48 Vict. 11. Notwithstanding any provision to the contrary contained in any local
0. 62. or private Act of Pailiament, the production of a grant of representation from
52 & 53 Vict,
a Court in the United Kingdom by probate or letters of administration or
c. 42.
confirmation shall be necessary to establish the right to recover or receive any
Representa-
tion in the part of the personal estate and effects of any deceased person situated in the
United United Kingdom : Provided that where a policy of life insurance has been
Kingdom to any insurance company by a person who shall die domiciled
efiected with
constitute the
elsewhere than in the United Kingdom, the production of a grant of repre-
title to assets
therein sentation from a Court in the United Kingdom shall not be necessary to
situate. establish the right to receive the money payable in respect of such policy.
Claimant In the case of claims made in respect of the estate of the
trtle*arcord-
^ssured who has died domiciled abroad, the company should be
{h) New York Breweries Co. v. Kong, Jamaica, Leeward Islands,

A.-O., [1899] A. C. 62. Manitoba, Natal, New South Wales,
(i) 20 & 21 Vict. c. 79, s. 95 ; New Zealand, Newfoundland, North
21 & 22 Vict. c. 95, s. 29. West Territories, Nova Scotia, On-
(k) 21&22Vict. c. 56,r3. 12. tario, Orange River Colony, Queens-
(I) 55 Vict. c. 6, s. 2. The follow- land, Saint Helena, Saint Vincent,
ing is a list of the British Possessions South Australia, Southern Nigeria,
to which the Act applies : —
Bahamas, Southern Rhodesia, Straits Settle-
Barbados, British Columbia, British ment, Tasmania, Transvaal, Trinidad
Guiana, British Honduras, Cape of and Tobago, Victoria, Western Aus-
Good Hope; Falkland Islands, Fiji, tralia,
Gibraltar, Gold Coast, Grenada, Hong
EBNEWABLE LEASEHOLDS FOR LIVES 631
satisfied that the persons making the claim have a good title to ing to foreign
sue either by a valid grant of representation in the country where ^'^^•
the assured was domiciled or otherwise in accordance with the Estate duty,
law of that country.
Where the claimant is entitled to payment without a grant of

representation in the United Kingdom, the Inland Revenue has
sometimes claimed payment of death duties from the com-
pany (m). It is doubtful, however, whether they could substantiate
this claim, and it has never been admitted by the offices.
Section XIV. —Benewahle Leaseholds for Lives
Insurance policies are frequently granted in connexion with Life policies
leaseholds for lives. A leasehold for lives is usually a lease granted

o •^ ff™!!'^
secure
*°
for the term of three lives and the survivor of the three. A renewal,
person for whose life the lease is granted is called a cestui que
vie, and the lessee usually is, but need not necessarily be, a cestui
que Such leases are usually subject to a right of renewal,
vie.
that upon the dropping of one or more of the lives the lessee
is
has the right upon payment of a fine to put in a new life and
then the lease runs for the duration of the new lives. And even
where there is no right of renewal such leases are in practice
constantly renewed by the lessor on payment of a fine. As the
liabihty of the lessee in respect of fines is necessarily an uncertain
element it is usually found most convenient to meet the liability
by insurance for the amount of the fine either on each of the
lives separately or on the joint lives payable on the death of any
one.
Where the lease for lives is the sole property of the lessee, the Primd facie
'
necessary insurance is easily arranged and the policy is his own does not'run'*'
absolute property and does not run with the lease but must be with lease.
specifically assigned if he assigns his interest in the lease.

Where the lease for lives is the subject of a settlement the Where lease-
,. J,
. . , 1 -i -11 1 hold for lives
question of insurance more complex and it will be more con-
is ig subject of a
venient to deal first with the rights and liabilities of tenant for settlement.
life, remainderman and trustees with regard to renewals and

then to consider how those interests may be met by insurance and
how the insurance moneys are to be applied.
(to) Presumably under Finance Act, Vide supra, p. 523; and see A.-O. v
1894(57 & 58 Vict. c. 30), s. 9 (1). Wasc/c (1899), Tlie Times, June 1 4.
Settlement Taking first the case of a lease for lives which is settled by will
trustees.
without the intervention of trustees so that the tenant for life and
remainderman have both legal estates, the following rules may be
laid down.
Obligation of In the absenoe of any direction or condition in the will
tenant for life
to renew, the tenant for life is not bound to renew the lease (m). He
cannot be compelled to contribute anything to the cost of renewal
unless the remainderman has reneAved and the tenant for life
afterwards elects to enjoy the benefit of the renewal after the

other lives have dropped (n). In such case he would become
liable to the remainderman for a proportion of the fine equivalent
to his enjoyment of the renewal (w). But although the tenant
for life is not bound to renew, he may, without the consent of
the remainderman, renew and at the end of his life tenancy the
settled estate will have the benefit of the renewal subject to a
lien in favour of the life tenant's estate of the unexhausted
value of the renewal The terms of the will may impose
(o).
upon the life tenant the duty to keep the lease up by renew-
ing and putting in a new life for every life which drops during
his life tenancy (n). Prima facie where there is a direction on
the life tenant to renew he must personally bear the whole cost
of renewal (g) but the will may authorise him to charge the
;
whole or part of the cost of renewal upon the estate. In such

case he must personally bear all that he is not authorised to
charge (r). Thus he must keep down the interest on the charge
during his life tenancy, and if the amount which he is authorised
to charge is less than the fine for renewal he must pay the balance
and has no recourse against the remainderman (r). In one case
where the obligation of the tenant to renew was upon the con-
struction of the will doubtful but the tenant for life believed he
was bound to renew, and in order to meet the fine insured the
cestui que vie at his own expense without any expectation of re-
covering the cost from the remainderman, was held that he could
it
not afterwards recover a proportion of the cost on the basis of a

voluntary renewal (s).
(™) Nightingale v. Lawson (1785), (o) Tanner v. Elworthy (1841), 4

1 Bro. C. C. 440; White v. White Beav.487; £is«, /nj-e, [190312Ch. 40.
(1798), 4 Ves. 24; 9 Ves. 5.54 ; Capel (q) Blake v. Peters (1863), 1 De
V. Wood (1828), 4Russ. 500 ; O'Ferrall G. J. & S. 345.
V. O'Ferrall (1834), L. & G. temp. (r) White v. WhUe (1798), 4 Ves.
Plunk. 79. 24 ; 9 Ves. 554.
(n) White v. White (1798), 4 Ves. (») Browne v. Browne (1860), 2
24 ; 9 Ves. 554. . Gift. 304.
RENEWABLE LEASEHOLDS FOR LIVES 633
Where the renewal fine falls to be apportioned between life Cost of fine
tenant and remainderman in proportion to their enjojmient of the beWeen We

benefit of the renewal, their respective shares are finally adjusted te"™*^ ^nd
^ o
. .
remaindei-
at the termmation of the estate of the tenant for hfe. His actual man.
enjoyment can then be estimated. If he has paid the renewal
his estate has a lien upon the settled estate for the amount of such
renewal less a proportion equivalent to his enjoyment, if any. If
the remainderman has paid the renewal either in cash or by

permitting it to be charged on the estate, the estate of the tenant
for hfe is Hable for a proportion corresponding to his enjoyment.
Strictly it is impossible to ascertain the proportion between the
enjoyment of the tenant for life and the enjoyment of the re-
mainderman until the death of the cestui que vie, but in practice
the probable duration of the life of the cestui que vie is estimated
on the death of the tenant for and while the enjoyment of the
life,
tenant for life is his actual enjoyment (t) the enjoj'^ment of the
remainderman is the estimated duration of the life of the cestui
que vie after the death of the tenant for life (u). The actual en-
joyment of the tenant for life only begins on the death of the
surviving cestui que vie under the unrenewed lease. If the tenant
for life does not survive the surviving cestui que vie under the old
lease he takes no enjoyment from the renewal and his estate may
recover the whole amount of the fine from the estate in re-
mainder {x). Where the tenant for life is himself a cestui que vie
under the old lease, he can take no benefit from a renewal, and if
he renews he may, on renewal, charge the whole fine on the

estate [y).
In the case of the tenant for life having paid the fine voluntarily interest upon
his estate is entitled to a lien on the settled estate for the amount renewal,
of the fine with compound interest up to the death of the tenant
for Hfe and with simple The
interest thereafter until payment {z).
rule that the tenant for life has to keep down the interest on a
loan raised for payment of a fine only applies to cases in which the
whole burden of renewal falls on the tenant for life, where there
is a direction to renew and the tenant for life is authorised to
charge the capital on the estate or some other fund but is not
authorised to charge the interest (z).
/onesv. Jon6«(1846),5H:are,440.
(<) {y) Lawrence v. Maggs (1759), 1
Bradford v. Brown-John (1868),
(m) Eden, 453.
L. R. 3 Ch. 711. (z) Bradford v. Broim-John (1868),
{x) Harris v. Harris (1862), 32 L. R. 3 Ch. 711.
Beav. 333.
Primd facie If a tenant for insures

life tlie lives of the cestuis que vient in order
tenant for
lifeinsures to provide a fund for renewal, prima facie he must be held to have
for benefit of
so insured on behalf of the estate (a), and if the life of a cestui que
estate.
vie drops during the hfe of the tenant for life he is bound to apply
the insurance money in renewal (a). Any surplus would accrue
for his own benefit, and if there was not sufficient to pay the cost
of renewal and repay himself the premiums with interest, he would
be entitled to a hen on the estate for any deficiency made good
by him. If no life dropped during the life of the tenant for life,
the remainderman would probably have the option of adopting
or rejecting the policy on behalf of the estate. If he took the
poHcy the estate of the tenant for hfewould have a hen on the
settled estate for the premiums paid and interest. If he declined
to take the pohcy the estate of the tenant for life would have no
lien for the premiums, but the policy would remain an asset of
his estate and the settled estate would have no further claim
on it.
Where tenant In the case of the remainderman having paid the fine for
for life enjoys
renewal at
renewal and being entitled to recover from the estate of the
cost of tenant for life a contribution corresponding to the latter's enjoy-
remainder-
man the ment of the renewal, it is essential to provide against the possibiHty
latter may of that estate not being sufficient to meet the claim. Whenever
demand
security. therefore the lives of the cestuis que vient under the old lease have
dropped and the tenant for life accordingly begins to reap a benefit
of the renewal at the expense of the remainderman, the latter is
entitled to insist upon proper security that the proportion payable

by the tenant for life will be paid at the termination of the
tenancy (6). It may be that the tenant for life will reap the
whole benefit of the renewal, but it is not necessary to insist
upon security being given in the first instance for the maximum
amount (c). A calculation based upon the lives of the cestui que
vie and the tenant for life will give the sum which will probably
be sufficient to meet the claim, and if security is given upon that

calculation further security may be demanded if and when it
becomes obvious that the original security will not be sufficient (c).
The security may take the form of an insurance on the life of the
tenant for life for the probable amount payable, payment of the
premiums being secured upon the rents and profits of the estate
(a) Browne v. Browne (1860), 2 (c) Jones V. Jones (1846), 5 Hare,
Qm. 304. 440.
(6) Reeves v. Creewick (1839), 3
Y. &C. 715.
EBNEWABLE LEASEHOLDS FOR LIVES 635
and a further insurance demanded when the first becomes

insufficient {d).
Where a leasehold for lives is settled in the hands of trustees, Settlement

with trustees.
the powers and duties of the trustees in respect of renewal is
controlled by statute.
Trustee Act, 1893, sec. 19

19. —
(1) A trustee of any leaseholds for lives or years which are renewable Power of
from time to time, either under any covenant or contract, or by custom or trustees of
j^^"^^^ôjs
usual practice, may, if he thinks fit, and shall, if thereto required by any
person having any beneficial interest, present or future, or contingent, in the renew and
leaseholds, use his best endeavours to obtain from time to time a renewed raise money
lease of the same hereditaments on the accustomed and reasonable terms,
purpose,
and for that purpose may from time to time make or concur in making a
surrender of the lease for the time being subsisting, and do all such other acts
as are requisite Provided that, where by the terms of the settlement or will
:
the person in possession for his life or other limited interest is entitled to enjoy
the same without any obligation to renew or to contribute to the expense of
renewal, this section shall not apply unless the consent in writing of that
person is obtained to the renewal on the part of the trustee.
(2) If money is required to pay for the renewal, the trustee effecting the
renewal may pay the same out of any money then in his hands in trust for
the persons beneficially interested in the lands to be comprised in the renewed
lease, and if liis hands sufficient money for the purpose, he may
he has not in
raise the money by mortgage of the hereditaments to be comprised
required
in the renewed lease, or of any other hereditaments for the time being subject
to the uses or trusts to which those hereditaments are subject, and no person
advancing money upon a mortgage purporting to be under this power shall
be bound to see that the money is wanted, or that no more is raised than is
wanted for the purpose.
mencement of this Act, but nothing in this section shall authorise any trustee
to do anything which he is in express terms forbidden to do, or to omit to do
anything which he is in express terms directed to do,, by the instrument

creating the trust.
The above section does not alter the ultimate adjustment of Apportion-
the expenses of renewal between tenant for and remainder- S^^newal"

life
man (e).
'
The will or deed of settlement may lay the burden on l^^tween
, . , » , 1 1 ,
tenant for life
may
, , , ,
one or the other as in the case of legal estates or the trustees and remain-
'^^'^™^°-
have a discretion as to where the burden is to fall (/). In the
absence of any direction in the settlement, the burden is to be borne
in proportion to actual enjoyment (g). Where the trustees are
(d) Reeves v. Creawick (1839), 3 Dr. & Wal. 417 ; Jones v. Jones
Y. & C. 715. (1846), 5 Hare, 440.
(e) Baring, In re, [1893] 1 Ch. {g) Baring, In re, [1893] 1 Ch. 61 ;
61. Jones v. Jones (1846), 5 Hare, 440;
(/) Trench v. Si. George (1838), 1 Greenwoodv.Evans{184:l),'iBeav.4:i.
directed to renew out of the rents and profits of the estate that
does not throw the whole burden on the tenant for hfe Qi). They
may raise the sum by mortgaging the rents and profits, and the
tenant for life must keep down the interest during his tenancy and
pay his share of capital according to his actual enjoyment {i).
Where the direction is to pay the fine out of the annual rents and
profits then the whole burden falls on the tenant for life for the
time being until the amount of the fine is paid (k). A bare direc-
tion to trustees to renew without specifying where or how the
money is to be obtained has been held to throw the burden upon
the residue of the general trust funds (1).
Cost of If trustees raise money by charging the corpus of the estate,

renewal
charged on and the tenant for life may be ultimately liable to contribute a
corpus. proportion of the fine in respect of his enjoyment, he may be called
upon to give reasonable security to provide for such contribu-
tion (m), and this may be effected by an insurance on his life with
a charge on the annual profits to meet the premiums (re).
Cost of If the money is paid out of annual rents and profits or advanced
renewal paid
out of rents by the tenant for life and the tenant for life is not, by the terms of
and profits. be
the settlement, bound to bear the whole burden his estate will
entitled to his proper proportion : but he cannot claim repayment

before the end of his tenancy because until then his actual enjoy-
ment cannot be ascertained. he dies during the life of the
If
cestui que vie under the old lease, his estate will be entitled to
recover the whole fine (o).
Power of Apart from express authority under the settlement, trustees

trustees to
insure to have apparently no authority to insure the lives of cestuis que vient
provide funds so as to provide a fund for renewal
(p). In one case where trustees
for renewal.
had done so the amount of premiums was disallowed in their
account (p). Where the consent of all the beneficiaries can be
obtained, insurance out of annual profits is the most convenient

way of raising the money (p).
The details of the following cases where questions arose re-
lating to the insurance of cestuis que vient for the benefit of lease-
holds for lives may be useful.
{h) AinsUe v. Harcourt (1860), 28 (m) Jones v. Jones (1846), 5 Hare,

Beav. 313. 440.
(i) Allan v. Backhouse (1813), 2 (n) Reeves v. Oreswich (1839), 3
V. & B. 65. Y. & C. 715.
(k) GoUez V. Wood (1861), 29 Beav. (o) Harris v. Harris (1862), 32
482. Beav. 333.
(I) Stone V. Theed (1787), 2 Bro. (p) Greenwood v. Evans (1841), 4
C. C. 243. Beav. 44.
EENBWABLE LEASEHOLDS FOR LIVES 637
Browne v. Browne (1860), 2 Giff. 304

A lease for lives was settled by will, and on the construction of the will it Browne
was doubtful whether the tenant for life other than the first tenant for life Broiime.
was bound to renew the lease. The tenant for life, not being the first tenant
for life, thought he was bound to renew, and insured the life of the younger
ceskii que vie in the names of himself and the executors of the will, and paid
the premiums until his death. The Court held that even on the assumption
that the tenant for life was not bound to insure, yet he did insure for the benefit
of the trust in the belief that he was bound to do so at his o^vn expense and
without any expectation of having the premiums repaid. The representatives
of the tenant for life had therefore no claim on the policy either for the sum
insured or for repayment of premiums. Bonus additions, however, were in
a different position. According to the terms of the insurance bonus additions
were to be applied in diminishing the premiums or to be paid to the insurers
at their option. In this case the Court thought it was not unreasonable to
assume that the tenant for life would have elected to receive the bonuses
accruing in his lifetime and that such bonuses would form part of his estate.
A declaration was therefore made that proceeds of the policies should belong
to the trust estate except that the bonuses which accrued during the life of
the tenant for life should be part of his estate.
Mailer v. Stanley (1864), 2 De G. J. & S. 183

A lessee of a lease for was in the habit of insuring each of tho
tliree lives Meller v.
lives and applying the insurance moneys in renewal when a life dropped. Stanley.
He
died leaving a will directing his trustees to accumulate the income of his real
and personal estate for twenty-one years, and at the end of that period to
stand possessed of all the property and accumulations in trust for A for life
with remainder to her children successively in tail. The trustees had power
to pay the annual premiums on the policies on the three existing lives, to renew
the lease, and to obtain other policies " on the plan now adopted." A sur-
vived the period of accumulation, and had two children. A life having dropped
during A's life tenancy, the trustees received the policy monej's which they
applied in renewing the lease, but owing to bonus additions there was a large
surplus. They insured the new life. Since the termination of the period of
accumulation, the premiums on all the policies were paid out of the income
payable to A. On the death of A her representatives claimed the surplus
proceeds of the policy on the which had dropped, and an assignment to
life
them of the three existing policies according to the general rule that where
real and personal estate are given together the person who takes the first
estate tail in the real estate takesan absolute interest in the personalty. It
was held that there was an express trust to hold and apply the policies for the
purpose of renewing the leaseholds. The proceeds of each policy as it fell
due were to be applied in pajdng (1) the fine for renewal (2) the first premium;
on a new policy (3) the future premiums on the policies existing at the
;
testator's death. It was therefore ordered that a sum should be retained to

meet the future premiums on the old policies, and subject to that and payment
of the first premium on the new policy the surplus policy moneys should
belong to A's estate.
Section XV. —Policy on Life of Debtor
Insurance on Where a policy is effected upon the hf e of a debtor in order to give

life cf debtor,
security to the creditor,the question frequently arises as to whether,
in the absence of any express agreement, the creditor is entitled
to thepohcy absolutely or whether he is only entitled as mortgagee
and bound to account to the debtor after satisfaction of the debt.
Whether the policy is in the name of the debtor or creditor is not
material, except as frimii facie evidence of ownership, and as a
general rule the pohcy must be deemed to belong to that one of
them who, as between themselves, is ultimately Uable to pay for
it (r).
Debtor the debtor expressly or impliedly agrees to pay the premiums

If
entitled to
policy for
foran insurance on his life, the policy belongs to him in whatever
which he form it may be effected (s). An agreement to pay the premiums
pays.
may be impHed if the creditor, in his account with the debtor,
debits the premiums to the debtor, and the debtor either pays
them (<), or admits that they are properly charged (m). But where
the creditor has merely charged the premiums against the debtor
in his own books that is only evidence of his intention to charge
the debtor if he could, and is not sufficient to show that the
debtor agreed to pay the premiums or that the policy was his (a;).
Where credi- Where there was no obligation on the debtor to pay premiums
tor under-
during the non-payment of the debt, but he agreed on the debt
takes to
transfer the being paid pay a proportion of the premium for the unexpired
off to
policyon
portion of the current year, it was held that the obligation to pay
repayment
of debt. this proportion of the premium implied an obligation on the
creditor to transfer the policy {y). But in such a case the pohcy
clearly belongs to the creditor absolutely until the debt is paid oil,
and where the creditor merely undertakes that on repayment

he will transfer a pohcy which the debtor is under no obligation
to pay for, the creditor is not bound to account for the proceeds
if the debtor dies before repayment {z). And similarly, if the debtor
(r)Bro«mv..FreeTOam(1851),4DeG. England Life and Fire (1858), 4 Jur.

& Sm. 444 Pennell v. Millar (1857),
; N. S. 158.
23 Beav. 172 Dryadale v. Piggott
;
(t)HoUandv.Smith{1806),e'Esp. 11.
(1856), 8 De G. M. & G. 546 Gottlieb ; (u) Morland v. Isaac (1855), 20
V. Cranch (1853), 4 De 6. M. & G. Beav. 389.
440 Oourtenay v. Wright (1860), 2
;
(x) Bruce v. Garden (1869), L. R.
Giff. 337 Salt v. Marquess of Nor-
;
5 Ch. 32.
thampton, [1892] A. C. 1. [y] Williams v. Atkyns (1845), 2
Storie's Trusts, In re (1859), 1
(«) Jo. & La T. 603.
Giff. 94; Simpson v. Walker (1833), {z) Bashford v. Cann (1863), 11
2 L. J. Ch. 55 ; Martin v. West of W. R. 1037.
POLICY ON LIFE OP DEBTOR 639
has a mere option to purchase the poHcy on repayment that is

not an option which can be exercised by his representatives after
hisdeath (a). A creditor who has covenanted to assign a pohcy
on repayment of the debt does not thereby undertake to keep the
pohcy on foot but, on the other hand, he could not sell it or
;
surrender it so as to defeat the debtor's right to it (b).
The fact that a debtor has agreed to pay interest which is When interest
obviously calculated so as to include the cost of insurance is not odculated to
sufficient to entitle him to claim as his a policy effected by the ô^^J" <^°^^ °^
creditor on his hfe (c). In such a case the creditor is entitled to

the additional interest, whether he effects a policy or not. He is
not bound to insure, and if he does insure he insures entirely at

his own expense with money which but for the insurance would
go into his own pocket.
Where the pohcy is effected at the debtor's expense he is Debtor's
entitled to the equity of redemption even although the poHcy ^^"^'^
°l^^
is name of the creditor as assured, or has been asigned to
in the
him (d). Any condition that the creditor may not redeem is
void if made at the time the security was created (e). On re-
payment of the debt the debtor is entitled to have the policy
assigned to him if not already in his name, and if he dies while
the debt is unpaid, his representatives are entitled to have the
policy moneys apphed in discharge of the debt, and to have the
balance paid over to them. Failure on the part of the debtor to
pay the premium in accordance with his promise to do so does
not entitle the creditor who has paid the premiums on the debtor's
default, to treat the pohcy as his absolute property (/). He
may add the premiums to the debt, but otherwise the policy still
belongs to the debtor (/).

If the pohcy is effected entirely at the creditor's expense, the Insurance at
have no concern with the application of
debtor's representatives ^f oredlt«T^
the policy moneys, and apart from agreement the debtor has no
right to a transfer on paying the debt (3).
(a) Leu'is v. King (1875), 44 L. J. (d) Martin v. West of England Life

Ch. 259. and Fire (1858), 4 Jur. N. S. 158;
(h) HawUna v. Woodgate (1844), Simpson v. Walker {\83S), 2 L. J. Ch.
7 Beav. 565. 55 ;In re Storie's Trusts (1859), 1
(c) Cranch (1853), 4 De
Gottlieb v. Giff. 94; Holland v. Smith (1806),
G.M. &Gr. 44:0; Fremev.Brade(1858), 6 Esp. 11 Morland v. Isaac (1855),
;
2 De G. & J. 582 Preston v. Neele

; 20 Beav. 389.
(1879), 12 Ch. D. 760; Knox v. (e) Salt v. Marquis of Northampton,
Turner (1870) ; L. R. 5 Ch. 515, [1892] A. C. 1.
Kavanagh v. Waldron (1846), 9 Ir. (/) Drysdale v. Piggott (1856), 8
Eq. R. 279 Ex parte Lancaster (1851),
; De G. M. & G. 546.
4 De G. & Sm. 524 hnt see Gourtenay
; (g) Brown v. Freeman {1S51), 4 He
V. Wright (1860), 2 Giff. 337. G. & Sm. 444 ; Humphrey v. Arabin
;
640 TITLE TO LIFE POLTOIES
Debtor not Before the case of Godsall v. Boldero Qi) was overruled (i), it
entitled to
have policy
was held that a policy of life insurance was a policy of indemnity,
moneys ap- and that therefore a creditor insuring the life of his debtor could not
plied in ex-
tinguishing recover from the insurance company after he had received payment
the debt. of his debtfrom the debtor, and as a sort of corollary to that rule
itwas held that if the creditor received the insurance money on
the death of the debtor it ought primarily to be appUed in extin-
guishing the debt (fe). Both these theories have long been ex-
ploded, and now if a creditor insures on his own account without
being bound to do so, and without any agreement express or
impUed to give the debtor the benefit, he may recover both the
debt and the insurance money for his own sole benefit. At first
sight it seems perhaps unfair that he should be paid twice over,
but neither the debtor nor the insurance company have any
reason to complain. Each pays in strict accordance with the
contract he has made. And there is no reason why either should
claim as a windfall the benefit of another contract with which
he has no concern.
Where Where a creditor has assumed the position of a trustee towards
creditor in-
sures as
his debtor he may, as trustee, be bound to account for a policy on
trustee. the debtor's life ; as where the debtor assigned to his creditor a
contingent reversionary interest in trust to pay the debt and hold
the balance to the use of the debtor, and the creditor insured the
debtor's life to provide against the contingency (l).
Where trans- Where a transaction between creditor and debtor is set aside,
action be-
the right to a policy effected on the debtor's life does not depend
tween debtor
and creditor on whether the debtor would or would not have been ultimately
is set aside.
liable to pay for it under the agreement between them because
ex hypothesi the agreement has ceased to exist (m). Apparently

the policy must be considered as the policy of the party who has
actually paid the premiums, and if the creditor has paid the
premiums he wiU not, as a rule, be allowed to charge them in
(1836), Ll. &

G. (Plunket) 318 ; Millihen v. Kidd (1843), 4 Drury, and
Bell V. Ahearne (1849), 12 Ir. Eq. R. Warren, 274.
576; Law v. Warren (1843), Drury, (h) (1807), 9 East, 71.
31 ; Foster v. Roberts (1861), 7 Jur. (i) Dalbyv. India and London Life
N. S. 400 ; Lea v. Hinton (1854), 5 (1854), 15 C. B. 365.
De G. M. & G. 823 Baron v. Fitz- ;
gerald (1840), 6 Bing. N. C. 201

(k) Henson v. Blackwell (1845), 4
;
Hare, 434.
Brovm v. Freeman (1851), 4 De G. &
Sm. 444 Humphry v. Arabin (1836),
;
(1) Ex parte Andrews (1816), 2
Ll. & G. (Plunket) 318 Bell v. ;
Rose, 410.
Ahearne (1849), 12 Ir. Eq. B. 576 ;
(m) Pennell v. Millar (1857), 23
Law V. Warren (1843), Drury, 31 Beav. 172.
FRIENDLY SOCIETIES 641
account against the debtor (n), but where the debtor in applying
to have the transaction set aside offered to refund the money
and interest and to comply with " any other fair and reasonable
demand," the Court set aside the transaction on condition that
he paid the premiums in exchange for a transfer of the policy (o).
If the insurance company has paid the policy moneys without Illegality of
questioning the validity of the pohcy, the plea that the pohcy ^g'Zm
was illegal or void cannot be set up by a creditor as against the payment,
debtor or vice versa (p).
A debtor effecting a pohcy on his own life in order to give Debtor
security to his creditor is a trustee of the policy to the extent of policy for
creditor.
the debt from the time it is effected (g).
Section XVI. —Friendly Societies and Benevolent Funds
Insurance in friendly societies, trade unions, and benevolent Insurance
funds does not stand on quite the same basis as insurance in an of member's
®^''^*®-
ordinary life company. Apart from the peculiar statutory con-
ditions in the case of registered societies and benevolent funds
controlled by special Acts of parliament, the rules of a society
may be such as to create a fund which is not prima, facie part of
the member's estate, but is a fund in the hands of the society
as trustees for specific purposes subject to a limited power of
appointment by the member in accordance with the rules of the
society.
Ashby V. Costin (1888), 21 Q. B. D. 401
The rules of an unregistered friendly society provided that the committee Ashby v.
might pay the death allowance to such person or persons as in their discretion ^''*'''"'
they might think fit, and in the event of there being no surviving relatives
nor any special bequest of the allowance by the member then the society
should be liable to pay only the funeral expenses of the member. A member
of the society died intestate, and the society paid the allowance to his sister.
It was held that the creditors of the deceased had no right to the money which
was not part of his estate. The Court held that if he had bequeathed the
money it would thereby have become part of his estate, and liable to his
debts. But the allowance was not the property of the member in the sense
(n) Pennell v. Millar (1857), 23 (p) Freme v. Brade (1858), 2 De G.

Beav. 172; Ex' parte Shaw (1800), & J. 582; but see Henson v. Blaek-
5 Ves. 620 ; Bromley v. Smith (1859), well (1845), 4 Hare, 434.
26 Beav. 644. {q) Winter v. Easum (1864), % Dg
(o) Hoffman v. Cooke (1801), 5 G, J, & S, 27?,
Ves. 622.
1,1*,
41
of its belonging to him absolutely in his lifetime. He had only a certain

power appointment by will, and if he did not choose to exercise that power
of
the allowance was a fund payable among his relatives in the discretion of the
committee, and not at his disposal.
Davies, In re, [1892] 3 Ch. 63

Davies, In re.
A clergyman had effected an insurance in the Clergy Mutual Assurance
Society. The poUcy -promisedpay the sum insured three months after the
to
assured's decease to the person entitled thereto by the rules. The rules provided
that any member of the society might nominate any person or persons his,
her, or their executors, administrators, or assigns, to receive any sum assured by
any such member, and if no nominee was appointed, or a nominee having been
appointed had died in the member's lifetime, the sum should be paid to the
member's widow if alive, or, if not, to his children in equal shares, and failing
them, to the next of kin but the sum assured was payable to the assigns
;
of the assured in preference to his nominee in any case where their claim should
have arisen under any specific disposition or charge by any instrument in
writing not testamentary, and in case there was no nomination was payable
to the assigns of the assured by any writing testamentary or otherwise. The
assured never made any nomination nor any specific disposition of the policy,
but by his will, which did not refer to the policy, he left the residue of his pro-
perty to the widow and children of a deceased son. His three daughters, who
were also the executrices of his will, claimed the policy moneys under the
rules, and the widow and children of the deceased son claimed them as part
of the residuary estate. North, J., held that the three daughters were entitled.
They had a vested interest in the policy moneys under the rules of the society,
and that interest could only be defeated by the assured dealing with the pro-
perty in certain specified ways, that is by nomination, or specific charge, or
disposition. He had not dealt with it in any of those ways, and therefore
itremained the property of his daughters, and did not pass under a general
bequest of residue. North, J., said he did not altogether assent to the language
of Mr. Justice Cave in Ashley v. Costin that the money was not
" the pro-
perty " of the assured because he had a contingent interest in it which would
have become absolute if he had exercised his power.
Customs Several cases have been decided relating to claims on the

Annuity and
Benevolent
Customs Annuity and Benevolent Fund. This fund was estab-
Fund. lished in 1816 by Act of parliament (r), for the benefit of widows
and children and other relatives of persons employed in the
Customs. The Act and rules establish the conditions upon which
the fund shall be distributed upon the death of a member.
Customs Annuity and Benevolent Funds Act, 1818, see. 9
Directors 9- The said directors shall and may if they deem it expedient admit any
may admit person or persons to be nominee or nominees of any subscriber to the said
(r) 56 George 3, o. 73 (Private and Personal), amended by 34 & 35 Vict.

C 103, and 59 Vict. o. U,
fund who may not be a relative or relatives of the said subscriber and the nominees as
;
subscribers,
said nominee or nominees so admitted as aforesaid shall and are hereby declared
to have, and thereafter to continue to have to all intents and purposes the
same and the like interest in the said fund and in the advantages thereof
as if the said nominee or nominees had been a relative or relatives of the said
subscriber under and subject in every respect to the rules and regulations
approved and ratified as aforesaid.
Customs Annuity and Benevolent Fund Rules, 1872

1. The Customs Annuity and Benevolent Fund shall continue to be raised
by subscription upon the principle of life insurance, and shall form a fund for
the benefit and relief of widows, children, relatives, and nominees of officers
or persons belonging to the department and under the control of Her Majesty's
Customs, and the admission by the directors of a nominee or nominees of
subscribers imder the said Act shall as to the person of such nominee or nominees
take place during the lifetime of such subscriber. And any such admission
may from time to time be revoked or annulled by the subscriber at his will
or pleasure, or by the directors at their discretion, where they shall have just
cause to believe that such admission has been procured in fraud of the principle
and policy of the fund. Every nominee of a subscriber shall be entitled to
such proportion only of his insurance in the fund as shall be limited and
directed by the subscriber in conformity with these regulations.
11. The directors may during the lifetime of a subscriber at his instance
exclude his widow from all benefit of the fund on account of misconduct on
her part proved to their satisfaction.
12. The capital money forthcoming at a subscriber's death by virtue of
his insurance shall, subject to the following regulations, be appropriated
according to the directions contained in his will or codicil, or in any instrument
in writing signed by him in the presence of an attesting witness, and deposited
with the directors during his lifetime or within three calendar months after
his death, and which instrument may at the option of such subscriber be
made absolutely irrevocable or in default of any such directions in manner
hereinafter prescribed. Provided always that where no such instrument in
writing shall have been so deposited as aforesaid, but one shall subsequently
be found duly signed and attested as aforesaid, the directors may, if they
think fit, receive and act upon such last mentioned instrument at any time
before the money forthcoming under the insurance shall have been paid or
appropriated, but after such payment or appropriation shall once have been
made no instrument or writing containing other directions not deposited
with the directors as aforesaid shall have any force or effect whatsoever.
The widow's share of the capital money forthcoming by virtue of her
husband's insurance shall not be less than one-third if appropriated in creation
of an annuity, nor less than the interest for her life of two-thirds if set apart
for investment, and in either case the remainder of the said capital money
forthcoming shall be subject to the directions of the subscriber, and shall be
applied or paid in any manner or proportions he may think fit for the benefit
of his widow, children, blood relations, or any of them, or his nominee or
nominees who shall have been duly admitted by the directors ... if there
be no widow then the whole capital fund shall be subject to the directions
of the subscriber as aforesaid.
If a subscriber die leaving issue without having by will or such other in-
strument as aforesaid directing the application of the capital money herein
placed at his disposal, the same shall become the property in equal proportions
of such of his children as shall be living at his death, and the issue of such,
ifany, as shall be then dead leaving issue then living, such issue to take
among themselves in equal proportions the share to which their parent or
respective parents would have been entitled if living.
If there shall be no widow, child, or other issue as aforesaid of such sub-

scriber, the whole capital money shall belong to the person or persons entitled
as his next of kin, according to the Statute of Distributions, and shall be paid
to the legal personal representatives of such subscriber in trust for such person
or persons ; but the receipt of the said legal personal representatives shall
effectually discharge the directors of the said fund from seeing to the appli-
cation of such capital money.
Subscriber's Under the above-mentioned Act and rules the subscriber's

iii^^^sst in the fund is a Hmited power of appointment (s). His
limtted*power
of appoint- share does not form part of his estate to bequeath as he pleases (<).
ment.
The widow takes a vested interest to the extent of one-third,
which interest is only defeasible by exclusion under rule 11 for
misconduct. Subject to that the widow and children are bene-
ficiaries among whom or to any one of whom the fund may be
appropriated by the properly executed direction of the subscriber.
A stranger may be admitted as beneficiary by nomination and
acceptance under rule 1, and having been admitted the subscriber
may appropriate the fund to him to the exclusion of the children.
Probably where a beneficial interest in the fund is intended to go
to a stranger, that stranger ought to be nominated and accepted
as nominee, and a nomination of a trustee will not entitle a bene-
ficiary to a share of the estate. But where a trustee is nominated

and the directors of the fund are made aware of the objects of
the trust, and accept the nomination of the trustee, that is in
effect a nomination and acceptance of the and the beneficiaries,
directors of the fund cannot afterward object that there was no

formal nomination of the beneficiaries (m). The nomination of
a stranger under rule 1 and the appropriation of the fund to
him under rule 12 may be effected by the same instrument as
where a settlement or will is executed and delivered to the
directors, and they accept it nomination (u). The fund may
as a
be appropriated to a beneficiary so as to give him and his assigns
(s) A.-O. V. Rowsell (1844), 36 Ch. (t) PhMUps'sInsuranceJnre (ISSS),

T>. 67»i. ; A.-G.v.Abdy (1862), 1 H. & 23 Ch. D. 235.
0.266; Urquhartv.BuUerfieldilSSI), (m) Urquhart v, Butterfield (1887),
37 Ch. D. 357. 37 Ch, D. 367.
an absolutely vested interest not necessarily conditional upon the

appointee surviving the subscriber (a;). Thus an appropriation to
the marriage settlement trustees of a child of the subscriber is
good as an appropriation to that child, notwithstanding that

under the settlement her husband an unadmitted stranger takes
a and the child predeceases the subscriber (x).
life interest,
The subscriber may nominate a stranger with the object of Nomination

mortgaging the subscriber's share to him as security for an advance. ^
°vay oT^^"^
The directors ought at the time to be informed of the object of mortgage,
the nomination (?/). An appropriation of the fund to a mortgagee

duly admitted as nominee will be valid to the extent of the debt,
and as to the surplus the fund will go as it would have in default
of appropriation (j/).
Phillips's Insurance, In re (1883), 23 Cli. D. 235
A subscriber to the Customs Annuity and Benevolent Fund made no PhUUpts's

nomination under rule 1. He died leaving three children surviving him, and Insurance,
^^'
having made a will whereby he purported to bequeath fund
his interest in the
to a stranger. The Court held that the children were entitled to the fund as
against the stranger. The subscriber's interest in the fund was not part of
the subscriber's estate to bequeath as he pleased, and he could only appropriate
the fund to a stranger if he had been admitted as a nominee under the Act.
Urquhart v. Butterfleld (1887), 37 Ch. D. 357
A subscriber to the Customs Annuity and Benevolent Fund, being un- TJrquliurt v.
married and illegitimate, made a will by which he appointed trustees, left Butterfield.
certain pecuniary legacies, and left the residue of his estate to his uncle. The
will contained no reference to the subscriber's interest in the fund. He after-
wards became insane, and being domiciled in Scotland a curator was appointed,
and at his instance the Court of Session nominated him " nominee " of the
subscriber for behoof of the legatees under his will. The directors admitted
the curator as nominee, and he paid the premiums until the death of the sub-
scriber, who died without recovering his reason. The will was proved in
Scotland. The curator claimed as against the secretary of the fund a declara-
tion that he was entitled to payment as the nominee of the subscriber. It was
admitted that the nomination by the curator was as effective as if made by
the subscriber himself, but it was contended that a nomination must be for
a beneficial interest. The Court held that the directors having accepted the
nomination could not now object to its form, and that in effect there was a
good nomination of the beneficiaries, and a good appropriation of the fund for
their benefit.
(x) Pocock's Policy, In re (1871), (y) Maclean's Trusts, In re (1874),

L. R. 6 Ch. 445. 19 Eq. 274.
Pocock's Policy, In re (1871), L. E. 6 Ch. 445

-^ subscriber to the Customs Annuity and Benevolent Fund, being a
Pocock's
Policy, In re. widower, executed and forwarded to the directors an instrument in accordance
with rule 12, directing that his share in the fund should be paid to the trustees
of his daughter's marriage settlement. The trusts of the settlement were for his
daughter for life, and after her death for her husband for life, and after the
death of the survivor for the children with an ultimate destination to the
daughter absolutely. Neither the trustees nor the daughter's husband were
ever formally admitted by the directors as nominees. The daughter died
during the subscriber's lifetime, leaving one child. Upon the death of the
subscriber, leaving a son, it was contended that the son and daughter's child
were entitled to share the fund on the ground that the appointment to the
trustees of the marriage was void as being for the benefit of an unadmilted
stranger. The Court held that the appointment was good, being essentially
for the benefit of his daughter.
Maclean's Trusts, In re (1874), 19 Eq. 274
Maclean's A subscriber to the Customs Annuity and Benevolent Fund executed and
Trusts, In re. deposited with the directors of the fund an instrument in accordance with
rule 12, directing that a sum of £1400, amounting to two-thirds of his share,
should on his death be paid to the trustees of an insurance company, and
requesting the directors of the fund to admit them as his nominees. The
appointment was declared to be irrevocable. This document was accompanied
by an oral representation from the subscriber that the object of the appoint-
ment was to oMain a loan from the insurance company in order to disincumber
certain property for the ultimate benefit of his family. The directors of the
fund admitted the trustees of the company as nominees. Thereupon the
subscriber mortgaged his interest to the insurance company to secure a loan
of £900. Upon his death the personal representatives of the subscriber
contended that the appointment to a mortgagee was void and contrary to
the principle of the Act. The Court held that the appointment was good.
Registered Insurance policies and death benefits payable by friendly

friendly
societies, societies, industrial and provident societies, and trade unions
industrial
which have been registered under the Acts relating thereto are
and provident
societies, and not enforceable by action, and disputes between members or
trade unions.
persons claiming under them and the society or union must be
settled in manner provided by the rules (z). Claims payable on
the death of a member are payable to his nominee if nominated
Nominations. in accordance with the statutes (a). A nomination, to be effective
must comply with the following conditions
as a nomination, (1)
:
—
The nominating member must be not less than sixteen years of
(z) F. S. A. 1896, sec. 68 ; T. U. A. 1876, sec. 10, amended by 46 & 47

1876, sec. 4 ; Ind. P. S. A. 1893, sec. Vict. 47, sec.
c. 3 ; Ind. P. S. A.
49. 1893, sec. 25.
(o) F. S. A. 1896, sec. 56 ; T. U. A.
PEIENDLY SOCIETIES 647
age ; (2) the nomination must be in writing under the hand of the
member (b), and deUvered at or sent to the registered office of
made in a book kept at such office (3) the
the society or union, or ;
amount payable to the nominee must not exceed £100.

If the amount of the fund payable by a friendly society or Nomiuatiou
'"^
trade union on the death of a member exceeds £100 the nominee ^^qq^
is entitled to payment up to that amount, but with regard to the
excess the sum is payable to the member's personal representa-
tives as part of his estate (c). If the amount of the fund standing
to the credit of a member of an Industrial or Provident Society
exceeds £100 at the time a nomination is made then such nomi-
nation is totally ineffective as such, and the whole fund remains
part of the member's estate (d).
If, however, at the time of the nomination the amount of the

fund does not exceed £100 the nomination is effective to the
extent of £100, notwithstanding that the total fund standing to
the member's credit exceeds £100 at death (dd).
A nomination may be revoked by a member, and if desired Revocation of

°°™'°* '°°"
another nominee substituted. But revocation can only be effected
in the same manner as the nomination is required to be made,
and a revocation made otherwise is ineffective as a revocation of
the original nomination (c).
no properly nominated nominee in existence the

If there is Default of
"°™'°^*'°°-
fund payable on the member's death forms part of his estate. If
he has died intestate the fund up to the amount of £100 is to be
administered by the society without letters of administration
among such persons as appear to a majority of the directors or
trustees to be entitled to receive it. Any excess over £100 is
payable to his administrators.

The beneficial interest in the fund does not necessarily belong BeneBciai
'"
to the nominee. A person may be nominated on the under- f"n®J^^*
standing as between him and the member that he shall hold
the fund as trustee, and such trust will be enforced by the Court.
If, however, a person is nominated without any such under-
standing or other reservation he takes a vested beneficial interest,
and the member cannot afterwards deprive him of the beneficial
(6) In Scotland the nomination in Scotland have to be executed by a

must be a probative document notary public on his behalf,
according to Scottish law, and the (c) Bennettv. Slater, [1899]lQ.B.i5.
mark of a member who cannot write (d) Baxter, In the Goods of, [1903]
is not a sufficient signature: Morton P. 12.
V. French, [1908] S. C. 171. A (dd) Griffiths v. Eccles Provident
nomination by such a member would Society, [1911] 2 K. B. 275.
648 TiTLE TO LIFE POLICIES
interest by assignment inter vivos or by will unless he has first
revoked the nomination in the manner provided by the Act (e).
Assignment Where there no nomination, or the nomination is bad or has

is
inter vivos or
by will.
been revoked, or the fund is in excess of £100, the member may
pass the beneficial interest by assignment inter vivos or by will,
and the personal representatives or the. society, as the case may be,
will hold the money in trust for the assignee or the beneficiary
under the will (e).
Invalid A nomination which is invahd under the statute as a nomination

nomination
effective as
either because it has not been properly notified, or because it
wiU. purports to nominate funds in excess of £100, may nevertheless

be valid as a will, and the Court will grant administration with
the nomination as the will annexed (/).
Bennett v. Slater, [1899] 1 Q. B. 45
Bennett v. A member a friendly society having nominated a person to receive

of
Slater. £100 out of thefund payable on his death, made a virill which,, without reference
to the fund, directed that the whole residuary estate should be divided between
certain beneficiaries. The beneficiaries claimed the fund, but it was held that
the nominee was entitled, firstly, because the residuary bequest could not be
construed as an expression of intention to revoke the nomination, and, secondly,
because even if there was such intention expressed in the will it would be
inoperative as a revocation.
Grififen, In re, [1902] 1 Ch. 135
Griffen, In re. A of a friendly society had not made any effective nomination
member
of the fund payable on his death, but during his lifetime he had purported
to assign the policy for valuable consideration. In a contest between the
assignee and the administrator of his estate it was held that the assignee was
entitled to the fund. There was nothing in the Act to prevent a member who
had not made a nomination from passing the beneficial interest by an ordinary
assignment. The fund was his property, and except so far as he was restrained
by the Act he might alienate it in the ordinary way. The Court discussed the
difficulty which might arise in the case of there being a written assignment
for value, and subsequently a nomination in favour of a nominee without
notice and for value. They declined to decide any such question before it
arose, but indicated that although a nomination might be conclusive as
between claimants and the society, it was not necessarily conclusive between
the claimants. Romer, L.J., also expressed the view that a nominee was not
necessarily beneficially entitled to the fund, but that he might be nominated on
the footing as between him and the member that he would take tjje fund as
a trustee on behalf of others, and those others could enforce their beneficial
interest against him.
(e) Griffen, In re, [1902] 1 Ch. (/) Baxter, In the Goods of, [1903]
135. P. 12.
FEIENDLY SOCIETIES 649
In the Goods of ^Baxter, [1903]j P. 12

A member of a society registered under tlie Industrial and Provident In the Goods
Societies Act, 1893, was entitled to shares in value exceeding £100. He signed °J -B""^^^-
a nomination paper in the form prescribed by the society, whereby he pur-

ported to give the whole amount standing at his credit at the time of his death
to his nephew. The paper was signed by him in the presence of two witnesses.
It was held that although the nomination was invalid as such, inasmuch
as the sum at the member's credit at the time of nomination exceeded £100,
yet the writing was testamentary and ought to be admitted to probate as a
will and that administration with the will annexed should be granted to the
nominee as sole beneficiary.
Grifiaths V. Ecelea Provident, &c., [1911] 2 K. B. 275

A member of a society duly registered under the Industrial and Provident Qriffiths v.
Societies Act, 1893, nominated the plaintiff as the person to whom the fund Eccles Provi-
standing to his credit in the books of the society should be transferred at his '
death. At the date of the nomination the total amount of the member's
credit was £98 13s. At the date of the member's death the total amount of
his credit was £103 6s. Td. The Court of Appeal (Farwell, L.J., dissenting)
held that the nomination was valid and effective to the extent of £100. A
nomination was valid if at the time of nomination the member's credit did
not exceed £100, and was effective to carry the amount of such credit at
that time and any increase at the date of death, but not exceeding £100
in all.
CHAPTER VII
FiKE Insukancb Claims
Section I. —Loss or Damage hy Fire
Usual form of The indemnity usually by a fire policy is aeainst " loss or
offered
indemnity. / „ a
damage uby lire.
, ^ ^t ^ î.-
An mquiry mto the precise scope oi this
indemnity resolves itself under two heads. (1) What is the
meaning of " fire " ? (2) When may the loss or damage be
deemed to be caused by the fire ?
Meaning Fire within the meaning of a fire policy means fire which has
®'
° broken bounds. There must be actual ignition where no ignition
ought to be. Damage caused by excess of fire-heat in its proper
place, or by smoke from a fire in its proper place, is not damage by
Goods burned fire. Thus, where articles are destroyed in process of manufacture
manufacture, by the excessive application of heat, whether by negligence or
pure misadventure, the damage cannot be recovered as damage
by fire, unless they have actually ignited. If they did ignite
there would probably be damage by
and therefore the express
fire,
exception in a fire policy of " loss or damage to property by or

through its undergoing any heating or drying process," is by no
means superfluous.
Austin V. Drewe (1815\ 4 Camp. 360; (1816), 6 Taunt. 436

Auslin V. The insurance was " against all the damage which the assured should
Urewe.
suffer by fire on their stock and utensils in their regular built sugar house."
The building consisted of seven stories, and from a stove on the ground floor
a flue passed up through the other floors for the purpose of heating them. At
the top of the flue was a register which was closed at night in order to retain
as much heat as possible. One morning when the fires were lit the assured's
servants forgot to open the register, and the intense heat which resulted
damaged the sugar which was being refined on the top floors. The building
was filled with smoke and sparks, but the flames never got beyond the flue
and nothing took fire. It was held that the damage to the sugar was not
_"loss or damage by fire 651
" damage by fire." Gibbs, C.J., said, " There was no more fire than always
exists when the manufacture is going on. Nothing was consumed by fire.
The plaintiffs' loss arose from the negligent management of their machinery.
The sugars were chiefly damaged by the heat and what produced that heat ? ;
Not any fire against which the company insures, but the fire for heating the
pans which continued all the time to burn without any excess, Had the . . .
fire been brought out of the fiue and anything been burned the company
would have been liable. . This is not a fire within the meaning of the
. .
policy, nor a loss for which the company undertake. They might as well be
sued for the damage done to drawing-room furniture by a smoky chimney."
And in another report (a), the same judge is reported to have said, " As no
substance therefore was taken possession of by the fire which was not intended
to be fuel for it, as the sparks and smoke caused no mischief, but as the damage
arose from an excess of heat in the rooms occasioned by the register being
shut I am of opinion that the plaintiffs are not entitled to succeed."
Damage done to the heating apparatus or surrounding property Damage done

by excess of fire-heat without improper ignition is equally beyond gre-heat.'^
the protection of a policy which insures merely against " loss or
damage by fire." Thus, damage done by the bursting of a boiler
caused by excess of ordinary fire-heat, and absence of water in the
boiler (b), or by reason of the boiler being old and worn (c), is
not damage by fire.
There appears to be no direct decision as to whether damage Damage by
done to property by excessive smoke from a fire which has not ^™°
^'
broken bounds is damage by fire. On principle it is quite clear

that it is not (d) ; but it has been held in America that where there
was ignition of soot in a chimney, and consequent obstruction of
the flue by the falhng of the lining of the chimney, the damage
caused by smoke escaping into the room was damage by fire,
and this appears to be a perfectly sound decision because the
damage was caused in consequence of an improper ignition, that
is, the lighting of the soot in the chimney (e).
The meaning of " loss or damage by fire " may be extended Excess of
by other terms in the policy so as to include damage by excess of expre^ly

fire-heat and other risks prima facie excluded. covered.
Jameson v. The Royal (1873), Ir. E. 7 C. L. 123
The insurance was on a distillery " on premises and stock in trade," against Jameson v.
loss or damage by fire with an express condition that the insurers should not ^^^ Bmjal.
(a) Holt, N. P. 126, 127. Home and Colonial (1880), 6 Q. B. D.

(6)American Touring Co. v. Oer- ',
,, . ,. „ , „^„
a,- /ioni\ r,ATtrj ccf (")AusUn V. DrewB, ante, r>. G50.
man Ftre (1891), 74 Md. 25.
l> ^^^ ^ Abingtor: Midial (1896),
(c) West India Telegraph Co. v. 166 Mass. 67.
652 FIRE INSUBANCB CLAIMS
be liable " for any loss or damage to still coppers or such like occasioned by
the ordinary flre-heat under same nor for loss to spirits or such like therein
at the time of such loss or damage." In answer to a claim for damage to
spirits the insurers pleaded that " the property destroyed consisted of spirits
and such like in a still, and that the loss complained of was occasioned by the
ordinary fire-heat under thfe said still." This plea was held bad on demurrer for
not alleging that the still was damaged by ordinary fire-heat, and that the
loss happened to the spirits therein at the time of such first-mentioned loss
or damage. The exception was based on the assumption that " loss or damage
by tiiB," prima facie included loss occasioned by ordinary fire-heat, the exception
was ambiguous, and was to be construed strictly against the insurers, and read
literally it did not exclude damage happening to the spirits unless such damage
happened at the time the still itself was damaged by ordinary fire-heat.
Where only The improper ignition which is 'prima jacie an essential element
neighbouring
property of " fire " within the meaning of a fire policy need not, however,
ignites.
be an ignition of the property insured. If other property in the
vicinity is alight, and damage is caused to the insured property
by falling walls (/), smoke, water (gf), or otherwise, as a direct
" fire " "
consequence of the fire there is and " damage by fire
within the meaning of the policy.
Lightning. There must, however, be some ignition either of the property
insured of some other property, and consequently damage by
lightning without ignition of the .property is not loss or damage
by fire Qi).
Fire must be When satisfied that there is a " fire " within the meaning of
causaproxima
of damage. the policy the next question is whether the damage was caused
by the fire. The time-honoured rule is that in all classes of in-
surance the proximate cause alone can be considered as the cause

of damage. This rule is easily stated in general terms, but its
precise meaning and application has been contested in a long

series of cases, and even at the present day the proximate cause of
loss or damage is not always easily determined. The rule with
its limitations as applicable to fire insurance may be more specifi-
cally stated as follows : —
The peril insured against must be the proximate cause
1. of
the damage (i).
(/) Johnston v. West of Scotland Kenniston v. Merchants' Mutual

(h)
(1828), 7 S. 52 ; Ermentrout v. Girard (1843), 14 N. H. 341 ; Babcoch v.
Fire (1895), 63 Minn. 305; 56 Am. Montgomery (1849), 6 Barb. N. Y.
S. R. 481 ; but see Everett v. London 637 ; Arnould's Marine Insurance
Assurance (1865), 19 C. B. (N. S.) 126. (2nd Ed.), 831 Bunyon's Fire In-
;
{g) Geisek v. The Crescent Mutual surance (3rd Ed.), 46.

(1867), 19 La. Ann. 297. (i) Everett v. London Assurance
LOSS OB DAMAGE BY FIRE 653
(i) It need not be the actual instrument of destruction (k).

For instance, where fire causes an explosion (l) or causes a
building tofall (m), the damage caused by the explosion
or fall damage by fire.

is
(ii) If the damage is the necessary consequence of the specified

peril under the physical conditions then existing there
is primd facie damage by that particular peril (n). The
cases of fire causing explosion or fall of a building are
examples.
(iii) Where the specified peril is one of the causes in a chain
of events following in inevitable sequence, it need not
be either the first (o) or last event in the chain, since all
the causes in the chain are 'prima, facie proximate causes
of the ultimate damage. Thus, if there were three
contiguous houses in a street, and an earthquake caused
house A to fall, and as a consequence fire broke out
and spread to house B where an explosion occurred
whereby house C was wrecked, the damage to house C
might be attributed equally to earthquake, fire, or ex-
plosion as the proximate cause of loss (p), and but for
the possible application of the rule in the next paragraph,
would be covered by an insurance simpliciter against
any one of these three perils.
(iv) Even although the peril insured against be the proximate
cause of damage within the meaning of the above rule,
there are cases where the damage is so far removed from
the particular peril in the chain of causation that by the
common understanding of insurers and assured it is not
deemed to be a consequence of that peril within the
meaning of the policy (q). For instance, where an
Marsden
(1865), 19 C. B. (N. S.) 126 ; (n) Montoya v. London Assurance
V. Cityand County Assurance (1866), (1851), 6 Ex. 451 ; Gahay v. Lloyd
L. R. 1 C. P. 232 Johnston v. West
; (1825), 3 B. &
Cr. 793 ; Lynn Gas
of Scotland (1828), 7 S. 52. and Electric v. Meriden (1893), 158
(k) Lynn Gas and Electric v. Meri- Mass. 570 Milwaukee and St. Paul
;
den (1893), 158 Mass. 570; Way v. Ry. v. Kellogg (1876), 94 U. S. 469,
Abington Mutual (1896), 166 Mass. 67. 474.
(I) Scripturev. Lowell Mutual (\B52), (o) Lewis v. Springfield Fire and
64 Mass. 356; Waters v. The AfwtoaZ (1857), 76 Mass. 159 Lynn ;
Merchants (1837), 11 Peters, 213; Oas and Electric v. Meriden (1893),

Oaballero v. Home Mutual (1860), 15 158 Mass. 570. See, however, Insur-
La. Ann. 217. ancew. Boon (1877), 95 U. S. 130.
(m) Johnston v. West of Scotland (p) Insurance Co. v. Tweed (\&&&),
(1828), 7 S. 52 ; Ermentrout v. Qirard 7 Wall. 44.
Fi/re (1895), 63 Minn. 305; 56 Am. (g-) Taylor v. Dunbar (1869), 4
S. R. 481, 0. V. 20f).
654 FIRE INSURANCE CLAIMS
explosion caused by fire takes place at a distance from

the insured premises, and such premises are damaged
by concussion, the loss is not deemed to be damage by
fire (r).
2. Where an independent cause operates to produce the damage

the fact that the peril insured against has given occasion for the
operation of the independent cause does not constitute the damage
a damage by the peril insured against (s). Thus, if a gable left
standing by the fire were afterwards blown down by a violent

gale, the damage caused by the falling gable would not be damage
by fire (i).
(i) This rule may, however, be modified by the custom and

practice of insurance business so as to admit recovery
in respect of damage which, although not strictly speaking,
attributable to the peril insured against as a proximate
cause does so commonly follow as a consequence that
it is deemed to be covered. For instance, where property
is damaged by water thrown on the premises to extinguish
the fire (u).
3. Where the peril insured against, or any of its inevitable

consequences operates directly as a cause of loss, there is damage
by such peril, even although some independent peril operates
concurrently to cause the damage {x).
4. The use of words such as " in consequence of " or " origina-

ting from " do not prevent the operation of the rule that the
proximate cause alone must be considered (y). Thus, loss or
damage originating from fire does not include damage done by
rioters in the confusion caused by fire (z).
There are very few EngUsh decisions on the question of

proximate cause in fire insurance.
[r) Everett v. London Assurance 4 B. & Cr. 394 ; Philpott v. Swann

(1865), 19 C. B. (N. S.) 126 ; Cahal- (1861), 11 C. B. (N. S.) 270.
lero V. Home Mutual (1860), 15 La. (t)Qaskarth v. Law Union (1876),
Ann. 217. Bunyon's Fire Insurance (3rd Ed.),
p. 37.
{s) Pink V. Fleming (1890), 25 (u) Stanley v. Western (1868),!,. B,.
Q. B. D. 396 ; De Vaux v. Salvador 3 Ex. 71, 74 ; Johnston v. West of
(1836), 4 Ad. & E. 420 ; Field Steam- Scotland (1828), 7 S. 52, 54.
ship Co. V. Burr, [1899] 1 Q. B. 579 ; (a) Seischer v. Borwick, [1894] 2
Williams and Co. v. Canton, [1901] Q. B. 548.
A. C. 462 ; The Bedouin, [1894] P. 1 ; (y) lonides v. The Universal
Inman v. Bischoff {1882), 7 A. C. 670 ; Marine (1863), 14 C. B. (N. S.) 259.
Marine v. Turner (1853), 1
Scottish (2) Marsden v. City and County
Macq. 334 ; Mordy v. Jones (1825), (1866), L, B, 1 C. P. 232.
LOSS OR DAMAGE BY FIRE 655
Everett v. London Assurance (1865), 19 O. B. N. S. 126

The insurance was in a house and against " such loss or damage as should Everett v.
or might be occasioned by fire." An explosion of gunpowder in a magazine ^'""'°"

half a mile distant from the assured's premises damaged the premises by con-
cussion of the atmosphere. The insurers declined to pay and argued that
unless the property insured sustained injury by the direct action of fire the
loss did The Court of Common Pleas held that
not come within the policy.
this particular loss was not covered by the insurance. Byles, J., said, " The
words are to be construed as ordinary people would construe them. They
mean loss or damage either by ignition of the article consumed or by ignition
of part of the premises where the article is ; in the one case there is a loss in
damage by fire." And Willes, J., said, " We are bound to look to the
the other a
immediate cause of the loss or damage and not to some remote or speculative
cause. Speaking of this injury no person would say that it was occasioned
by fire. It was occasioned by a concussion or disturbance of the air caused
by fire elsewhere. It would be going into the causes of causes to say that
this was an injury caused by fire to the property insured. The rule in jure '
non remota causa sed proxima spectatur determines this case."

'
The decision in the above case is no doubt correct. Firstly,

there was apparently no fire in the ordinary sense of the word,
that is, there was no ignition of property, and although an explosion
of gunpowder or gas caused by a lighted match, or a spark from a
pipe, may be said to be caused by fire, it is probably not a fire in
the common acceptance of the word, or in the insurance sense (a)..
Secondly, a loss of this kind happening altogether beyond the

ordinary operation of a fire is not to be deemed to be within the
contemplation of the parties as a fire risk. The words, however,
of the learned judges cannot be accepted as generally applicable
to fire insurance claims under all circumstances. The statement
that there must be ignition either of the property insured or of
the premises in which it is contained isThere can be
too wide.
little doubt that if a fire were to occur on the opposite side of the
street from the insured premises damage caused by the heat and
smoke would be covered even although there was no actual
ignition. So, too, the application of the rule that the proximate
cause alone can be considered is too strict. Loss caused by
explosion or by the fall of property during the course of a con-
flagration has never been excluded save under an express exception,
and properly so because the explosion or fall is the necessary
consequence of the fire under the physical conditions then existing
(o) See, however, an American case, contra ; Scripture v. Lowell Mutual

(1852), 64 Mass, 356,
and the fire is therefore the proximate cause of the loss in the
true sense of the word " proximate."
Johnston v. West of Scotland (1828), 7 S. 52

Johnston V. The insurance was on a house against " loss or damage which the insured
West of shall suffer by fire on the property above described." A house on the opposite
Scotland.
side of the street was burned down and a gable wall was left standing in a
dangerous condition. The Dean of Guild, who has jurisdiction in these matters,
ordered the gable to be pulled down, and as it was being demolished in accord,
ance with his instructions it fell and damaged the assured's premises. It
was held that the loss was a loss by fire within the meaning of the polioj'.
Lord Meadowbank made the following note " The I;ord Ordinary is quite
:
clear that in all questions of this kind fire must be the proximate cause of the
injury received. But he is not aware of there being any case in which it has
been held that in order to entitle the assured to their relief, it should be proved
to have been the actual instrument by which the injury sustained was
inflicted. Thus if furniture is destroyed not by the fire itself but by water
thrown in to extinguish it, or if a mirror should be broken from a stone loosened
from the building by the flames, such losses the Lord Ordinary has understood
are universally admitted to be covered by a policy of insurance against fire.
Neither has it ever been understood that the fire doing the injury should
actually have arisen or been in the premises insured for if from the reflection
;
of the conflagration in a narrow street damage has been occasioned to the

tenement opposite to those on fire it is believed it never was disputed that the
proprietors of those tenements if insured were entitled to recover. Now in
this case it is settled in point of fact that the wall which created the damage
fell in consequence of the injury it had sustained by the fire, and therefore,
although the wall was the instrument by which the damage was occasioned,
the fire was the proximate cause of the injury.'' Lord Craigie doubted
whether the decision was correct " because it does not appear that except
for the interference of the Dean of Guild the gable would have fallen." On
the finding of fact that the wall fell " in consequence of the injury sustained
by the fije " the decision in law appears absolutely sound, although if it had
been proved that the wall would not have fallen but for the interference of
the Dean of Guild the fire would no longer have been the causa proxima of
the damage, and the decision ought probably to have been the other way.
Damage The proposition that fire need not be the actual instrument
caused by
of destruction is an American case (6) where an
well illustrated in
electric
current. electric generating station and plant was insured against " loss or
damage by fire." A fire broke out and the heat of the flames
caused a short circuit between two lightning conductors. The
result of the short circuit was to produce an increase of electric
current in the dynamo, whereby extra pressure was put upon a
pulley which was ruptured thereby, causing a general break-down
(6) Lynn Qas and Electric Co. v. Meriden (1893), 158 M^ss. 570.
in the machinery. The fire had not reached the part of the build-
ing where the machinery was, but the damage to the machinery
was nevertheless held to be a " loss or damage by fire."
The question as to when damage done to property by efforts Damage done

°
made to avert or arrest the consequences of a fire can be deemed to avert or ^
be damage " by fire " is one of some difficulty (c).
extinguish a,
It is clear that
damage done by water thrown on to property to arrest a fire
cannot strictly be attributed to the fire as a causa proxima ; but,

on the other hand, where the property thus damaged has been
saved from certain destruction, the damage is invariably paid for
by insurers, and must be deemed by the common understanding
of insurers and assured to be covered by an ordinary fire policy.
In Stanley v. Western {d) Kelly, O.B., said :
" I agree that any from an apparently necessary and bmtd fide
loss resulting
effort to put out a whether it be by spoiling the goods by water or throwing

fire,
the articles of furniture out of window or even the destro3dng of a neighbouring

house by an explosion for the purpose of checking the progress of the flames,
in a word, every loss that clearly and proximately results whether directly or
indirectly from the fire is within the policy."
And in Johnston v. West of Scotland (e) Lord Meadowbank,

in the passage already quoted, said :
" If furniture is destroyed not by the fire itself but by water thrown in
to extinguish it , . . such loss is universally admitted to be covered by a
policy of insurance against fire."
The above statements, however, are purely ohiter dicta, and in

England there appears to be no direct decision to the effect that
damage caused by efforts to extinguish a fire is damage by fire.
In America it is admitted that damage to property which has
been saved from certain destruction by fire then actually raging
on the premises ought to be paid for as damage by fire. But it
has been said that damage by water, demolition, removal of
furniture, and the like is not to be deemed damage by fire (1) :
where the peril of fire is not an actual existing peril, but merely
an apprehended peril ; or (2) where the property would not in
fact, have been consumed by the fire even if the efforts to save it
had not been made. It has been held in Pennsylvania (/), that
where a fire was raging in the neighbourhood, but never reached
(c) Bunyon's Fire Insurance {3rd (e)(1828), 7 S. 52, 54.

Ed.), 51. (/) Hillier v. Alleghany Mutual
{d) (1868), L. R. 3 Ex. 71. (1846), 3 Pa. 470.
I.L, 42
• —
658 FIRE mSURANCB CLAIMS

the premises in which the goods insured were deposited, their
removal under the reasonable apprehension of danger did not
entitle the owner to recover the damage so caused as loss or damage
by fire. But there are other American and Canadian cases to
the contrary effect, where it is said that the fact that fire has not
reached the insured premises (g) or that the property would not
have been consumed Qi) is not material, the question is was there
reasonable apprehension justifying the precaution ? (h). If so there
is damage by fire. Some of these cases were considered in an
English marine insurance case. The Knight of St. Michael (i).
The insurance was upon freight, and the perils insured against
included fire and " all other perils, losses, and misfortunes that
shall or have come to the hurt, detriment, or damage of the subject
matter." Owing to the heating of a cargo of coals a large part of

the cargo was discharged at an intermediate port, and there was a
consequent loss of freight. It was held, in fact, that this discharge
was a necessary precaution for the safety of the vessel, as otherwise
the cargo would have ignited by spontaneous combustion. No
part of the cargo had, in fact, ignited at the time the discharge
was made. The underwriters admitted that if there had been
actual ignition they would have been liable for loss occasioned by
an act done to avert its consequences, but in this case they con-
tended that there was no existing peril, but only an apprehension
of a peril, and that there was therefore no loss by that peril.
Gorell Barnes, J., held that although strictly there might not have
been a by fire the loss was incurred in order to avoid a certainty
loss
of loss by fire, and therefore it was so analogous that it must be

held to be covered by the general words " all other losses and
misfortunes." In a fire poHcy there are no such general words, but
the learned judge cited with approval the dictum of Kelly, C.B.,
in Stanley v. Western (k), and probably that dictum has now been
so long acted upon as an accurate statement of the law that all
insurers on a fire poHcy must be deemed to cover the class of loss
there indicated. It may therefore be said, without serious doubt,
that a firepolicy against loss or damage by fire covers consequential
salvage damage as follows : —
If there was reasonable justification for the measures taken
to avert damage by fire, damage to property caused by
(g) Geisek v. The Orescent Mutual (i) [1898] P. 30.

(1867), 19 La. Ann. 297.
(A) Baleatracci v. The Firemen's (k) Supra, p. 657t
(1882), 34 La. Ann. 844.
; ; — ;
(1) water (l),
(2) demolition (m),

(3) removal (n),
is covered as damage by fire ; and it is immaterial whether

(a) fire had or had not actually reached the premises or goods
insured (o)
(b) the measures were taken by or on behalf of the assured or

some other person (p)
(c) the measures were taken for the purpose of saving the
property in respect of which the claim is made, or for the
purpose of saving other property threatened by fire (p)
(d) the property damaged would or would not have been

ultimately consumed by fire (g).
In the case of fires within the metropolitan area there is a Damage done
special statutory provision that any damage occasioned by the luan fire
l>"gade.
fire brigade in the due execution of their duties shall be deemed to
be damage by fire within the meaning of any policy of insurance
against fire (r). The brigade has express power to break into or
pull down any premises for the purposes of putting an end to the
fire. They may also interrupt the water supply for the purpose
of obtaining greater pressure at the scene of the fire. Damage
done by such acts may therefore be recovered under a fire policy,
although the property where the damage was done was not even
remotely threatened by fire. It may be that the Act in this respect
is merely declaratory, but it does in the case of fires within the
metropolis remove a doubt as to whether certain kinds of damage
can be recovered as damage by fire.
Loss or damage to property by thieves or rioters during the Damage by

confusion caused by a fire is frequently paid for as " damage by j-joters durino'
fire." In Levy v. Baillie (s) the insurance was on stock-in-trade, fi"'^-
and a claim was made for £85 in respect of goods injured in removal,
and £1000 in respect of goods abstracted by the crowd. No
(I) Stanley V. Western {186S),h.'R. Thompson v. Mutual (1848),
3 Ex. 71 Johnston v. West of Scot-
; U. C. Q. B. 319.
land (1828), 7 S. 52, 54; Geisek v. (o) Balestracci v. The Firemen's
Orescent Mutual (1867), 19 La. Ann. (1882), 34 La. Ann. 844; Geiseh v.
297 ; Lewis v. Springfield Fire and The Crescent Mutual (1867), 19 La.
Mutual (1867), 76 Mass. 159. Ann. 297.
(m) Stanley v. Western (1868), (p) City Fire v. Corlies (1839), 21
L. R. 3 Ex. 71 ; City Fire v. Corlies Wend. 367.
(1839), 21 Wend. 367. {q) Balestracci v. The Firemen's'
{n) Stanley v. Western (1868), (1882), 34 La. Ann. 844.
L. R. 3 Ex. 71 ; Levy v. Baillie (1831), (r) Metropolitan Fire Brigade Act,
7 Bing. 349 ; Balestracci v. The 1865 (28 & 29 Vict. c. 90, s. 12).
Firemen's (1882), 34 La. Ann. 844; («) (1831), 7 Bing. 349.
660 FIRE INSUEANOE CLAIMS
objection appears to have been taken on the ground that loss by

theft was not covered by the policy. And in a Canadian case (()
the Court expressed an opinion that goods lost or stolen in the

confusion occasioned by the fire were within the terms " loss or
damage by fire." On principle, however, it seems clear that

loss occasioned by the felonious act of third persons cannot be
attributed to the fire which only provided the opportunity for the
intervention of an entirely independent cause of damage.
Marsden v. City and County Assurance (1866), L. E. 1 C. P. 232
Marsden v. The policy was on plate glass " against loss or damage originating from
City and
any cause whatsoever except fire, breakage during removal, alteration or
repair of premises." A fire broke out in some premises adjoining the assured's
house, and the assured began to remove his furniture and stock-in-trade, and
whilst he was so engaged a mob feloniously broke in the windows for the purpose
of plunder. The Court held that the breakage was not damage by fire within
the meaning of the exception, and that the insurers were liable. Erie, C.J.,
said, " No doubt the remote cause of the damage was fire, but the proximate
cause was the lawless violence of the mob. I think the general rule of insurance
law that the proximate and not the remote cause of the loss is to be regarded
as the rule which must govern our decision in this case. The assembling of
the crowd was caused by the fire, and but for the fire probably the plaintiff's
windows would not have been broken. But the breakage was not caused by
the fire it was the result of the assured's attempt to save his stock and furniture,
:
coupled with the desire of the mob to seize what they could lay their hands on."
And Willis, J., said, " The word originating,' which has been so much relied
'
on, does not prevent the operation of the rule in jure non remota causa sed
proxima spectalur any more than the word consequences did in lonides v.
' '
The Universal Marine " (w).
Loss or damage by riot, civil commotion, and theft, is usually
expressly excepted from the risk in a fire policy, but it seems to

followfrom the above decision that, even although not expressly
excepted, damage by thieves and rioters consequent upon a fire
cannot be recovered as damage by fire.
Damage by It is a well-known rule in marine insurance that when loss or
inherent
damage is caused solely by the defective condition of the thing
insured, the assured cannot recover, as where a vessel on a time
policy goes to sea in an unseaworthy condition and, having met
with only ordinary weather, has to put into a port of refuge for
repairs (a;).
it) Thompson v. Montreal In- (x) Fawcus v. Sarsfield (1856), 6

gurance (1848), 6 U. C. Q. B. 319. E. & B. 192.
(«) (1863), U
C. B. (N. S.) 259.
LOSS OE DAMAGE BY FIRE 661
On the above principle was held in America that where

it
Spontaneous
combustion.
certain cases of oilcloth were consumed by spontaneous com-
bustion solely due to the condition in which they were shipped,
they were not lost by fire within the meaning of a marine policy {y).
And in anEnghsh mariae case, Boyd v. Dubois (z), fire broke out
in the hold and consumed a cargo of hemp. It was alleged that
the hemp was shipped in a defective condition, and that the fire
was due to consequent fermentation. The allegation was not
proved, and the assured recovered, but Lord Ellenborough said
that, " if the hemp was put on board in a state liable to effervesce,
and it did effervesce and generate the fire which consumed it,
then, upon the common principles of assurance law the assured

cannot recover for a loss which he himself has occasioned." On
the other hand, in a case in Montreal (a), a fire policy on a quantity
of coal stored on land was held to cover the risk of spontaneous

combustion due to the coal having been negligently stacked in a
damp condition. On the whole, there appears to be no very
sound reason why, if there is actual ignition, a loss by fire should
be excluded on the ground of spontaneous combustion. Loss
due to inherent vice is excluded from a marine risk because it is
not a loss which is caused by any of the perils insured against.

It is loss solely due to an independent cause. But if the inherent
defect of the thing insured is brought into activity by a peril
insured against, or if the inherent defect gives rise to a peril

insured against, it does not follow that the loss will not be covered.
Negligence of the assured or his servants giving rise to a peril
insured against does not defeat the claim of the assured. The
dictum of Lord Ellenborough in Boyd v. Dubois was at nisi jprius,
and was purely obiter, and the between a case of inherent

distinction
vice causing loss independently of the perils insured against, and
a case of inherent vice giving rise to one of the perils insured against,
and causing loss through that peril, may well have escaped the
learned judge's observation. But, however that may be, it is
submitted that in fire risks upon articles such as haystacks, coal,

and inflammable spirits, the risk of ignition consequent upon
spontaneous combustion is covered unless expressly excepted. The
policy does usually contain an exception of " loss or damage to pro-
perty occasioned by or happening through its own spontaneous
(y) Providence, Washington v. Adler (a) British American v. Joseph

(1885), 65 Md. 162. (1857), 9 Low. Can. R, 448.
(z) (1811), 3 Camp. 132.
;,
fermentation or heating." It is conceived that, if a stackyard

was insured, and one stack were to ignite through spontaneous
combustion, the loss of that stack would fall within the exception
but if the fire were to spread to the rest of the stacks their loss
would be recoverable. The exception only excludes the loss of
the particular thing which has been lost through its own spon-
taneous combustion.
Where a wilful act of the assured operates as a proximate
Fire caused cause of loss the assured cannot recover (b). Every insurance
by wilful act
of assured.
contains an implied exception to this effect, and no express
exception is necessary (c). The reason for the exception is
sufficiently obvious from a business point of view. Legally it
may be expressed in two ways (d). (1) When the instrument

of loss, such as put in operation by the wilful act of the
fire, is
assured, it is no longer a " peril," that word involving something
fortuitous or unexpected as far as the assured is concerned. (2)

No man can take advantage of his own wrong doing. A wilful
act of the assured which merely increases the risk does not, apart
from warranty, affect the policy. To defeat the claim it must
operate as a proximate and not merely a remote cause of loss (e)
- Thus, apart from express conditions, the introduction of highly

inflammable goods or of lights and fires into dangerous positions
does not affect the insurer's liability, unless (i) the assured's
deliberate intention was to cause a fire ; or (ii) the necessary
consequence of the act done was to cause a fire. Incendiarism
on the part of the assured must be alleged and proved by the
insurers ason a criminal charge (/).
The claim is not defeated by the wilful act of the assured's
Wilful act of servants or agents, if he was not privy to their acts (g). The
assured's ser-
vants or assured can therefore recover even if the property insured was
feloniously burned by his wife (h) or other member of his house-
hold (i). In the case, however, of a corporation being insured
it probably could not recover if the fire was wilfully caused by
one of its principal officers (j).
(b) Bell V. Carstairs (1811), 14 (/) Thurtell v. Beaumont (1823),

East, 374 ; Horneyer v. Lushington 1 Bing. 339 Hoffman v. Western
;
(1812), 15 East, 46 Oswell v. Vigne

; Ma/rine (1846), 1 La. Ann. 216.
(1812), 15 East, 70. (g) Dudgeon v. Pembroke (1877),
(c) Britton v. Royal (1866), 4 2 A. C. 284.
F. & F. 905, 908. (h) Midland Insurance v. Smith
{d) Trinder Anderson v. Thames (1881), 6 Q. B. D. 561.
and Mersey, [1898] 2 Q. B. 114, 127. (i) Perry v. Mechanics' Mutual
(e) Thompson v. Hopper (1858), (1882), 11 Fed. Rep. 485.
F. B. & E. 1038. (j) Meilyând Co. v. London and
'
If the wilful act of the assured is done for the purpose of wufui
avoiding a peril insured against the loss may be recoverable (k) where justi-
as where property is wilfully destroyed for the purpose of check- ^^^ ^^ "^
,
CUIDSutlllCCS.
mg a conflagration (l). And it has been said that if a wilful
burning is otherwise a justifiable act and not done merely for
the purpose of obtaining the insurance money it is a loss by fire
which may be recovered under the policy (k). Thus, Emerigon

says that an insurer on a marine policy is liable where the ship
was deliberately burned to prevent plague spreading (m). It is
very doubtful whether such a principle would be applicable to

ordinary fire risks on a fire policy. It could not be said, for
instance, that if bedding or furniture were burned after infectious
Qlness that such loss could be recovered from the insurers.
Even if the assured has not in fact been guilty of incendiarism, Intention to
^°^'
if it be proved that he effected the policy with intent to destroy ''^
the property the whole insurance will be void (n).
Over-valuation of property insured constitutes important Ovcr-vaiua-
evidence in support of a plea of wilful fire-raising or insurance with denceôT'"

fraudulent intent (o). intention.
Hercules Insurance v. Hunter (1835), 14 S. 800

The amount of loss having been submitted to arbitration the arbitrators Hercules In-
found that the actual value of the property was as valued by the assured. ^"''*"'^^ ^
The Court held that the insurers were bound by the award in so far that they
could not dispute the valuation for the purpose of assessment or contend
that the policy was void by reason of a fraudulent over-valuation, but they
were entitled before a jury to prove that there was a fraudulent over-valuation
as evidence of an alleged fraudulent intention to destroy the property. The
jury having found that there was a fraudulent over-valuation, but no intention
to destroy the property the assured obtained judgment for the amount of the
award (p).
I'ire caused
In marine insurance the principle that the assured cannot
recover in respect of
,
damage proximately caused

11-
by his own
y assured
sovereign,
s
wilful act was, in the case of aliens, extended so as to prevent

recovery in respect of damage wilfully done by the alien Govern-
ment of which the assured was a subject {q). The alien assured
Lancashire Fire (190G), 14:8 Fed. Hep. (o) Hercules Insurance v. Hunter
683. (1836), 14 S. 1137.
(k) Gordon v. Rimmington (1807), (p) Hercules Insurance v. Hunter
1 Camp. 123. (1836), 14 S. 1137, 1142.
(I) Ante, p. 657. (?) Conway v. Gray (1809), 10
(m) Emerigon, i. 434. East, 536 ; Campbell v. Innes (1821),
(n) Hercules Insurance v. Hunter 4 B. & Aid. 423.
(1835), 14 S. 147.
;
was identified with the acts of his own Government on the ground
that it would be otherwise impossible to avoid fraudulent collusion
between the assured and his Government for the purpose of obtain-
ing the insurance money. No such identity was admitted between
the home Government and its own subjects (r). Even in the
case of aliens there is nothing unlawful in insuring them against

own Government when at peace with the insurer's
the acts of their
country, and when the terms of the policy and the circumstances
under which it was made show that both parties intended that the
risk of such loss should be covered, it must be deemed to be
covered accordingly (s). The rule, then, is at most a presumption
that aliens are not insured against the acts of their own Govern-
ment. The insurers must prove that the loss was in fact a loss
occasioned by an act authorised by the Government. They must
prove the legality of the act and the authority of the perpetrator (t).
In America the whole principle of identification of the assured with
the acts of his own Government has been much doubted (i).
Whether if occasion arose the principle would be applied to fire
insurance either in this country or America must remain an open

question. The kind of case that would fall within the principle
would be the destruction of property under stress of military
necessity. The ordinary fire policy excepts loss by military

power, but analogous cases not within the exception might arise.
Fire caused Negligence of the assured (m) or his servants (x) is no defence
by negligence to an action by the assured on his policy. The proximate cause
of assured or
his servants. of the loss is fire, even although the fire has been caused by
negligence. The insurers are therefore liable unless (1) negligence
of the owner or his servants gives the underwriter a right of cross-
action which extinguishes the claim ; (2) negligence of the owner
(r) Hagedorn v. Whitmore (1816), 507 ; Phoenix v. tlrie Transportation

1 Stark. 157, 159, and cases cited in (1886), 117 U. S. 312, 323; Johnson
footnote. V. Berkshire Mutiial (1862), 86 Mass.
(«) Simeon v. Bazett (1813), 2 388 ;Huckins v. People's Mutual
M. & S. 94 aff. sub nom. Bazett v.
; (1855), 31 N. H. 238 Liverpool and
;
Meyer (1814), 5 Taunt. 824. London and Globe v. McNeill (1898),

(t) Ocean Insurance v. Francis 89 Fed. Rep. 131 Gove v. Farmers'
;
(1828), 2 Wend. 64. Mutual (1868), 48 N. H. 41 contra. ;
(m) Shaw V. Robberds (1837), 6 Young v. Washington (1853), 14

A. & E. 75 ; Jameson v. The Royal Barb. N. Y. 545.
(1873), Ir. R. 7 C. L. 126 ; Davidson (x) Avstin-v. Drewe(\%\5), i Camp.
V. Burnand(1868), L. R. 4 C. P. 117, 360, 362 Dobson v. Sotheby (1827),
;
121 Trinder Anderson v. Thames

; 1 M. & M. 90 Busk v. Royal Ex-
;
and Mersey, [1898] 2 Q. B. 114; change (1818), 2 B. & Aid. 73

California Insurance v. Union Com- Mickey w. Burlington (1872), 35 Iowa,
press (1889),133 U. S. 387; Columbian 174 ; Gates v. Madison Mutual
Insurance v. Lawrence (1836), 10 Pet. (1852), 5 N. Y. 469.
LOSS OR DAMAGE BY PIEB 665
works some personal disability upon him. It has been settled

by a long series of authorities that negligence of the assured's
servants does not^give the underwriter a right of cross-action.
The assured does not contract not to be negligent. Then does
work any personal disability
negligence of the owner ? The only
personal disability of the kind known to the law is fraud, and there-
fore unless there is fraud the assured is entitled to recover not-
withstanding that he was negligent (y). Even gross negligence
will not debar the assured from his right to an indemnity unless
itwas crassa negligentia cequiparata dolo, that is conduct so reckless
and careless of consequences that it amounts in law to a wilful
act (z).
It has been said that refusal to take obvious precautions to Where assured
prevent or stop afire may disentitle the assured, such as leaving abstains from
a coal which has fallen out of the grate,

° or a. candle shade which checking a
fare. .
has become ahght, to set fire to the whole house (a). It is question-
able, however, whether such wilful omission can be used by the
insurer except as evidence of a wilful act which cannot be proved
by direct evidence.
If the assured is so insane as not to be legally responsible for Insanity of
his acts an act of incendiarism will not disentitle him from re-
covering (b). If the act of the insane man is apparently wilful

and deliberate, the question will be whether he was labouring
under such a defect of reason from disease of the mind as not to
know the nature and quality of the act he was doing, or as not
to know that what he was doing was wrong (c).
The assured may, while drunk, deliberately set fire to bis Drunkenness
premises. Can he recover on his fire policy ? Criminal law does

not excuse an offender on the ground that an offence was com-
mitted under the influence of drink (d). The crime is deemed to
have commenced when, being sober, he voluntarily intoxicated
himself. But if intent is of the essence of the crime charged,
drunkenness may be pleaded to show that there was no such
intent (e). In the same way it would seem that drunkenness
(y) Trinder Anderson v. Thames (6) D'Autremont v. The Fire Asso-

and Mersey, [1898] 2 Q. B. 114. ciation (1892), 65 Hun. 475.
(z) Trinder Anderson v. Thames (c) McNaghten's Case (1843), 10
and Mersey, [1898] 2 Q. B. 114; CI. & F. 200.
Pipon V. Cope (1808), 1 Camp. 434. {d) Pearson's Case (1835), 2 Lew.
(a) Chandler v. Worcester Mutual C. C. 144.
(1849), 57 Mass. 328 Jameson v.
; (e) R. v. Thomas (1837), 7 C. & P.
The Royal (1873), Ir. R. 7 C. L. 817 ; R. v. Moore (1852), 3 C. & K.
126 319.
may be pleaded by an assured in reply to the defence that the

property was burned by his wilful act. If the assured was so
drunk that he did not know what he was doing, it was not his
wilful act, and there appears to be no bar to his recovering on

the poUcy. In criminal law it is argued that the drunken perpe-
trator of a crime is guilty because the crime was the consequence
of his voluntary act of getting drunk, but that is looking to the
remote and not to the proximate cause, and it is submitted that
the rule of causa proxima prevents the use of the same hne of
argument in insurance cases.
Excepted When loss arisingfrom a particular cause is excepted either

perils. expressly or by implication, all damage arising as the proximate
consequence of such cause is excepted, notwithstanding that the
peril insured against is one of the events in the inevitable chain
of causation or even the actual instrument of destruction (/).
Rule of causa Thus, where loss consequent upon explosion is excepted from a
proximo gj,g policy, the exception will equally exclude (1) damage caused by
fire consequent upon explosion (2) damage caused by explosion

;
consequent upon Where the policy was expressed not

fire (g).
to cover " loss or damage by fire occasioned by or through

. . .
any earthquake," and an earthquake caused a lighted stove in

one house to be upset, and in consequence the house took fire
and the fire spread to other houses, in so far as it spread without
the intervention of other than natural causes, it was a fire caused
by or through earthquake (h). But remote consequences of the
excepted cause are not excluded (i). Thus, where damage
occasioned by incendiarism was excepted, the neighbouring
proprietor wilfully set fire to his house and the wind carried the
flames to the assured's house and set it on fire. It was held that
if the fire spread in consequence of the influence of the ordinary
elements the destruction of the assured's house was the proximate
result of the incendiary act, and therefore excepted from the
risk ; but if, on the other hand, the fire had been communicated by a
(/) Stanley v. Western (1868), May 21; Scottish Union and National
L. R. 3 Ex. 71 ; Insurance Co. v. v. Alfred Pawsey and Co. (1908), The
Tweed (1868), 7 Wall. 44. Times, October 17.
{g) Stanleys. ^Tesiern (1868), L. R. (i) Marsden v. City and County
3 Ex. 71. (1866), L. R. 1 C. P. 232 ; Andersons.
(h) Tootal Broadhurst v. London Marten, [1907] 2 K. B. 248.
and Lancashire (1908), The Times,
'
LOSS OK DAMAGE BY PIEB 6G7
fireman removing goods from the burning house and accidentally

throwing some portion of the burning material upon or near the
assured's premises there would have been the intervention of an
independent cause, and the loss would not have been the proximate
but the remote result of incendiarism, and the assured could have
recovered notwithstanding the exception (k). In the absence of
evidence indicating some independent cause the Court presumed
that the fire spread by natural causes (fc).
The use of such words as " in consequence of," " by means of,"
does not operate so as to exclude damage which is merely the
remote consequence of the excepted peril. Unless there is a
clear indication of a contrary intention (l) the rule of proxima
causa will be applied to all cases of exceptions from the general
risk (m).
The rule generally recognised in English Courts for determining Burden of
'^^°°
the burden of proof in the case of an alleged exception is that if
the assured prove, or if it be admitted, that the loss was caused

by the general risk insured against, that is fire, the burden of
proof lies upon the insurers to show that, although the loss was
caused by fire, the fire was of such a nature as to bring the case
within one of the exceptions, was a fire
as, for instance, that it
caused by or by incendiarism (n).

earthquake The general
application of such a rule has been questioned in America, where
it is said that the strict rules of evidence lay upon the assured
in the first instance the burden of proving that he has suffered

loss from a peril insured against, and that it is not within the
excepted perils (o). Thus, if there was a bare admission on the

record that the loss was caused by fire, the burden of proof would
still be on the assured to show the nature of the fire. Evidence,
however, of the fact that the premises were burned and that there
was nothing in the circumstances to suggest that the fire was
caused by earthquake, incendiarism, or other excepted peril
would be sufficient primd facie evidence to throw the burden on
the insurers of proving the existence of the alleged exception (p).
Logically this is probably the correct view, but for practical
(A) Walker v. London Provincial v. Beaumont (1824), 8 Moore, 612

(1888), 22 L. R. 572, 575, 577.
Ir. Hercules v. Hunter (1836), 14 S. 1137,
(I) Heffron v. Insurance Co. (1890), 1141.
132 Pa. 580. (o) SoUer v. Norwich Fire (1865),
(m) Maraden v. City and County 93 Mass. 336.
( p) Kingsley v. New England Mut.
(1866), L. R. 1 C. P. 232.
(n) Qorman v. Hand-in-Hand Fire (1851), 62 Mass. 393.
(1877), Ir. R. 11 0. L. 224; Thurtell
—
;
668 FIEE INSURANCE CLAIMS
purposes the rule that the burden of proving the exception is on

the insurer is substantially accurate.
The burden of proof in the case of alleged earthquake fires
was discussed in two cases arising out of the earthquake in Jamaica,
in January, 1907.
Seottisli TTnion and National v. Alfred Pawsey & Co. (1908),

The Times, Oct. 17
Scottish This case was tried before a jury in Jamaica. The action was brough
Union and upon four policies on certain stock-in-trade in the assured's premises. Three
^' of the policies contained the condition that the policy did not cover "loss
jn/'^j,
cfc Co. or damage by fire occasioned by a happening through earthquakes,'". . .
and the fourth policy contained the condition that the policy did not cover
" loss or damage by fire during (unless it be proved by the assured that the
loss or damage was not occasioned thereby) or in consequence of earth- . . .
quake." The questions left to the jury, and the answers, were as follows :
1. Was the which destroyed the

fire assured'.s property occasioned by, or
did it happen through an earthquake ? No. 2. Did the fire which destroyed
the assured's property occur during or in consequence of an earthquake ?
No. On these findings judgment was entered for the assured, and the insurers
appealed on the ground of misdirection, and a verdict against the weight of
evidence. The appeal was ultimately heard by the Judicial Committee of the
Privy Council. In the case of all four policies the judge at the trial placed
upon the insurers the burden of proving that the fire which destroyed the
premises was an earthquake fire, and not an independent fire. This ruling
was not objected to as regards the first three policies, but it was objected to
as regards the fourth, and it was held in the Privy Council that as regards the
fourth policy the ruling was wrong, but, inasmuch as the jury found that the
premises were not burned during the earthquake the error in the ruling was
immaterial, and no cause for a new trial. The contested points in the case
were (1) whether the which consumed the premises in question was one or
fire
the other of two fires which broke out at or about the time of the earthquake,
and spread through the town, viz. (i) a fire which had its origin in building
A on the east, or (ii) a fire which had its origin in building B on the west
(2) whether the A fire was an earthquake fire ; (3) whether the B fire was an
earthquake fire. On the first question there was confiicting evidence both ;
fires spread in the direction of the assured's premises, and it was obviously
an open question for the jury to say which fire actually consumed them.
The Board were of opinion that on the assumption that one or other of the fires
was an independent fire the jury were justified in finding for the assured,
if on the evidence they were satisfied that the destruction of the insured pro-
perty was due, or might well have been due, to the independent fire, or to that
fire and the other fire conjointly. On the assumption, therefore, that there
were two fires, an earthquake fire and an independent fire, it was for the
insurers to prove affirmatively that the property was destroyed by the earth-
quake fire. On the second question, whether the A fire was an earthquake
fire or an independent fire, the undisputed evidence was that the fire was
first detected from half to three-quarters of an hour after the shock. The
Board were of opinion that it could not be said that the fire followed the
earthquake shock so quickly as to lead to any very strong presumption that

the one event was the cause of the other. Apart from this presumption the
only definite theory set up by the insurers was that the fire was caused by the
ignition of a quantity of safety matches which were stored on the premises,
and were apparently crushed by the falling buildings at the time of the shock.
The Board were of opinion that if the jury came to the conclusion that this
view was insufficiently supported, and that the origin of the fire was not
accounted for they were entitled to act on the footing that the fire was an
independent fire and not an earthquake fire. Here, again, the burden was on
the insurers to prove afiirmatively that the fire was caused by earthquake. On
the third question, whether the B fire was an earthquake fire or an independent
five, there was conflicting evidence as to whether smoke was first seen rising
from the premises a few minutes before or a few minutes after the shock.
Again the Board were of opinion that if in the opinion of the jury it was not
conclusively shown that the fire broke out after the shock they were entitled
to act on the footing that the fire was an independent fire.
Tootal Broadhurst Lee & Co. v. London and Lancashire Fire

(1908), The Times, May 21st
The which contained the fol- Tootal Broad
plaintiffs
lowing clauses :
— claimed
"
in respect of three
a building or any part thereof
If
policies
shall fall except as a result ^'"*' ^^^ "^
of fire all insurance by this company in it or its contents shall immediately
^^ Lanca-
cease and determine," and " This policy does not cover loss or damage by . . . shire. Fire.
fire occasioned by or through any earthquake." This case was tried before
. . .
Bigham, J., and a Middlesex special jury. It was admitted that the fire
which consumed the property insured had its origin in a building belonging
to C, but the parties were in issue as to whether it broke out before the earth-
quake shook room occupied byC, or whether it broke out after and
in a top
in consequence of the shock in a lower room occupied by Dr. A., as a consulting-
room. There was conflicting evidence given by Dr. A. and his maidservant
as to whether a stove with a Bunsen burner which Dr. A. had been using to
sterilise instruments was or was not alight at the time of the shock. There
was also a statement by Dr. A., which he afterwards contradicted, to the effect
that after the shock the first fire which he saw was in his consulting-room,
where a mass of flame was reaching right up to the ceihng. On the other hand,
there was evidence that there was a kerosene stove in the upper room, and C.
stated that there was smoke in his room before the shock. A considerable
number of witnesses said that from some distance off they saw a great column
of smoke and a fire in this house before the earthquake. Bigham, J., left it
to the jury to say whether the fire which consumed the assured's premises was
a fire occasioned by or through earthquake. He said the onus of proof was
on the insurers to make out that the fire was an earthquake fire. They must
not even leave the jury in reasonable doubt. The jury must be satisfied that
it was an earthquake fire.
On the question whether the insurance ceased on the fall of the buildings,
if the jury thought that the which took place was of such a substantial
fall
nature that the risk to the remaining portion was increased they would on
that ground find for the insurers. The jury found that the fire was caused by
earthquake, and judgment was entered for the defendants.
— ;
Question for The above

cases show how much is left in the hands of the
the jury.
jury when the question is whether the loss is or is not caused by
an excepted peril. The verdict of the jury will not be disturbed
in the Court of Appeal if there is any evidence to support it.
In the Scottish Union Case Sir Arthur Wilson, in stating the opinion
of the Board, said
" It is not enough to show that adverse criticism may justly be applied to
the verdict or to the evidence upon which was based. It it is not enough to
show that a contrary verdict might well have been found. It is not enough
that those sitting in appeal should consider that a contrary verdict would have
been preferable to that actually returned. It is for the jury to decide questions
of fact, and their decision upon .such questions cannot be interfered with by an
appellate tribunal unless it be shown that that decision was one which could
not reasonably have been arrived at upon the evidence before the jury.''
Gorman v. In an Irish case, Gorman v. Hand-in-Hand (g), two hay-ricks
Hand™' ^^^ heen burned, and the uncontroverted evidence was that
both went on fire simultaneously, that fresh tracks to and from
the ricks through a potato plot were discovered, and that none of
the farm servants had been there. The Court of Appeal held that
although there was strong evidence of incendiarism they could
not disturb a verdict for the assured. The judge may direct a
verdict against the party on whom the onus lies, if there is no
evidence on which the jury could find the allegations proved
but the judge may not direct a verdict for the party on whom the
proof lies unless the facts in issue are uncontroverted. Although
all the facts proved in evidence are undisputed, the fact in issue
may be the inference to be drawn from that evidence, and in
drawing such inferences the jury may be directed to act on their
own experience of life (r).
Partial loss In marine insurance if a partial loss from perils insured against
followed by
is followed by a total loss from an excepted peril, so that the assured
total loss
from excepted is not ultimately prejudiced by the partial loss, no recovery can
^^"^
be had in respect of such partial loss (s). This principle may be
due to the peculiar nature of the subject matter in marine risks,
and it is doubtful whether it has any application to an ordiaary

fire risk. The fact, however, that property damaged by fire was
immediately thereafter consumed by an excepted peril as, for
instance, if it was destroyed by an earthquake, might be held to
(g) (1877), Ir.R. 11 C. L. 224. («) Livie V. Janson {1810), 12 East,

(r) Gormanv. Hand-in-Hand (^1811), 648 ; Knight V. Faith (1850), 15 Q. B.
Ir. R. 11 C. L. 224. 649.
s
AMOUNT OP LOSS PAYABLE 671
discharge the insurers who, if hable, would be unable to exercise the

usual option to reinstate the premises, and would have to pay the
damage on very doubtful evidence as to what the extent of it was.
Section II. — Amount of Loss Payable

The insurers' liability in respect of a fire claim is measured by the General rule,
depreciation in the market value of the property ; but it cannot

exceed (1) the amount insured ; (2) the amount of the assured'
insurable interest. If the depreciation in the value of the property
exceeds either or both of the two last-mentioned items, it must
be reduced so as to correspond with the smaller of them (t).
In estimating the actual damage to the property it is important No conse-

°^^'
to remember that prima facie an insurance on property covers '^^^^ '^
the loss of or damage to the property insured but no consequential ;
damage. It is not an indemnity of the assured against all the

consequences of the fire, but only against loss or damage to the
property, and therefore the amount of damage can in no case
exceed the full value of the property insured.
The result of the principle is that an insurance on property such as loss
°^
simpliciter does not cover loss of rent, occupancy, business profits,
prJgts
wages of servants or workmen rendered idle, and similar con-
sequential damages (w).
Consequential loss may be expressly insured against, and unless ex-

1 J, , 1 1 . . pressly in-
loss 01 rent and non-occupancy durmg repairs are very common iured
subjects of insurance. Business profits may also be specifically
insured, and owners of monopolies, such as patent rights, may
insure against diminution of royalties consequent upon the
premises of a licensee being destroyed by fire {x).
Insurances upon these specific subjects of consequential loss ^ a specific

subject o£
must be distinguished from insurances upon the property itself. insurance.
They must be dealt with as separate insurances upon an incor-
poreal right. Thus, the damage done to the property ceases to be
(t) Glasgow Provident v. West- Menzies v. North British (1847), 9 D.

minster Fire (1887), 14 R. 947, 988. 694 Farmers' Mut. v. New Holland
;
WrigUv.Pole(l%Z4:),\A.&.'E,.
(u) Co. (1888), 122 Pa. 37.
621 ; sub nom. Sun Fire v. Wright, (x) The National Filtering Oil Co.
3 Nev. & Man. 819 ; Shelbourne v. v. The Citizens (1887), 106 N. Y. 535.
Law Investment, [1898] 2 Q. B. 626 ;
;
a factor in the calculation of the insurer's hability, and the measure

of such liabihty is the diminution in value of the incorporeal
right insured, provided it does not exceed (1) the amount insured
(2) the amount of the assured's insurable interest in the incorporeal
right. For example, in Westminster Fire v. Glasgow Provident [y),
the incumbrancer on the property had insured specifically on rent.
He had an insurable interest in the property in respect of his

incumbrance ; but not being in possession of the property the
loss of rent fell entirely on the proprietor. The incumbrancer
had no insurable interest in the rent, and could therefore recover
nothing in respect of such loss.
Principles The liability of the insurers in respect of damaged property

upon which
damage is is not necessarily the same as the cost of reinstatement {z), and
even where the insurer has an option to reinstate, that does not
entitle the assured to take the cost of reinstatement as the proper
measure of damages (a). The proper measure of damages is the
difference between the value of the undamaged property before
the fire, and the value of the damaged property after the fire (i»).
Undamaged The undamaged value before the fire is to be taken at the

value.
market value immediately before the fire (c). In marine insurance
the value taken is the value at the commencement of the risk,
but this principle appears to be applicable to marine insurance
only, and the weight of authority is against extending it to fire
Market price. risks. The value therefore is the market value at the time and
place of the fire (d). The assured is not entitled to take the cost
Cost price. price or the cost of construction or manufacture as conclusive
evidence of the value of the property at the time of the fire (e).
It may
be 'prima facie evidence (/), but it is subject to abatement
under three heads (1) the assured may have paid more than
:
its value ; (2) the market value may have fallen since the time
A. C. 699.
(y) (1888), 13 Equitable Fire v. Quinn (1861),
(c)
Westminster Fife v. Glasgow
(z) 11 Low. Can. R. 170; Hilton v.
Provident (1888), 13 A. C. 699; Phoenix (1898), 92 Me. 272 Washing- ;
Gastellain v. Preston (1883), 11 ton Mills V. Commercial Fire (1882),

Q. B. D. 380, 383 ' Pitman v. Uni-
;
13 Fed. Rep. 646 135 Mass. 503.
;
versal Marine (1882), 9 Q. B. D. 192.

{a) Commonwealth Insurance v.
(d) Bunyon on Fire Insurance
(3rd Ed.), 150.
Sennett (1860), 37 Pa. 205.
(6) Westminster Fire v. Glasgow (e) Equitable Fire v. Quinn (1861),
Provident (1888), 13 A. C. 699; llLow. Can. R. 170.
Hoffman v. Western Marine (1846),
1 La. Ann. 216 ; Grant v. Aetna Fire ( Marchesseau v. The Merchants
/ )
(1860), 11 Low. Can. R. 128. (1842), 1 Rob. (La.) 438.

AMOUNT OP LOSS PAYABLE 673
of purchase wear and tear or damage other than that insured

; (3)
against may have depreciated the value of the particular property.

Conversely the property may for similar reasons have risen in
value, and the assured is entitled to the benefit of the rise (g).
Although he will thereby reahse a profit without having speci-
fically insured on profits, he, in fact, recovers no more than the
loss or damage to the property. The market value of a parcel Government

^'
of whisky in bonded store was held to include the amount of "
Government tax which was unpaid, but for which the assured
remained liable (h). On the other hand, a merchant or shop-
keeper insuring his stock caimot recover the retail value of the Retail price,
stock because he would thereby be recovering loss of profits on

his retail business, and more than the actual loss or damage to
the property (i).
"When property is destroyed in the hands of a vendor who has Sale price.
contracted to sell the vendor is not entitled to take the sale price
as conclusive evidence of the value of the property. The test of
value is the market price irrespective of the contract price, and
the latter can only be recovered when there is a special condition
in the policy substituting the contract price for the market price (k).
Mr. Bunyon, in his book on Kre Insurance, puts the case of a When market
in which a large quantity of some scarce commodity is consumed hanTed^T'
fire
and the market price thereby greatly enhanced (l). If the assured ^'^^ fire,
only gets the value of the goods immediately before the fire he
cannot restock his premises without great additional expense.
This expense, however, is only incurred so that he may not lose
his profits, and if there was no specific insurance on profits it seems
clear that he can only recover the value of the goods according
to the market price immediately before the fire.
Often an old house or an old article, although not so valuable When an old
in the market, is just as serviceable to the assured as a new house serviceable as

a new one.
or a newand when the old thing is destroyed by fire the
article ;
assured may be compelled to erect or buy a new thing. That is

to say, he cannot be reinstated, and therefore in a sense he
cannot be indemnified, without an expenditure which exceeds the
value of the thing destroyed. In such case he is not entitled to
(g) Equitable Fire v. Quinn (1861), (i) Fisher v. Orescent Insurance

11 Low. Can. R. 170. (1887), 33 Fed. Rep. 544.
,, , „ , „ . ,,„„„, ,„„ , (k) Bunyon on Fire Insurance (3rd
Hedger v. Union{1883), 17 Fed.
{h)
jg^ j'
jgi/ ^
Rep. 498 Wolfe v. Howard Insur-

;
(j) Bunyon on Fire Insurance {3rd
ance (1853), 7 N. Y. 583. Ed.), 150.
i.L. 43
claim the full value of a new thing (m). He is only entitled to

the value of the old thing, and that value does, in fact, indemnify
him because, when he erects or buys a new thing at a greater
cost, he has the benefit of the greater value of his property. In
estimating the value of old houses, old machinery, old furniture,
and other things of the same sort, no definite rule can be laid
down what proportion of the cost price should be deducted
as to
for wear and tear, each case depends on the particular facts given
in evidence (n).
Amount The amount of the insurance inserted in the ordinary fire policy
insured as
evidence of ismerely a limit of the amount recoverable. It is not a valuation
value.
of the property binding on the parties unless the words " valued
at " are used (o). When the insurer or his agent is party to an
appraisement of the property for the purpose of the insurance
the amount so settled is probably prrnid facie proof of value (ji),
but otherwise the amount stated in the pohcy as the amount

insured on any particular subject is not even prima facie evidence
of the value. Where the assured has, ia his preliminary proof of
loss, valued the property destroyed, he is not bound by such
valuation, and may amend his valuation at the trial (q). The
preliminary proof may be used as evidence, but not conclusive
evidence, against him (q).
Total and When the property is totally destroyed, that is to say when
constructive
total loss. it is rendered incapable of repair, and the debris is of no value
whatever, the assured is entitled to a cash payment of the full
value of the property destroyed (r). In marine insurance, where
the property insured is so damaged that the cost of repairs will
exceed the repaired value, there is a constructive total loss, and
the assured is abandonment to the
entitled to give notice of
underwriters who, if the notice was justified by the facts, are
bound to pay the full value as for a total loss, and are entitled
to the damaged property as salvage (s). There is no such right
(m) Guinn v. Phcenix (1890), 80 9 La. 27 ; Wallace v. Insurance Co.
Iowa, 346 Hilton v. Phoenix (1898),
; (1832), 4 La. 289.
92 Me. 272 ; Hercules Insurance v. {p) Ma/ryland Home v. Kirrnnell
Hunter (1836), 14 S. 1137, 1141; (1899), 89 Md. 443 ; Lebanon In-
Vance V. Forster (1841), Ir. Ct. R. 47. surance V. Kepler (1884), 106 Pa. 28 ;
Perry v. Mechanics' Mutual (1882),
(n) Vance v. Forster (1841), Ir. Ct.
11 Fed. Rep. 485.
R. 47 Brinley v. National (1864), 52
;
iq) Trull V. Roxbury Mut. Fire
Mass. 195.
(1849), 57 Mass. 263; Hoffman v.
(o) Hercules Insurance v. Hunter Western Afarme ( 1846), 1 La. Ann. 216.
(1836), 14 S. 1137 ; Vance v. Forster (r) Monteleone v. The Royal (1895),
(1841), Ir. Ct. R. 47; Waynesboro 47 La. Ann. 1563.
Mutual V. Creaton (1881), 98 Pa. 451 ; (s) Angel v. Merchants' Marine,
Millaudonv. Western Marine (1836), [1903] 1 K. B. 811.
— —
.
AMOUNT OF LOSS PAYABLE G75
ofabandonment in the case of ordinary fire risks, and if the salvage

is any value whatever, the assured is only entitled to a money
of
payment of the difference between the value of the undamaged
property and the value of what is left (i). But in practice insurers
do usually pay as for a total loss on goods which are seriously
damaged, and when they do so pay they are entitled to the
damaged goods as salvage, or to the value of them if sold (u).
And similarly if they pay a total loss on real property they are
entitled to anything in the nature of salvage which may be realised
or realisable from the ruins.
The value of damaged property is the value which it will fetch Damaged
"®'
at a fair sale in the open market. If the assured sells the property ^*
at a fair sale by auction after notice to the insurers, the price Sale by
'°°'
reaHsed affords strong prima facie evidence of value (x) ; but a *"°
sale by auction without notice to the insurers has been held in
America to be inadmissible as evidence against them (x).
When the property is capable of repair or reinstatement the DifEerenoe
damaged value may be estimated by deducting the cost of repair j-eprêd

from the repaired value, and the damage payable is then arrived value and
at by taking the difference between the undamaged value and

the damaged value thus
Undamaged value
Repaired value £110
Cost of repair 70
Damaged value .
Amount recoverable
or in a case where the repaired value is less than the undamaged

value
£
Undamaged value . . . . . . . . . . 100
Repaired value . . . . . . . . . . £90
Cost of repair . . . . . . . . . . 70
Damaged value . . . . . . . . . . . . 20
Amount recoverable . . . . . . . . . . 80
(t) Bunyon on Fire Insurance v. Salvador (1836), 3 Bing. N. C.

(3rd Ed.), 155 ; Hough v. People's 266, 288 ; Kaltenhach v. Mackenzie
Fire (1872), 36 Md. 398. (1878), 3 C. P. D. 467, 471.
(m) Shipper Grant (1861), 10
v. (x) Hoffman v. Western Marine
C. B. (N. S.) 237 RanJcin v. Potter
; (1846), 1 La. Ann. 216.
(1873), L. R. 6 H. L. 83, 118 ; Roux
:
The same result is arrived at by taking the cost of repairs, and

either deducting therefrom, or adding thereto the difference
between the undamaged value and the repaired value according
to whether the latter is greater or less than the former.
Vance v. In Vance v. Forster (y) was destroyed by
certain machinery
Forster.
fire, and had to be replaced by new machinery. The Court laid
down the following rule for ascertaining the insurer's liability
" I think it would be a fair criterion to see what would be the
expense of placing new machinery such as was in the mill before,

and to deduct from that expense the difference in value between
such new machinery and the old machinery which was destroyed.
I think such difference is the actual loss sustained by the
plaintiff."
Ultimate test Estimation of loss based on the cost of repair is not, however,
istke sale-
able value. a conclusive test. The assured may not have such an interest
in the property as entitles him to demand that the owner shall
repair it, as in the case of an incumbrancer, and if the property
is not in fact repaired the cost of repair may not be representative
of the actual loss. The damaged value in the market may be
considerably less than the difference between the repaired value
and the cost of repairs. When that is shown to be the case the
presumption of value based on the cost of repairs is displaced
and actual saleable value must be taken (2).
Depreciation Loss of value due to severance may be taken into account
in value
caused by in estimating the damaged value of the property. Thus, in
severance. the case of a building site and building together may be
:
worth more than the cost of the bare site plus the cost of
constructing the buildings, and, therefore, where a building is
burned the loss is the difference in market value of the site
and premises before the fire and the site and premises after
thefire, and if part of that loss is due to a depreciation of the

value of the site, that may be recovered on a policy which
purports to insure the buildings Lord Watson expressed (a).
an opinion that if two houses standing side by side were insured

in one policy by the owner of both, and one was burned down,
he could calculate as part of his loss the consequent depreciation
in the value of the other. If one building only was insured he
(2/) (1841), Ir. Ct. R. 47. Provident (1888), 13 A. C. 699;

Westminster Fire v. Glasgow
(z) contra, Bardwell v. Conway Insurance
Provident (1888), 13 A. C. 699. (1877), 122 Mass. 90.
(a) Westminster Fire v. Glasgow
AMOUNT OF LOSS PAYABLE 677
could not recover the depreciation in value of the uninsured build-

ing consequent upon the burning of the insured building. That
would be contrary to the rule that damage to the insured property
is the only damage recoverable, and that other consequential
damage cannot be recovered. The principle of loss by severance

laid down by Lord Watson appears to be equally apphcable to
insurances on goods, and it is submitted that loss consequent upon
the breaking of an assortment is recoverable, although this was
controverted by Lord Young in the Court of Session {b). Thus,
if a pair of carriage horses value £500 were insured, and one only
was destroyed the assured would be entitled to recover say £300,

£250 for the horse lost and £50 for depreciation in value of the other.
After a fire the insurers ought to have all reasonable opportunity Right to
of entering and inspecting the premises in order to ascertain the

;na*pg(.t"dam-
extent of the damage or the value of the salvage. The right to aged pro-
enter upon the insured premises is sometimes made a condition

of the policy, but even in the absence of any express condition
such right may possibly be implied as flowing of necessity from the
nature of the contract and the custom of insurance business (c).
The right of the insurers to enter does not exclude the assured from
the possession and control of his property, and if the insurers
remained longer than was reasonably necessary for the purpose
of investigating the damage they would be liable to an action of
trespass (d). When the property damaged is inspected by the
insurers the assured should have an opportunity of being present
and should therefore be notified beforehand of the intended
examination (e).
In cases where the property is not in the possession or control Where pro-
of the assured, as where the assured a ground landlord or an ^âJsured's

is
incumbrancer, there is, of course, no implied condition that the possession.

insurer shall have access to the premises, and probably an express
condition in ordinary printed form would be held inapplicable to
the circumstances and therefore to be taken pro non scripto.
Under the Metropolitan Fire Brigade Act, 1865 (/), the statutory
insurers may, through the salvage corps, have a greater right of sl^yage corps.
(6) Glasgow Provident v. West- [d) Oldfleld v. Price (1860), 2

minster Fire (1887), 14 R. 947. F. & F. 80.
(c) Oldfieldv. Price (1860), 2 F. & F. (e) Masters v. Lefevre (1870) ; Bun-
80 ; Bunyon on Fire Insurance (3rd yon on Fire Insurance (3rd Ed.), 54.
Ed.), 54. / 28 & 29 Vict. c. 90, ss.
(
) 12, 29.
entry and possession than they would have under the contract.
The fire brigade has statutory power to enter and take possession
of any property within the Metropohs for the purpose of extinguish-
ing fires, and by section 29 it is provided that if the insurance
companies or a sufficient number of them estabUsh a salvage

corps, the fire brigade shall, without charge, render such salvage
corps all necessary assistance, and hand over to their custody
the property salved. The salvage corps has therefore a statutory
right to the custody of the salvage, not only against the assured,
but against all others. No doubt this right must be deemed to
be restricted so as to give them the custody for such time only as

is reasonably necessary for the purpose of ascertaining the damage
done, and realising the salvage, if the insurers have become
entitled to it, but during the time the salvage corps have the
custody the right of the assured or other owner or occupier to the
possession or control of the property would appear to be excluded (3).
Company Subject to the limitations imposed by the amount of insurance

liable for
total loss
and extent of the assured's interest the assured is entitled to a
vvithout full indemnity in respect of the total damage done to the property
regard to
assured's insured without any deduction in respect of claims which the
rights of in-
demnity
assured may have against others in respect of the loss (h). The
against third prima facie to pay the total fire damage,
obligation of the insurers is
persons.
not the ultimate damage which the assured may suffer after he
has realised all available rights against third parties for extinguish-
ing or diminishing his loss (i).
CoUingridge v. The Eoyal Exchange (1877), 3 Q. B. D. 173
The proprietor of certain house property insured it, and the insurers
The Royal "
V.
undertook to pay in respect of " any loss or damage by fire to the buildings
Exchange.
not exceeding £1600. The premises were afterwards acquired by the Metro-
politan Board of Works under compulsory powers and the amount of com-
pensation was assessed. Before conveyance or pajnnent of the compensation
the premises were burned down, and it was held that the assured could recover
the full amount of the damage notwithstanding his rights under the compulsory
purchase.
American In an American case (fe) where the owner of the fee simple
oases.
{g) Joyce v. Metropolitan Board of (i) Westminster Fire v. Glasgow

Works {1S81), 44:1,. T. 811. Provident (1887), 14 R. 947, 966.
(k) Foley v. Manufacturers (1897),
(h) Dickenson v. Jardine (1868), 152 N. Y. 131 ;Foley v. Farragut
L. K. 3 C. P. 639. J'ire(1893), 71 Hun. 369.
;
insured buildings, partially constructed under a building agreement,

he was held entitled to the entire damage by fire, notwithstanding
that the builder was bound to make good the loss and was not
entitled to the contract price until the work was completed. In
another American case where the reinstatement of the premises
involved the rebuilding of a party wall, the insurers were liable
for the total damage including the whole value of the party wall,
notwithstanding that the assured might recover half the cost of
rebuilding the party wall from the adjoining owner (?).
The principle of personal indemnity in such cases is preserved by Principle
giving the insurer who has paid a loss the benefit of all rights which
preservedby
have accrued or may thereafter accrue to the assured in diminution subrogation.
or extinction of the loss ; but the insurer is not entitled to estimate

the value of the assured's choses in action, and set them off against
the damage to the property. Even where before action brought the
assured has realised claims or received benefits in diminution
of his loss it is doubtful whether bis claim for damages is thereby
reduced or whether the insurer must not rely on his right of
subrogation and counter-claim for what the assured has received
instead of setting it off in diminution of the claim. Practically,
the distinction is of little importance if the assured is solvent
but if he is insolvent the importance is obvious. It is submitted
that the insurer's right is one of counter-claim and not set-off, and
that therefore in the first instance the damage must be estimated
and paid as at the time of the loss.
The question has been raised whether the assured is entitled Reinstate-
to recover the insurance money if before action brought some SiMp^ty.

third person has reinstated the premises, for example, where a
mortgagee has insured on his own interest and the mortgagor
or his insurers have reinstated the premises. In Westminster
Fire v. Glasgow Provident (m) it was said that if the first
incumbrancers had reinstated the premises the second incum-

brancers would have suffered no loss ; but it is doubtful
whether this is strictly accurate. It is submitted that the
right of action by the second incumbrancers against their
insurers accrued when the premises were burned, that the
insurers were bound to pay the damage to the extent of their
assured's debt, and that the benefit arising from the reinstatement
{1} Monteleone v. The Royal (1895), (m) (1888), 13 A. C. 699.

47 La. Ann. 1563.
G80 FIBE mSUEANCE CLAIMS
of the premises, whether reinstated before or after action brought,

would be a matter for subrogation, the insurers being entitled,
if the insurance was for the benefit of the incumbrancer alone,
to an assignment of the debt and transfer of the security including
therein the benefit of the reinstatement. It has been decided
in America (n) that a mortgagee is entitled to recover from his
insurer, notwithstanding that the owner of the equity of redemption
has reinstated, whereas in Canada (o) there is an opinion to the

opposite effect. It is submitted that the American decision is
correct.
Where In Westminster Fire v. Glasgow Provident (p) it was argued in
have, but the House of Lords that as the second incumbrancers were
has not, entitled under 14 Geo. 3, c. 78, s. 83, to call upon the insurers
compelled
third party to of the prior incumbrancers to lay out the insurance money in
reinstating the premises, but had omitted to do so, they had only
themselves to blame if they sufferedloss, and therefore they could
not recover from their own insurers. As the point had not been
pleaded the House refused to consider it seriously, but, apart
from the question as to whether the statute apphed to Scotland

at all or whether it was applicable between mortgagor and mort-
gagee or between prior and puisne incumbrancers. Lord Selbome
indicated that before the insurers could rely on this statute as a
defence they must show that their assured knew there were other
insurances, that they knew they had the legal right to intervene,
and probably that they, the insurers, called upon them to inter-
vene. But it is very doubtful whether failure to take advantage
of the statute could ever be relied on as a defence.
No liability Where the assured has insured on his own behalf only, he cannot
beyond
assured 's recover more than the amount of his insurable interest at the
insurable time of the loss This follows from the presumption that the
(q).
interest.
contract of fire insurance is a contract of personal indemnity,
and that the intention of the parties is to protect the interest of
the assured, and not to provide him with a gambling speculation
on the interests of others. If the assured has insured on behalf
of others as well as on his own behalf, he may recover in respect
(n) Foster V. Equitable Mut. (1854), {q) Anderson v. Commercial Union

68 Mass. 216. (1885), 55 L. J. Q. B. 146, 149; Castel-
(o) Mathewson v. Western Assur- lain V. Preston (1883), 11 Q. B. D.
ance (1859), 10 Low. Can. R. 8. 380, 400.
{p) (1888), 13 A. C. 699.
of their interest as well as his own. The amount of insurable

interest which various persons interested in property such as
tenants for life, landlords and tenants, mortgagors and mortgagees,
bailors and bailees, may have in the property, has already been
considered, as has also the question when, and in what form one
person interested may insure not only on his own behalf, but on
behalf of others who have also an insurable interest {qq). For the
present purpose it will only be necessary to consider the position
of the assured who has insured on his own behalf, and is entitled
only to an indemnity on his own interest.
The insurable interest of one who is not absolute proprietor Insurable
of the property insured consists either in (1) ^^^^^^^ "^^^

some proprietary
right in the property, or (2) some liability which may arise on the
destruction of the property. Frequently the insurable interest
is a combination of these two elements. Thus, a tenant has
insurable interest in respect of the value of his lease, and in respect
of bis liability to repair.
In so far as the interest of the assured is a proprietary interest ? proprietary
it has been said that he is entitled to recover the depreciation

in the market value of his interest. Such depreciation is not
necessarily met by paying the assured the same proportion of the
damage as the market value of his interest bears to the total
value of the property. For instance, a partial loss may for the
time being entirely destroy the market value of a tenant's interest,
and the immediate depreciation of the market value of the assured's
interest may thus be greater than the total damage done to the
property. It is very doubtful, however, whether depreciation
in market value of a limited interest is the proper test of the
amount recoverable. It is said that the rule of strict indemnity
requires that if should be the test, and that the assured should
recover no more and no less. But it may be questioned whether
this is not a misapplication of the rule. As was pointed out in
Collingridge v. The Boyal Exchange (r), a fire policy promises to
pay the loss or damage to the premisesand not the total loss or
damage to the assured, and although the presumption against
speculative risks has led to the adoption of the rule that the
assured shall not be deemed to have insured, and shall not recover
beyond the value of his insurable interest, there seems to be no
good reason for extending the rule so far as to make the contract
mean something other than is expressed on the face of it. It is
(qq) Supra, pp. 129, 144. (r) (1877), 3 Q. B. D. 173.

therefore submitted that the proper rule for estimating the primary
liabiUty of the insurers on a limited proprietary interest is not
what was the depreciation in value of the assured's interest, but
what was the loss or damage to the property, and the assured is
entitled to recover that amount up to the extent of his proprietary
interest in the property.
An interest In so far as the assured's interest is a possible liability in which
arising from
possible
he will, or may, be involved by the destruction of the thing insured,
liability. the assured is entitled to recover to the extent of the liability
incurred. The fact that the liability has not been enforced
against him, and that he has made no actual payment in respect
of the loss no answer to his claim against the insurers (s). If
is
the assured, in fact, incurs no liability in respect of the loss it is

perhaps doubtful whether he is entitled to recover. On the one
hand, it may be said that a person in the position of a tenant or
bailee is entitled to recover the full amount of damage so as to
indemnify him against any possibiUty of his being thereafter
charged with liability, and incurring expense in resisting or
settling a doubtful claim. On the other hand, if he is paid by the

insurers the amount of the damage and no attempt is made to
charge him with liabiUty, he does recover more than he loses,
and there are no rights to which the insurers can be subrogated

so as to preserve the principle of indemnity. It is submitted
that the terms of an ordinary fire policy do entitle him to recover.
He cannot have complete indemnity unless he does, and this
fact ought to weigh in the balance more than the other fact that
he may ultimately have more than an indemnity.
In either case It is probably therefore true in all cases of insurance on pro-
loss is payable
perty that the assured is primarily entitled to recover the total
up to the
limit of fire damage up to the amount of his insurable interest, and that
interest.
the rule of subrogation alone is to be relied on to preserve the
principle of strict indemnity.

Where several persons having separate interests have insured
interests
entitled to
each on his own interest, it is no answer to A's claim for indemnity
separate against his own insurer for the insurer to say that B has already
indemnity.
been paid by his insurer the total fire damage. Eecovery by B
can only satisfy A's claim if B recovered with the authority of
A in respect of A's interest as well as his own (<).
(s) Galifornia Ina. Go. v. Union (1886), 101 N. Y. 277; Scottish

Compress Co. (1889), 133 U. S. 388. Amicablev. Northern A8eurance{l883),
(t) Glover v. Greenwich Insurance 11 R. 287.
Westminster Tire v. Glasgow Provident (1888), 13 A. C. 699 (m)
The owners of certain mills in Scotland had borrowed money on the security WestmiriSter
of their mills, and granted bonds (mortgages) to their creditors A, B, and 0, ^^''^^- .?*'
the security of the later bondholders being postponed to the security of the
earher. Each of the bondholders caused insurance to be effected each to
protect their own interest, and each with a different ofSce. These were all
practically in the same form, and were in the name of the respective
bondholders primo loco, and in the name of the owners in reversion, but
there was no privity of agreement between the bondholders. The
premiums were paid by the bondholders, but were debited in account
against the owners. C's bond was for £1000 and £917 lis. 6rf. was outstanding.
His insurance was for £900. The policy recited that the assured were " C and
X, Y (the owners) jointly and severally in reversion.'' Then followed the
condition for payment. " The Society hereby agrees with the insured that
if the said property or any part thereof shall be destroyed by fire the . . .
society will pay or make good all such loss or damage to an amount not ex-
ceeding in respect of the several matters described in the margin hereof the
sum set opposite thereto respectively, and not exceeding in the whole the sum
of £900." In the margin this sum was apportioned over different parts of
the premises insured. The premises were damaged by fire. Immediately
before the fire the value of thesite and premises was sufficient to satisfy all
the bondholders. The value of the site and salvage after the fire was valued
by C's valuators at £3500, and by the insurer's valuators at £6900, that is to
say, in either case it was not sufficient to satisfy the prior bonds, which amounted
to £8600. The value of the premises apart from the site was never sufficient
to satisfy the prior bonds. The prior bondholders recovered from their in- 'j
surers the total fire damage, amounting to £5668 16«. 8tZ., and applied it in I
reduction of their debt against the owners. This sum would have been
sufficient for the complete reinstatement of the premises. 0, with the consent
and concurrence of the owners, then raised an action in the Court of Session
against their insurers, claiming in respect of each item in their policy, the total
amount of fire damage to the extent of the sums apportioned thereon. The
Inner House found that the damage to the property in so far as it did not exceed
the sum insured upon each item, was in all £350, made up of £190 the sum
insured on the principal building, £120 the sum insured on one year's rent
thereof, and £40 in respect of three other items. The insurers contended that
when there were several policies upon different interests in the same premises
no more could be recovered in the aggregate upon all the policies than the
total damage done by the fire. Here they contended that the position was
the same as if the owner had insured for his own benefit, and for the benefit
of the successive incumbrancers. He could have recovered the total fire damage
but no more, and the incumbrancers would have been entitled to the benefit
of that sum in accordance with the priority of their securities. Here the total
fire damage had already been paid, and the prior incumbrancers had applied the
same in part satisfaction of their debt. To this payment the insurers admitted
that they were bound to contribute rateably in proportion to the sums insured
by them, but they contended that they were not bound to pay postponed
(u) Sub nom. Qlasgow Provident v. of Session ought to be consulted alone

Westminster Fire (1889), 14 R. 947. with the report of the appeal to the
This report of the case in the Court House of Lords.
G84 FIEE INSUBANCE CLAIMS
incumbrancers, who would also apply the money in reduction of their debt,
and so the owners would receive more than the total damage to the premises,
a result that was contrary to the principle of This argument
strict indemnity.
was rejected by a majority of the judges in the Court of Session, and by a
unanimous decision of the House of Lords. It was held that separate fire
policies covering the same subjects effected without priority by independent
incumbrancers for the protection of their several interests were not to be
treated as if they had been effected by the owner of the subjects merely
because he was made a party to each policy in respect of his right of reversion.
Each insurance was a separate insurance on the interest of each incumbrancer,
and each was entitled to an indemnity from his own insurer. If the premises
were so damaged by fire that what was left was insufficient to satisfy the prior
incumbrancers, a puisne incumbrancer was entitled to recover the amount
of his debt from his insurers. The total fire damage was not to be taken as
the total amount recoverable from all the insurers and then divided in pro-
portion to their interests among the assured. Each assured was entitled to an
indemnity for his immediate loss from his own insurer notwithstanding that
the result of that might be indirectly to give some one else something more
than an indemnity. As a matter of fact no one would in the long run get more
than an indemnity, because the insurer's rights of subrogation would prevent
that result. The judgment in the House of Lords was upon this basis, that
whereas the value of the premises before the fire was sufficient to cover all
the incumbrancers the fire had so reduced the value that even after the first
incumbrancers had appUed the insurance money received by them in part

extinction of their debt, the value of the land and salvage was not sufficient
to meet the balance of the first incumbrancers' debt. The security of the
postponed incumbrancers was in this view practically extinguished and each
was clearly entitled to the total fire damage not exceeding the amount insured
by him on each item or the amount of his debt. The item of £120 on rent was
disallowed on the ground that the postponed bondholder, not being in possession,
had no insurable interest in the rent.
Questions not The judgment of the House of Lords in the above case leaves
wT^nUnler °P^^ *^® question whether a postponed incumbrancer would be

Fire v. Olas- entitled to recover in all or any of these four cases (1) if the :
^°^ '
premises before the fire had been insufficient to satisfy the prior
incumbrances ; (2) if after the fire the premises had been sufficient
to satisfy the balance of the prior incumbrancers' debt (after

payment by their insurers) and leave sufficient to satisfy the
postponed incumbrancers' debt, but with a smaller margin of

security (3) if the value of the premises had not been reduced by
;
more than the amount paid to the prior incumbrancers so that

after the fire the premises had been sufficient to satisfy the balance
of the prior incumbrancers' debt and leave the same margin of
security as before; (4) if the owner or prior incumbrancers re-
instated the premises so that after reinstatement the postponed
incumbrancers were left with the same margin of security as
before the fire. It is submitted that in each of these four cases

the postponed incumbrancer would primarily be entitled to recover
from his insurers the amount of the fire damage done to the
premises not exceeding the amount of his debt.
In the first case, the fact that a prior incumbrancer could not,
even before the fire, have been satisfied out of the premises, does
not divest a postponed incumbrancer of all interest in them.
The prior incumbrancers might be paid off without having recourse
to the security, and then the security would be available to the
postponed incumbrancer.
In the second case, the fact that the margin of security is
reduced should entitle an incumbrancer to an indemnity, even

although a bare security is left. His interest is to have
the security maintained with the same ample margin. And
this appears to be the view that was taken in the Court of
Session (x). The facts of the case as reported in Session Cases
were not quite the same as assumed in the judgments in the
House of Lords. The figures show that the balance of the
prior incumbrancers' debt could have been satisfied out of the
salvage, and even on the lowest estimate something would have
been and on the insurers' estimate of the salvage sufficient
left,
would have been left to satisfy the pursuers. This possibility

appears, however, to have been treated by the Court of Session
as immaterial, and they base their judgments on this, that " the
value of the security was diminished by fire " and " that the
damaged subjects did not in fact afford as good a security for
the diminished debt as the entire subjects afforded for the whole
debt before the fire."
In the third and fourth cases the question is whether the amount
payable is the amount of damage at the time of the fire or whether
subsequent benefits which reduce the damage are to be set off
against this amount. It has already been submitted that the

benefit accruing to the assured from reinstatement is properly
matter of subrogation and counter-claim, and not set-off, and the
same rule appears to be applicable to the case where the amount
paid to the prior incumbrancer is damage done,
equivalent to the
so that when he has reduced his debt by that amount the security
of the assured is undiminished. Primarily the assured is entitled
to the whole amount of damage, but the insurer may counter-claim
(a;) Glasgow Provident v Westminster Fire (1887), 14 R. 947, 963.

in respect of the benefit which the assured has received from the
fact that prior charges on the property have been paid off.
Liability The assured cannot recover more than the specific amount
limited to
the sum insured on the property, or on each distinct part of the property
insured. when the sum is apportioned into several risks. For this purpose
each term of insurance is a distinct risk, that is to say, in an ordinary
fire pohcy renewable from year to year, the insurers undertake
to make good all loss or damage by fire up to the specified amount

during each current year of insurance. If the property is burned
down and a loss paid the insurers are only liable in the balance
of the sum insured for any subsequent loss during the same year
of insurance. When the insurance is renewed for another year,
the insurers again become liable for loss or damage up to the
specified amount. If the insurers elect to reinstate, and before they
have done so the premises are again burned down, they are
liable to make good the damage whether the second fire happened
during the same year of insurance or during a renewal of the
insurance, or even after the insurance had expired altogether.
Having elected to reinstate the insurers are Uable as on an agree-
ment to build, and they are not discharged from this obhgation
by reason of accidental fires which make the cost of reinstatement
much greater than the sum insured (i/).
Section III. —Beinstatement

Circum- One of themost important conditions in a fire pohcy from the
stances under
insurers' point of view is that which reserves to them the right
which the
right to rein- of replacing or repairing the property instead of paying a money
state arises.
indemnity to the assured. It is particularly valuable in circum-
stances similar to those which gave rise to the case of Westminster
Fire v. Glasgow Provident that is, where there are several
(z),
insurers on several and their total liability may be far

interests,
greater than the total amount of fire damage. If in the case

just mentioned the companies interested had taken advantage
of their right to reinstate, and had joined in giving notice to their
several insurers that they elected to reinstate, they would have
discharged their liability by one payment of the fire damage
{y) Smithv. Colonial M^ltual (1880), (z) (1888), 13 A. C. 699.

Vict. L. R. 200.
— ; ;
REINSTATEMENT 687
divided between them insteadof each having to pay to their assured

the total fire damage up to the amount insured without any right
of contribution from the other companies.
The insurersmay insist on the right to reinstate
(1) where they have reserved express power by their contract
(2) where they have suspicion of fraud or arson
(3) when they are requested to do so by any person, other than
the assured, who is interested in or entitled to the premises
damaged by fire.
Their right on the last two heads is under the statute 14 Geo.
3, c. 78, which will be discussed later. On the last head the
statute creates not only a right against the assured, but also a duty
on the part of the insurer towards the person interested who
demands that the statute shall be put in force. Where the
insurer has neither statutory nor express contractual right to
reinstate he cannot, as against his assured, insist on doing so, but
must pay a money indemnity (a).
The usual form of reinstatement clause gives the insurers an Where eleo-
option to pay a money indemnity or to restore to the assured ^^^^ ^ re^-""
in specie the property damaged or destroyed. The alternative served by the
is not merely to lay out the insurance money in reinstatement as
far as it will go, but to reinstate completely. If the insurers

elect to reinstate their hability is not limited either by the
amount insured, the amount of the damage, or the assured's
insurable interest.
Prima facie the obligation of the insurers is to pay a money Election must
indemnity, and if they desire to reinstate they must give the unequivocal
assured unequivocal notice that they intend to exercise their notice
option (c). Such notice must be given withia the time hmited (d),
if any, or otherwise within a reasonable time (e). Notice must be

given to the assured or his agent having authority to receive such
notice on his behalf (/ ). Where the owner insured and the policy
was indorsed " loss, if any, payable to mortgagee," it was held
that notice of election to reinstate was properly given to the
owner, and notice to the mortgagee was unnecessary {g).
(o) Wallacev. Insurance Go. {1S32), (e) Anderson v. Commercial Union

4 La. 289. (1885), 55 L.J. Q. B. 146; Sutherland
(c) Daul V. Firemen's Insurance v. /Swn jPire (1852), 14 D. 775.
(1883), 35 La.Ann. 98. (/) Supra, p. 201.
(d) Maryland Home v. Kinrniell (g) Heilmann v. Westchester Fire
(1899), 89 Md. 443. (1878), 75 N. Y. 7.
within the Where the option to reinstate was conditional upon giving
time limited,
if any, notice within sixty days after the completion of proofs, it was
held that the proofs meant the formal preliminary proof of loss
and not proof of loss before an arbitrator (fe) ; but where after
delivery of formal proofs the insurer returned them for correction,
and the assured made the desired correction without objection,
he was held to be estopped from contending that they were com-
plete when first delivered, and time for giving notice ran from
the delivery of the corrected proofs (i).
and before If the insurers have elected to pay a money indemnity they
election to
pay a money cannot afterwards change their minds and say they will
indemnity.
reinstate (j). It is not, however, always easy to determine what
constitutes such an election. When after loss the assured signed an
indorsement on the policy, "
Pay the loss under the written policy
toB," and the company added their indorsement, " Assented to,"
it was held that the company had not waived their right to
reinstate, but had merely assented to an assignment of the

benefit of the policy as it stood to B (fe).
Sutherland v. Sun Tire (1852), 14 B. 775
Sutherland v. A stationer's premises and stock were insured and damaged by fire. The
Sun Fire.
company, before any formal claim was made, sent an expert to examine the
premises and report on the damage. After a formal claim was made the
insurers made an offer of a cash payment which was refused. They then
offered to refer the amount of damage to arbitration, but the assured declined
to arbitrate. The insurers then said they would reinstate, and on the assured
subsequently bringing an action for the money indemnity it was held that the
was a good defence, and did not come too late. Lord Ivory,
offer to reinstate
however, expressed some doubt. He thought the offer of a cash payment
was an election to adopt the course of settlement by payment, but that the
subsequent refusal of the assured to go to arbitration as provided by the policy
threw the whole question open again and entitled the insurers once more to
make their own election.
Scottish. Amicable v. Northern Assurance (1883), 11 E. 287
Scottish This case arose out of the same fire as that which gave rise to the later
Amicable v. case of Westminster Fire v. Glasgow Provident (ni), the insurers who had
Northern,
insured the first incumbrancers joined with the insurers of the postponed
incumbrancers in trying to effect a settlement. The fire occurred on August 1,
{h) Glover v. Greenwich (1886), 101 Northern (1883), 11 R. 287; Mojrell

N. Y. 277. V. Irving Fire Co. (1865), 33 N. Y.
(i) Kelly v. Sun Fire (1891), 141 429.
Pa. 10. {k] Tolman v. Manufacturers (1848),
(j) Sutherland v. Sun Fire (1852), 55 Mass. 73.
14 D. 775 Scottish Amicable v.
; (m) (1888), 13 A. C. 669.
REINSTATEMENT 689
1881, and there were prolonged negotiations for settlement. The assured, the
first incumbrancers, claimed a certain sum or reinstatement. The insurers
tools no notice of the alternative claim for reinstatement, but disputed the
amount claimed. A minute of reference to arbitration on the question of
damage was prepared by the insurers, but was not signed as the insurers
insisted upon all the companies being made parties to the reference. On
February 1, 1882, the assured raised their action for payment, and in their
defence the insurers for the first time offered to reinstate. It was held that
the offer came too late. The Court was satisfied from the terms of the corre-
spondence that the insurers had elected to settle in money for the loss covered
by the policy, and that the only difference between the parties was the amount
payable.
Whether or not there has been an election to pay a money What consti-
indemnity to the exclusion of the right to reinstate depends there- eJ'eJti^n to

fore on the circumstances of each case, and no definite rule can v^y •< money
11-11 1 •
be laid down as to what is or what is not

1 • 1
an election [mm),
/ \ T
it would
indemnity.
seem, however, that the insurers ought to be allowed a reasonable

opportunity of ascertaining the probable amount of money damage
which they would have to pay if they should ultimately decide to
by payment. A reference, therefore, to an expert to ascertain
settle
the damage, even although made by mutual consent of the parties,

is not necessarily an election to pay (n). If it is merely a pre-
liminary investigation by which neither party is to be bound,
the presumption would be that there was no election ; but, on the
other hand, if there is an agreement to arbitrate, the presumption
would be that the insurers had elected to pay in money (o). The
offer to settle by payment of a certain sum of money cannot be
deemed by itself to be an election to pay in money if that offer is

refused ; but where such an offer is made, and particularly where
negotiations are prolonged as in the Scottish Amicable Case, the
insurers should always state that the offer is made without pre-
judice to their right to reinstate in the event of their money
offer being refused.
Where the insurers have elected to reinstate, but the assured When assured
questions their right to do so and demands a money payment, insurers' right
reinstate,
the insurers need not proceed with the work until the dispute has to
been settled, and if an action is brought for the money they may
plead their election as a defence (p). If the insurers Hke to take
the risk of the dispute being ultimately decided against them, they
{mm) Lancashire Insurance v. Bar- (o) McAllaster v. Niagara Fire

nard (1901), 111 Fed. Rep. 702. (1898), 156 N. Y. 80.
(n) Langan v. Aetna Insurance (p) Kelly v. Sun Fire (1891), 141
(1900), 99 Fed. Rep. 374. Pa. 10.
I.L. 44
690 PIEE INSURANCE CLAIMS
may proceed to reinstate, and the Court will not restrain them
from doing so pending the trial of the action (g). If the assured
interferes and prevents the insurers from reinstating, and does
his own and it is ultimately decided that the insurers
reinstating,
were right and ought to have been allowed to reinstate, the assured
can recover nothing, not even the sum which the insurers must
necessarily have expended on reinstatement (r).
When re- Reinstatement of premises may become a practical impossi-
instatement
is impossible,
bility either because they are no longer in the possession or control
of the assured (s), or because the authorities have ordered the
premises to be demolished (t), or because building regulations
prevent them being reinstated as they were originally built (m).
Such impossibility does not entitle the insurers to say that, as their
choice of alternatives has gone, they are entitled to be discharged
altogether from the contract (s). Since they cannot elect to
reinstate they must pay the money damage (x).
and insurers If the insurers do, in fact, elect to reinstate and thereafter
have elected
to reinstate,
it appears that reinstatement is impossible, they are not entitled
on that account to go back on their election. After election the
insurers are in the same position as contractors who have agreed
to rebuild, and have been paid the price (y). If they do not
they must perform their obligation they are Hable in damages. So long as
pay damages.
the non-performance is not caused by the interference of the
assured the insurers are liable, whether it was caused by their
own default or by circumstances over which they have no control.
Like all contractual obligations, the obligation is prima facie
absolute and impossibility of performance affords no defence.
Alchorne v. Tavill (1825), 4 L. J. (O. S.) Ch. 47

Alchorne v. The insurers elected to reinstate a house which had been absolutely de-
Favill.
stroyed. Before the fire the building projected beyond the line of the other
buildings in the street. The Building Act, 14 Geo. 3, o. 78, required that
the building when back in line with the others. A
rebuilt should be set
certain area of building space was thus lost, and although the insurers rebuilt
the premises so as to correspond as nearly as possible with their condition
before the fire, the value of the new buildings was considerably less than the
(g) Bisset v. The Royal (1821), 1 E. & E. 863; Monteleone v. The

D. 174. Royal (1895), 47 La. Ann, 1563.
(r) Beats v. The Home (1867), 36 [u) Alchorne v. Favill (1825), 4
N. Y. 522. L. J. (O. S.)Ch. 47.
(a;) Monteleone V.
(«) Anderson v. Commercial Union The Boyal (1895),
47La. Ann. 1563.
(1885), 55 L. J. Q. B. 146.
(2/) Brown v. The Boyal
Brotm The Boyal (1859), 1
(<) V. (1859), 1 E. & E. 853.
KEIN&TATEMENT G91
value of the old, and the insurers were bound to indemnify the assured by a
money payment in respect of the difference.
Brown v. The Royal (1859), 1 E. & E. 853
The insurers elected to reinstate a house which had been damaged by fire. Brown v. The
Before they could do so the house was condemned by the Commissioners of ^ôy^^-
Sewers under the Metropolitan Building Act, 1855, and ordered to be demo-
lished. The insurers thereupon refused to reinstate or pay the insurance
money. In an action for damages for breach of contract the insurers pleaded
that they elected to reinstate, and were proceeding to do so when performance
became impossible by reason of the order of the Commissioners, and that the
said order was made on account of the dangerous condition of the premises,
and that the dangerous condition was not caused by the fire, but existed before
the fire. On demurrer it was held that the plea was no defence to the claim.
The Court said that the defendants were bound by their election and if per-
formance became impossible or (which was all that was shown) more expensive
than they had anticipated, still they must either perform their contract or pay
damages for not performing it. They expressed no opinion as to the mode
in which the damages were to be assessed.
In an American case {z) the insurers elected to reinstate and when

afterwards the building authorities prohibited reinstatement prohibited^ re-
unless brick was used instead of wood, as before. It was held instatement
that the election was irrevocable, and that the insurers were
bound to reinstate with brick or pay damages for their failure to
do so. The damages would include the cost of reinstatement in
brick, and consequential damages for undue delay such as loss
of business.
If after the insurer has elected to reinstate and has partially when
'^^'
completed the work the premises are again burned down, the fnsuted
insurer must make good the fresh damage as part of his obligation premises were
,
• , , / s
burned.
to remstate (a).
If the insurer does the work of reconstruction badly and the Damages
result is less valuable than the original building, he must make good ^^^gy^^[^'
''^
the deficiency (c). And not only is he liable for the difference
in value, but he is liable for all consequential damages flowing from

defect in reinstatement as the natural and probable consequence
of such defect. Thus, apart altogether from whether such interests
were expressly insured in the policy he would be liable for loss of
business, loss of rent and other kinds of incidental damage (d),
(z) Fire Asaociation v. Rosenthal (c) Ryder v. Commonwealth Fire

(1885), 108 Pa. 474. (1868), 52 Barb. 447.
(a) Smith v. Colonial Mutual Fire {d) Henderson v. Insurance Co.
(1880), 6 Vict. L. R. 200. (1896), 48 La. Ann. 1031.
692 FIRE INSUEANCE CLAIMS
No credit for Although the insurer is liable to make good the difference
improved
value.
if he produces an inferior article, he gets no credit if he produces
a superior article. He is not in the absence of express agreement
entitled toany rebate in respect of new for old. That is a matter
which he must take into consideration before he offers to reinstate.
Damages for The insurer must complete the reinstatement withm a reason-
delay.
able time or he will be liable to pay damages for delay (e). If he
fails to complete after having commenced to reinstate the assured
may himself complete and sue the insurer for the cost (/). In
some policies the election of the insurer to reinstate merely
suspends the right of action for the sum insured, and the condi-
tions are so framed that if the insurer does not proceed with the
work and complete within a reasonable time the assured can sue
on the policy for the total amount of fire damage (g). As a rule,
however, the condition is so framed that after election to rein-
state within the time limited the sole obligation of the insurer is
to do so, and the obligation to pay a money indemnity is dis-
charged Qi).
Joint obliga- When several companies give their joint undertaking to

tion of co-
insureia. reinstate, they are jointly and severally liable for the fulfilment
of the obligation, and the assured may sue any one for any defect
or delay notwithstanding that the defect or delay is caused solely
by the default of another of the companies {i).
Insurers' Insurers who have elected to reinstate are not relieved from
claim for
their responsibility by delegating the work to contractors or others,
against however competent they may be. If the persons entrusted with
contractor.
the work do not perform it properly the insurers are liable to their
assured. The insurers may sue the contractor for breach of
his contract with them, but they may not be so fortunate in their
suit againsthim as the assured has been in his suit against them.
The contractor is not bound by the findings in the action between
the assured and insurers.
Times Fire v. Hawke (1859), 28 L. J. Ex. 317 (k)
Times Fire v.
'^^^ insurers elected to reinstate A's house, and employed B to do the
Hawke. work. When the work was completed A was and brought an
dissatisfied,
(e) Fire Association v. Rosenthal (h) Morrell v. Irving Fire Co.

(1885), 108 Pa. 474. (1865), 33 N. Y. 429 ; Parker v. Eagle
(/) Morrell v. Irving Fire Co. Fire (1857), 75 Mass. 152; Wynkoop
(1865), 33N. Y. 429. V. Niagara Fire (1883), 91 N. Y. 478.
(g) Haskins v. Hamilton Mut. (i) Hartford Fire v. Peebles Hotel
(1855), Mass. 432; Langan v.

71 (1897), 82 Fed. Rep. 546.
AetTM Insurance (1900), 99 Fed. Rep. (k) At Nisi Prills, 1 F. & F. 406.
374.
REINSTATEMENT 693
action against the company which was referred to arbitration, and an award
was made against the company. The company then sued B for breach of
contract, and the jury found a verdict for B. It appeared that B had, as regards
some of the painting, instead of completing the job, given A £5 in satisfaction.
Tlie Court of Appeal thought that probably the company was entitled to
nominal damages for this breach, but as the point had not been pleaded they
refused to disturb the verdict.
Queen Insurance v. Vey (1887), 16 L. T. 239

A company had by separate policies insured a lessee in respect of improve- Queen Insur-
ments and Both "'''^^ ^- '^y^
his lessor in respect of the entire premises. policies reserved
to the company the right of reinstatement. On a fire occurring tlie insurers
paid the lessee sufficient to reinstate the premises, and he undertook to do
so. The lessee having failed to reinstate the premises the lessor made a claim
and was paid by the insurers, who then brought an action against the lessee
for breach of his promise. He pleaded that there was no consideration for
his promise, but the Court held there was and that the lessor was entitled to
sue for damages.
The terms of an insurance company's memorandum and articles Whereeleotion
may limit the right of the directors to reinstate to cases where jg „;(^„ „j>e5.
the company can rebuild at a cost no greater than the amount
insured {I). If they elected to reinstate in a case where the cost
would be greater the election would be ultra vires, and apparently
the assured could not sue the company for damages for breach
of their obligation to rebuild, but he could still sue them for the
money indemnity. In so far as the company had in fact rein-
stated, the assured would probably have to make an allowance for
the value of the work done.
The insurers who have elected to reinstate are bound to put Extent of
° '^* '°""
the house substantially in the same state as before the fire (m).
They are not bound to give the assured a new house for an old one ;
and therefore when premises are only partially destroyed they

are not bound to pull down the old walls and rebuild them entirely
on account of some defect in their foundation. If by incorporating
the old with the new the repaired building is made as good as
the old one the insurers do all that can be required of them (m).
When the right of reinstatement is exercised in respect of BuUdingsmust
buildings, the insurers must reinstate them on the same site. They on the same
site.
cannot fulfil their obligation by reinstating them elsewhere. But
the fact that the site has passed out of the possession or control
of the assured does not deprive them of their right to reinstate if
(I) Zalesky v. Iowa State (1899), (m) Times Fire v. Hawke (1858)'
108 Iowa, 392. 1 F. & F. 40G.
694 FIRE INSUEANOB CLAIMS
they can obtain permission to do so. Thus, if a mortgagor has

insured and the mortgagee has gone into possession the insurers
may fulfil their obligation by reinstating the premises in the hands
of the mortgagee (n).
Machinery When the right of reinstatement is exercised in respect of
and other
movable pro- goods or other movable property the locality of the thing is not
perty need
an essential element of reinstatement. If the thing cannot be
not.
replaced in the same locality owing to the destruction of premises,
change of possession, or for some other reason, the insurer may fulfil
his obligation by offering to supply a similar article in such reason-
able place as the assured may be willing to receive it. And even
if reinstatement in the same place is possible the insurers cannot
insist on placing the substituted article in that place if, for some
reason, it is inconvenient for the assured to have it replaced in
the original locality, and he expresses a desire to have it delivered
in some other convenient place (w).
Anderson v. Commercial Union (1885), 55 L. J. Q. B. 146

Anderson v. The assured was an oil and colour manufacturer, and was lessee of premises
Commercial
where he erected a steam engine, plant and machinery. He mortgaged his
Union.
interest,made default in payment, and in November, 1882, an action by the
mortgagees for possession was pending. Under these circumstances he
effected insurance on the machinery, and the policy contained the usual
condition providing that the company might discharge their liability by
reinstatement. In December a fire occurred, and the premises and machinery
were damaged. In January the mortgagees went into possession. The
insurers elected to reinstate, and repaired the machinery while the premises
were in possession of the mortgagees. The assured objected to this course,
and claimed payment of the amount of loss or damage. The dispute went
to arbitration, and the arbitrator stated a case for the opinion of the Court
as to whether the insurers were entitled under the circumstances to exercise
the option of reinstating the machinery. The assured contended that the
fact that the premises and machinery had passed from the possession of the
assured made it impossible for the insurers to reinstate within the meaning
of the contract, and that they were therefore bound to indemnify them by a
money payment. The Court of Appeal held that the insurers were entitled
to exercise the option of reinstating the machinery the assured might have
;
removed the machinery to some other convenient place and required the in-
surers to repair it there, but he left it where it was, and the insurers had fulfilled
their contract by repairing it.
Reinstate- The right of the insurers, under the Statute 14 Geo. 3, c. 78,
ment under
14 Geo. 3,
to cause the insurance money to be laid out in reinstatement,
0. 78.
(«) Anderson V. Commercial Union (1885), 55 L. J. Q. B. 146.
REINSTATEMENT 695
and their duty to do so when so required by other persons interested,

must be distinguished from the insurers' right of election under
the contract. When they exercise their right under the contract
they must restore the premises to their original condition, no
matter what the ultimate cost may be. When they exercise
their right or are compelled to perform their duty under the
statute the obligation is merely to cause the insurance money
to be expended in rebuilding or repairing the premises as far as
the money will go. There is no obligation to make complete
reinstatement if the insurance money is insufficient.
Metropolitan Building Act, 1774, sec. 83

An Act for the further and better Regulation of Buildings and Party Walls : 14 Geo. 3,
^^°'
and for the more effectually preventing mischiefs by fire within the Cities of ^''^'
London and Westminster and the Liberties thereof and other the Parishes,
Precincts and Places within the Weekly Bills of Mortality {p), the Parishes of
County
83.
of Middlesex.
!P
And
*****
Saint Mary-le-Bow, Paddington, St. Panoras, and St. Luke
and hinder ill-minded persons from wilfully

in order to deter
setting their house or houses or other buildings on fire with a view of gaining
at Chelsea, in the
H<
to themselves the insurance money, whereby the lives and fortunes of many
families may be lost or endangered, be it further enacted by the authority
aforesaid, that it shall and may be lawful to and for the respective governors
or directors of the several insurance offices for insuring houses or other buildings
against loss byfire, and they are hereby authorised and required upon the request
of any person or persons interested in or entitled unto any house or houses or

other buildings which may hereafter be burnt down, demolished, or damaged
by fire, or upon any grounds of suspicion that the owner or owners, occupier
or occupiers, or other person or persons who shall have insured such house or
houses or other buildings have been guilty of fraud or of wilfully setting their
house or houses or other buildings on fire, to cause the insurance money to
be laid out and expended as far as the same will go towards rebuilding, re-
instating, or repairing such house or houses or other buildings so burnt down,
demolished, ordamaged by fire unless the party or parties claiming such
;
insurance money shall within sixty days next after his, her, or their claim is
adjusted give a sufficient security to the governors or directors of the insurance
officewhere such house or houses or other buildings are insured that the
same insurance money shall be laid out and expended as aforesaid or unless ;
the said insurance money shall be in that time settled and disposed of to and
amongst all the contending parties to the satisfaction and approbation of such
governors or directors of such insurance office respectively.
(p) This is the area within which, which the Act applies corresponds
prior to the Registration of Births, substantially to the present Metro-
Deaths, and Marriages Act, 1836, politan area as defined in the Metro-
provision was made for the recording politan Management Act, 1855 (18 &
of deaths in London. The area to 19 Vict. c. 120), s. 250.
696 FIRE mSURANCB CLAIMS
Scope of the The statute only applies to insurances on
statute.
any house or houses or
other buildings, and is therefore inapplicable to policies on goods
or other movable property such as trade fixtures or tenant's
which would not pass under a conveyance of " all that

fixtures,
house and buildings "(g). The insurers cannot exercise the right
as against the assured unless (1) reinstatement has been demanded
by some other person interested in the premises, or (2) they have
reasonable grounds of suspicion of fraud or arson. The statute
does not say that the assured must be the suspected person, and
probably the words are not so limited by any necessary imphca-
tion. If within sixty days the assured gives a sufficient security
that the money shall be laid out in repair or reinstatement -the

insurers arebound to pay over the money so that the assured may
execute the work himself.
Whether it There is still some doubt as to whether the application of sec-
applies out-
side the Bills tion 83 of 14 Geo. 3, c. 78, is not confined to buildings within the
of Mortality.
Bills of Mortahty. The statute is primarily a London Build-
ing Act, appHcable only to the areas specified in the title to the
Act. The greater part of the Act has been repealed and replaced
by more recent Metropolitan Building Acts, but the 83rd and 86th
sections have been preserved. The difficulty is created by the
fact that throughout the Act numerous provisions are prefixed
with the qualification " within the limits aforesaid." On the
other hand, some provisions, as in the 84th section, are prefixed
with the words " within the limits aforesaid or elsewhere within
the kingdom of Great Britain." Several provisions, however,
including the 8Brd and 86th sections, are in general terms without
any indication of the limits of their application. In Vernon v.
Smith (r) it appears to have been assumed by the Court of King's

Bench that the application of the 83rd section was limited to the
Bills of Mortahty, but the question was neither argued nor decided.
Then, in Richards v. Easto (s). Baron Parke, delivering the judgment
of the Court of Exchequer, said that the 84th and 86th sections
were of general application, and not local. This dictum, however,
in respect of the 86th section was unnecessary. The decision was
sufficiently supported by the fact that the 84th section was general,
and it is expressly stated in that section that it is so. In Filliter v.
Phippard (t) the question was whether section 86, which exempts
{q) 6orley,Ex parte (1864), 4 De (r) (1821), 5B. & Aid. 1.

G. J. & S. 477 Quiche's Trusts, In
; (») (1846), 15 M. & W. 244.
re, [1908] 1 Ch. 887. (t) (1847), 11 Q.B. 347.
REINSTATEMENT 697
•
proprietors from liability in respect of fires accidentally beginning

on their property, was a defence to an action brought by the pro-
prietor of land against his neighbour for damages by fire alleged
to have been caused by the defendant's negligence. Lord Den-
man, C.J., delivering the judgment of the Court of Queen's Bench
said, with reference to this section, " We cannot doubt that Baron
Parke in Bichards v. Easto {u) rightly viewed it as a general law."
They, however, gave judgment for the plaintiff on the ground that
the section did not apply to fires caused by the negligence of the
defendant or his servant. The opinion as to the general applica-
tion of the statute did not therefore affect the ultimate decision
of the Court. In Ex parte Gorley {x) the application of the 83rd
section beyond the Bills of Mortality was definitely argued and
decided for the first time {y).
Gorley, Ex parte (1864), 4 De G. J. & S. 477

The assured was and effected insurance Qorley,
lessee of certain licensed premises
for his own benefit on the premisesand trade fixtures therein. The assured Ex parte.
in his lease covenanted to deliver up the trade fixtures to the lessor at the
termination of the lease. He mortgaged his leasehold interest in the premises
and fixtures to secure a loan. The premises were destroyed by fire and the
assured became bankrupt. The assignee in bankruptcy claimed the insi ranee
money, but the lessor and mortgagees claimed that it should be applied towards
reinstatement. The Commissioner in Bankruptcy decided that the applica-
tion of the 83rd section was limited to the Bills of Mortality and held that
the assignee was entitled to the insurance money {%). On appeal Lord Westbury
held that the section was of general application and that in so far as the
premises were concerned the insurance money thereon must be applied in
reinstatement but in so far as the fixtures were concerned the assignee
;
was entitled to the insurance money thereon since the section applied only
to houses and buildings.
Westminster Fire v. Glasgow Provident (1888), 13 A. C. 699

The question was raised in the House of Lords whether the 83rd Westminster
section applied to Scotland. Lord Halsbury, L.C., declined to consider Fire v. Glas-
the point as it was not pleaded or argued in the Courts below. Lord ^
Selbome gave no opinion on this point either, but Lord Watson said,
" Having regard to the preamble of the statute and to the general scope
of its provisions, it humbly appears to me that if a question were to arise
as to its applicability within the realm of England beyond the Bills of
(m) (1846), 15 M. & W. 244. was decided on other grounds, and no

(x) (1864), 4 De G. J. & S. 477 ;
opinion was expressed on the scope
IIL. T. 319. of the statute.
iy) The point was argued at length (z) Sub nom. Ex parte Leney and
before Page Wood, V.C., in Simpsonv. Evenden (1864), 10 L. T. 697.
Scottish tjnion (1863), but the case
Mortality, the decision in Ex parte Oorky(b) would have to be carefully

considered. In my
opinion the Act was not intended by the Legislature to
have any application to Scotland. It was passed in order to amend previous
legislationwhich had no reference to that country, and the whole tenor of its
enactments and the remedies which these provide appear to me to indicate
that they were not meant to be administered by Scotch Courts." And during
the argument Lord Watson said that the provision contained in section 86
to the effect that the defendant might " plead the general issue " would have
been utterly unintelligible and incapable of application in the Scotch Courts.
Present state At present Lord Westbury's decision in Ex parte Gorley (h), to

the effect that the 83rd section applies throughout England, is
binding on all Courts of first instance in England, and has been

followed in a recent case by Swinfen Eady, J. (d) ; but the whole
question is open to review in the Court of Appeal. In Scotland there
is no decision binding any Court, Lord Watson's opinion being
purely obiter. It is submitted that, notwithstanding what Lord
Watson has said, the decision of Lord Westbury in Ex parte Gorley
is right. The same arguments apply equally to sections 83 and 86.
In neither is there the slightest shadow of reason for limiting
the provisions to the Bills of Mortality. The evil intended to be
remedied was general, not local. Too much stress ought not to
be placed on the fact that section 84 is expressly appHed to the
whole of Great Britain. It is not a necessary inference that
because there is no corresponding expression in sections 83 and 86
that therefore they must be deemed to be limited in operation to
the Metropolitan area. The fact that section 84 is a penal section
may account for the greater precision in defining the limits. If it
had been intended to limit the application of sections 83 and 86

it is difficult to understand why such general words should be used,
while in section 85, where the provisions as to police are of an
essentially local character, the application should be expressly
limited to fires " within the limits aforesaid." As regards the
application of these sections to Scotland there is no doubt that
section 84 was intended to apply to Scotland, and therefore Lord
Watson's observations do not apply to the whole Act. Again,
the criticism that the provisions in section 86 relating to pro-
cedure would be inapplicable to Scotland is not a conclusive
argument against the application of the rest of the section or the
Act to Scotland. It was by no means uncommon to
rest of the
insert such provisions in statutes which were clearly intended to
(6) (1864), 4 De G.J. & S. 477.

{d) Quiche's Trusts, In re, [1908] 1 Ch. 887.
REINSTATEMENT 699
apply to Scotland, as, for instance, the Copyright Act, 1842,

where there is a similar provision as to pleading the general issue (e).
Such provisions must, on applying the Act to Scotland, be taken

pro non scri/pto. It is submitted, therefore, that sections 83 and 86
do apply not Qnly to England beyond the Bills of Mortahty, but
to the whole of Great Britain, that is, within the same limits as
was expressly enacted with regard to the penal section 84. The
provisions of this Act do not apply to Ireland (/).
The meaning of the words " insurance money " has been the Meaning of
subject of considerable discussion. Primarily no doubt the words money.'

refer to the money which, but for the Statute, would be payable
to the assured in cash, and do not mean the total sum insured.
Difficulty, however, arises where the assured's interest in the
buildings is less than their total value as in the case of a lessee
or tenant for life. A cash payment to him of, say £100, might
represent the full value of his interest in the buildings, and would
therefore completely indemnify him ; but if the landlord or
reversioner not being insured demanded reinstatement, the ex-
penditure of £100 in rebuilding might mean only a partial rein-
statement, and leave the assured to a great extent unindemnified.
This would be a strange result if the amount insured was sufficient
to cover a complete reinstatement. On the other hand, if the
company is bound to make complete reinstatement the statute
which is primarily designed for the protection of the community
operates to increase the contractual liability of the company.
It is submitted, however, that it has this effect. The "insurance
money " is the sum which the company contracts to pay. It
contracts to pay an indemnity. The proportion of the amount

insured required to indemnify the assured may vary according
to circumstances. If the statute is invoked a larger sum is
required to indemnify an assured with a limited interest than

would be required if the statute were not invoked, and the
company must pay accordingly. Another way of putting the
assured's case is that where the statute may be invoked he has
an insurable interest to the full value of the property, and is
thus entitled prvma facie to recover the full value {ff). This is
"
the insurance money " which must be laid out in reinstatement,
(e) 5 & 6 Vict. c. 45, s. 26. (1863), 1 H. & M. 618, 628 ; Andrews
(/) Andrews V. Patriotic [1885), 18 v. Patriotic (1886), 18 L. R. Ir. 355,
L. R. Ir. 355, 366. 366.
(ff) Simpson v. Scottish Union
although it may be that if the statute was not invoked, the

company could say that the assured was bound to accept the
smaller sum which in that event would fully indemnify him.
Who are It has been doubted whether section 83 of 14 Geo. 3, c. 78,
entitled to
the benefit
entitles all persons interested in the property to interfere, or
of the whether its application is not limited to a certain class of persons
statute.
interested. The words of the section are that the insurers shall cause
the insurance money to be laid out in rebuilding " upon request
of any person or persons interested in or entitled unto any house
or houses or other buildings . . . damaged by fire." These words
are sufficiently wide, but the concluding words of the section pro-
viding that the insurers may pay if " the money shall be settled . . .
and disposed of to the satisfaction of all the contending parties"

has suggested the inference that the section is only available to
persons who are interested in the sense that they have a claim
upon the insurance money. Thus, in Westminster Fire v. Glasgow
Provident {g), Lord Selborne doubted whether the section applied
so as to entitle a postponed bondholder to call upon the insurer

of a prior bondholder to lay out the insurance money payable to
the latter in reinstatement, each bondholder having insured on
his own interest and clearly having no claim on the other's insurer.
Speaking of the section, he said : "It has not, as far as I know,
ever been decided that it applies as between mortgagor and mort-
gagee or (which is the same thing in effect) as between prior and

puisne incumbrancers." There is practically no authority on the
point, but Ex parte Gorley (h) is authority for holding that " persons
interested " are not Hmited to persons who have some claim on
the insurance money, because in that case the insurance by a

lessee was clearly effected for his own benefit, and the lessor and
mortgagee made no claim to the insurance money, but only
claimed a right to insist that the insurers should reinstate instead
of paying the money to the lessee's assignee in bankruptcy. It
should also be noted that in that case the lessee's mortgagee was
one of the applicants for reinstatement, and althougH the case
contains no decision that he alone would have been entitled to
interfere, it is significant that it does not appear to have been
suggested throughout the proceedings that the section was not

enforceable by a mortgagee desiring to obtain the benefit of the
mortgagor's insurance. In one case it was argued that although
(g) (1888), 13 A. C. 699. (h) (1864), 4 De G. J. & S. 477.

REINSTATEMENT 701
a lessor could enforce the statute against a lessee who msured,

a lessee could not enforce it against a lessor who insured entirely
for his own benefit (i).The case was settled, and the point was not
decided. In Wimhledo7i Park Golf Club, Ltd. v. The Imperial (k)
a lessee sought to enforce the statute against the lessor's insurers,
and it was not suggested that the statute did not apply to such a
case.
In the case of In re Quiche's Trusts

(l) it was held that where
had insured under the powers contained in

trustees of settled land
the Conveyancing Act, 1881, s. 42, and the Trustee Act, 1893,
s. 18 (1), and had paid the premiums out of income, the
remaindermen were entitled as against the tenant for life to
claim the benefit of the statute and have the insurance moneys
applied in reinstatement of the premises.
It is submitted, therefore, that the statute can be enforced by
a mortgagee against the mortgagor's insurers and vice versa, and by
a lessee against the lessor's insurers and vice versa, and by a
remainderman against the insurers of the tenant for life, and
that the person claiming the right to enforce the statute need
not show that he has otherwise any claim to the benefit of the
insurance money.
It may be that by reason of the terms of the contract between Contracting
the assured and the party claiming reinstatement the assured may "•"^ft^'^^
be entitled to payment of the insurance money in cash. If so, the claim the
party so claiming reinstatement will not be allowed to enforce Act.
the statute so as to violate his contractual obligations, and the
Court will, at the instance of the assured, grant an injunction re-
straining him from giving notice to the insurers or otherwise
enforcing
^t>
the statute.
Reynard v. Arnold (1875), L. E. 10 Cli. 386

A lessee in pursuance of a covenant in the lease effected insurance on the Reynard v.
premises for the joint benefit of lessor and lessee. Under the lease the lessee Arnold.
had an option to purchase the premises at a specified price within a specified
time. On a fire happening the lessee elected to purchase and demanded
that the insurance money should be applied in part payment of the price.
The on the other hand, demanded reinstatement, and gave notice to
lessor,
the office under the statute. The Court held that the lessee was right, and
granted an injunction restraining the lessor from requiring the insurance
money to be applied in reinstatement.
(i) Paris v. Oilhcm (1813), Coop. (k) (1902), 18 T. L. R. 815.

Ch. C. 56. (I) [1908] 1 Ch. 887.
702 FIRE mSUBANCB CLAIMS
As between mortgagor and mortgagee, the mortgagee may be

entitled, either by the express terms of the mortgage deed or under
the terms of section 23 of the Conveyancing Act, 1881 (m), to have
any insurance money applied towards discharge of the mortgage
debt, and if so, the mortgagee could restrain the mortgagor from
demanding that the insurers should apply the money in reinstate-
ment {mm). In Bayner v. Preston (n), where it was decided that a
vendor who had effected insurance and then contracted to sell
was not trustee of the insurance for the benefit of the purchaser,
it was said that the purchaser might have obtained the benefit
of the insurance by giving notice to the vendor's insurers to cause

the money to be laid out in reinstatement, and this is no doubt
right since, although the purchaser was not by his contract en-
titled to claim any benefit from the insurance, he was, on the
other hand, under no contractual obligation to permit the money
to be received in cash by the vendor, and therefore there was
nothing to prevent him enforcing the statute in his own interest.
But where the conditions of sale provide that the purchaser shall
take all risks after the agreement is signed, this probably precludes
the purchaser from getting the benefit of the vendor's insurance
by demanding reinstatement.
Reinstate- If a request is made for reinstatement the insurers are bound
ment may be to comply with it, although neither they nor the parties applying
demanded
although no have any suspicion of fraud (o). The right of the insurers to re-
suspicious
circum- instate upon reasonable suspicion of fraud or arson is distinct from
stances. their right and duty to reinstate when properly required to do so.
There must The demand to reinstate must be made to the insurers before
be a distinct
they have paid the insurance moneys to the parties otherwise
demand
before the entitled to payment (p). The demand must also be a distinct and
claim
settled.
is
definite request to the insurers to act upon the statute. A mere
claim to the benefit of the insurance money is not suf&cient.
Simpson v. Scottish Union (1863), 1 H. & M. 618
Simpson v. A lessee insured the demised premises in pursuance of a covenant in the

Scottish lease. After a fire had occurred the lessor went to the insurer's office, and the
Union. Secretary said that the case was a suspicious one. The lessor then said that
(m) 44 & 45 Vict. 41. Vide (n) (1881), 18 Ch. D. 1.
infra, p. 774. (o) Vernon v. Smith (1821), 5

(mm) This, however, would not
affect the right of the office to exercise
B. & Aid. 1.
its option under a reinstatement ( p) Simpson v. Scottish Union

clause in the policy or to rely upon (1863), 1 H. &M. 618.
the statute if they suspected fraud.
EEINSTATEMENT 703
he olaimed to be entitled to the benefit of the policy and to have the amount
laid out towards rebuilding the houses. After this conversation the lessor
sent the following notice to the Secretary :
" Sir, As the owner of the houses
. . . destroyed by fire on the 10th instant, insured in your office by A. B., I
hereby give you notice not to pay any money in respect of that policy to him
or any one on his behalf, beUeving myself to be entitled to the benefit of that
insurance, having sustained a heavy loss by the burning of these premises.''
Thereafter the insurers settled with the lessee by paying him a sum insured
by him under a separate policy on his stock-in-trade in consideration of his
abandoning all claims upon the first-mentioned policy. The lessor thereupon
proceeded to rebuUd, and during the rebuilding made demand upon the
company to pay the insurance money to him or expend it on rebuilding. On
refusal the lessor completed the reinstatement, and sued the insurers for the
insurance money. The Court-decided that there was no sufficient request to
have the money applied under the terms of the statute. No reference was
made to the statute, and there was nothing more than a demand to have the
benefit of the insurance moneys. In the absence of a formal demand to the
insurers to reinstate the premises pursuant to the statute the person interested
had no right under the statute to claim any benefit from the insurers. And
even when a formal demand was made the applicant had no right to have the
moneys paid to him, and the insurers had no power to deal with the money
otherwise than by reinstating the premises.
Apart from the right to require the insurers to cause the money The statute
to be laid out in reiustatement the statute does not confer upon pgjties no
any person any right to claim the benefit of an insurance claim to a
TTTi
When ,1
the
11
money has been paid
-1 T . 11
unconditionally to the assured,
1
(o).
1 charge on the
insurance
the statute does not give other persons interested any right to ^°^^y-
follow the money in his hands, and they cannot by reason of the
statute demand that the assured who has received the money shall
reinstate or otherwise apply the money for their benefit (r). And
even where it was alleged that the assured's solicitors had by mis-
representation on a point of law induced a person interested to
refrain from enforcing the statute it was held that he had thereby
no claim against the assured (r). He was not entitled to rely upon
what was merely a statement of opinion. Third persons may by
contract be entitled to demand that the assured shall apply the
insurance moneys in reinstatement or otherwise give them the
benefit of the insurance (s) ; but the statute 14 Geo. 3, c. 78, can-
not be prayed in aid of any such claim after the insurance money
has been paid over (t). In the case of In re Quiche's Trusts (u),
(q) Simpson v. Scottish Union Leeds v. Gheetham {1829), 1 Sim.

(t)
(1863), 1 H. & M. 618. 146 iês v. Whiteley (1866), L. R.

.
(r) Rayner v. Preston (1881), 18 9 tt,

^-c^q. ,,q
I4d.
Ch. D. 1.
(s) Garden v. Ingram (1852), 23 („) [1908] 1 Ch. 887.
L. J. Ch. 478.
704 PIRE INSURANCE CLAIMS
where the trustees of settled land had insured under their powers
under the Conveyancing and Trustee Acts and paid the premiums
out of income, the insurance money was paid to the trustees.
They took out an originating summons to have the rights of the
tenant for Hfe and the remainderman to the insurance money
determined. was held that the remaindermen were entitled
It
to exercise their right under the statute and require the sum
received to be applied in rebuilding. No point was taken on behalf
of the tenant for life that it was too late for the remaindermen to
invoke the statute, and the decision seems to be inconsistent with
the principles just stated.
Procedure to In Simpson V. Scottish Union (x), Page Wood, V.O., said
enforce the
statute.
that a third party interested in the property might enforce
the statute against the insurers by a mandatory injunction,
and that the insurers might thereby be compelled to expend
the insurance money in reinstatement. In Wimbledon Park
Golf Club, Limited, v. The Imperial (y), Wright, J., thought that
a party interested had no right to compel the insurers to under-
take the reinstatement, and held that his proper remedy was
an injunction against the insurers to restrain them from paying
over the insurance money until they should have obtained a
sufficient security from the assured that the money should be
expended in reinstatement. Now, there is no doubt that if the
assured does tender a sufficient security the insurers are bound
to hand the money over to him,and the fact that such security
has been given is a complete answer to any claim made by the
party interested against the insurers. Apparently a personal bond
without sureties given by the assured will be sufficient security
if the assured is financially sound [z). It is submitted that the
bond should be executed in favour of the party interested as well
as in favour of the insurers, for otherwiseit is a mere indemnity
to the insurers,and affords no security to the party claiming re-

instatement. But it is possible that the assured may be so
financially unsound that he is not in a position to offer sufficient
security that the money paid will be expended in reinstatement,
or he may be able but unwilling to give security. In either case
the party claiming reinstatement will receive no benefit from an
order against the insurers restraining them from parting with
{x) (1863), 1H. & M. 618. Limited, v. The Imperial (1902), 18

{y) (1902), 18 T. L. R. 815. T. L. R. 815.
(z) Wimbledon Park Golf Club,
DOUBLE INSURANCE 705
the money, and it is submitted that his right under the statute
does entitle him to compel the insurers to cause the insurance
money and that Page Wood, V.C.,
to be paid out in rebuilding,
was when
right he suggested that a mandatory injunction was
his proper remedy. The objections suggested by Wright, J.,
that the insurers had no power to enter on the premises, and that
the parties interested were not agreed as to what should be
rebuilt, may be answered by saying that the statute gives the
insurers implied power to enter and reinstate any premises which
they have insured, and if the parties cannot agree as to the form
of reinstatement they must be content to have the insurance

money expended in so far as it will go in a replica of the old
building.
The insurers may be able to escape the responsibility of re- Payment of
building the premises by paying the insurance money into Court, money into
Court.
If the assured demands payment of the money and a third party
' interested demands reinstatement, there is a proper case for inter-
pleader, and the insurers by bringing the money into Court will
get a discharge and payment of their costs (a). The issue will then
be between the assured and the party claiming reinstatement, and
if the latter succeeds the order of the Court would be to pay the
money out to a builder named in the order on the certificate of an

architect or surveyor that the work had been duly completed.
Section IV. —Double Insurance

Double insurance is where the assured insures the same risk Apart from
with two or more independent insurers. Over-insurance is where each'insmer

the insurances more than the total value of li^ê for
the aggregate of all is
. 1 „ T •
T 1
whole loss but
the assured s mterest at risk. Apart from express condition, both entitled to
double insurance and over-insurance are perfectly lawful. A f""^'^'^"*"'"

man may insure with as many insurers as he pleases and up to insurers.
the fuU value of his interest with each one {b). If a loss occurs
he may, in the absence of the pro rata contribution clause,
select any one or more insurers and recover from him or them
the total amount of the loss (c). If he fails to recover his whole
(a) Paris V. Gilham (1813), Coop. American oases the assured recovered
Ch. C. 56. only a pro rata share where ap-
(6) Millavdon v. Western Marine parently there was no express pro
(1836), 9 La. 27. rata clause. Barnes v. Hartford Fire
(e) Godin v. London Assurance (1882), 9 Fed. Rep. 813; Blake v.
(1758), 1 W. Bl. 103. In some Exchange Mui. (1882), 18 Mass. 265.
I.L. 45
loss from those against whom he has proceeded in the first instance,
he may recover the balance from any one or more of the others.
But in no event is he entitled to recover more than his loss because
each contract is a contract of indemnity only, and therefore when

he has recovered his total loss from some one or more of his in-
surers his claims against the others abate. The right to discuss
his insurers in any order is a valuable right for the assured, for it
protects him against loss in the event of one or more of his in-
surers becoming insolvent ; but as it would be a considerable
hardship on the insurers that one alone of several co-insurers
should bear the whole loss, the doctrine of contribution was evolved,
apparently by Lord Mansfield, who held that in marine insurance
an insurer who paid more than his rateable proportion of the loss
should have a right to recover the excess from his co-insurers, who
had paid less than their rateable proportion (d). The same general
principles of liability and contribution have been held to apply to
fire insurance (e) and in Scotland in a case of insurance against
liability for accidents. Lord Low, Ordinary, expressed an opinion
that they apply to all classes of indemnity insurance (/). As a
rule, however, fire insurance companies are not content to leave
their liability on this basis, and have'^'accordingly inserted con-
ditions in their policies in order to protect themselves as far as
possible against fraudulent over-insurances, and at the same time
to obtain the maximum benefit from the contributory liability
of co-insurers.
Conditions Most fire policies contain one or other or both of the following
relating to
double
conditions : (1) requiring the assured to disclose other insurances
insurance. upon the same property subsisting at the time the policy is issued ;
(2) providing that in the event of other insurances subsisting at

the time of the loss the company shall only be bound to pay to
the assured their proper proportion of the loss. The clauses
designed to effect these objects appear in many different forms
and with many variations in detail, but in construing them it is
always important to remember that they are aimed primarily at
double insurance, that is, at cases where the assured has made
{d) Newhyv. Reed (1762), 1 W. Bl. (/) Sickness and Accident v.
416 ; Davis (1777), 2 Park,
Rogers v. General Accident (1892), 19 K. 977 ;
601 Davis v. Gildart {nil), 2

; 29 S. L. R. 836. The rule, therefore,
Park, 601 ; and see Marine Insur- might also apply to guarantee and
ance Act, 1907, 6 Edw. 7,c. 41, sees. fidehty insurances, Seaton v. Heath,
32, 80. [1899] 1 Q. B. 782 but see American
;
(e) London, Liver-

North British v. Surety Co. v. Wrightson (1910), 16
pool, and Globe (1877), 5 Ch. D. 569, Com. Cas. 37.
583.
contracts with other insurers upon the same property and the
same interest and against the same risk, and unless a condition
contains words which compel a different construction it ought
only to be applied to cases which are strictly cases of double
insurance.
The first essential element of double insurance that the in- Double insur-
is
ance means
surances must be on the same property. The Courts of renn- insurance on
sylvania have held that another insurance does not " cover the
pjopg*j™y_
same property " within the meaning of the conditions requiring
notice and providing for pro rata liabihty unless such other in-
surance covers identically the same property no more and no less {g).
This, however, is contrary to the general consensus of authority

elsewhere Qi). There does not appear to be any English authority
on this point, but after considering the decisions in the other
American States and in Canada, the better opinion undoubtedly
seems to be that there is double insurance within the meaning of
these conditions, and for the purposes of contribution, whenever
another poHcy does in effect cover a substantial part of the property
already insured, and English fire insurance companies have for long
acted upon this assumption. Thus there is double insurance
where item A is insured by one insurer and items A and B are
insured for a single undivided premium by another insurer, or
where goods are covered by a floating policy and part of the goods
so covered are also insured specifically. Such poUcies are con-
tributing pohcies, and liable to abatement under the pro rata
condition. In a recent case (i) Hamilton, J., expressed a doubt
as to whether the equitable doctrine of contribution was applicable
to a case where in one policy a bank was insured against loss of
securities from fire, burglary, or dishonesty of employees in a sun:
of £40,000 without apportionment, and in another policy the bank
was insured against loss through dishonesty of employees, and a
maximum amount was insured against each employee. This case
does not, however, appear to throw any serious doubt on the
proposition that there may be contribution, although the risk
(g) Lumber Exchange Co. v. Ameri- 388 Page v. Sun Insurance (IS
;
can Central (1898), 183 Pa. 366 ;

74 Fed. Rep. 203 Ramsay Woollen
;
Clarkev. Tf esiern (1891), 146 Pa. 561 ; Cloth Co. v. Mutual Fire (1854), 11
Royal Insurance v. Roedel (1875), 78 U. C. Q. B. 517 Lesure Lumber v.
;
Pa. 19; Sloat v. Royal Insurance Mutual Fire (1897), 101 Iowa, 514;
(1865), 49 Pa. 14. ' Houyh v. People's Fire (1872), 36 Ind.
(h) Unitarian Congregation v. Wes- 398.
tern (1866), 26 U. C. Q. B. 175 ; (i) American Surety Co. v. Wrighi-
Ogden v. East River (1872), 50 N. Y. son (1910), 16 Com. Cas. 37.
708 FIRE INSUBANOE CLAIMS
covered by the two policies is not identical either in respect of

the subject matter or the perils insured against.
Tho same There
no double insurance unless at least a substantial part
is
risk.
of the same risk is covered by both iasurances, and the fact that
two insurances may under certain circumstances overlap so as to
insure the same property against the same risk for a brief period
does not constitute a double insurance within the meaning of
the condition requiring notice to be given (k), although, on the
other hand, if the loss does in fact happen when the property is
covered by both insurances there would probably be double in-

surance within the meaning of the pro rata clause and for the
purposes of contribution.
Australian Agricultural Insurance v. Saunders (1875), L. R.

10 C. P. 668
Australian An insurance against fire was effected on wool " in all or any shed or store
Agricultural on station or in transit to Sydney by land only, or in any shed or store, or any
Insurance v.
Sannders.
wharf in Sydney until placed in ship." Tliis policy contained the condition,
" No claim shall be recoverable if the property insured be previously or
subsequently insured elsewhere, unless the particulars of such insurance be
notified to the company in writing." Subsequently the assured effected a
marine insurance, " at and from the River Hunter to Sydney per ships and
steamers, and thence per ship or sMps to London, including the risk of craft
from the time that the wools are first waterborne, and of transhipment on
landing, and reshipment at Sydney." The wool was shipped to Sydney,
where it was landed and deposited in the stevedore's warehouse to await re-
shipment. The wool was burned while in the warehouse, and this action
was brought on the fire policy. The insurers pleaded double insurance without
notice but the Court held that there was in fact no double insurance. This
;
loss was not covered by the marine policy, and they thought there was no
possibility of the policies overlapping, but even if there was a possibility
"
of overlapping during a short period, that was not " insurance elsewhere
within the meaning of the condition, and Pollock, B., said (l), " These conditions
liave been of late inserted into fire policies with the object of enabling the
insurers to know the character of the risk and that the parties had the real
value of the goods insured. But would manifestly be quite immaterial

it
to the underwriters of a fire policy, whether they knew or not that the assured
had a wide marine policy also even if the two policies might in some event
overlap; " and Blackburn, J., said (m), " I think the meaning of an insurance else-
where in the fire policy is an assurance specifically covering the same risk and
not a mere possibility that at some point another policy should attach " ;
and Lush, J., said(»i), " The clause refers to subsequent insurances obviously
intended to cover the same risk."
{k) Australian Agricultural Insur- [1) 33 L. T. 447, 450.

ance V. Saunders (1876), L. R. 10 C. P. (m) L. R. 10 C. P. 668, 676.
668 ; Mead v. American Fire (1897), (») L. R. IOC. P. 668, 677.
13Hun. App. 476.
In an American case (o) the pro rata clause apfjlied to " other
insurances subsisting at the time of the fire, whether valid or
invalid." The assured had previously effected an insurance with
another company, but on some alterations being made on the
premises that company refused to cover the additional risk. The
assured therefore effected this policy, covering the premises as
altered, and it was held that the company could not set up the
original pohcy it was an insurance
as a contributing policy since
upon a different risk.
The next essential element of double insurance is that the 'fhe same
insurances must cover the same interest (p). Where two people
have different interests in the same property, and each insures
his own interest on his own is no double insurance,
behalf, there
even although the aggregate two insurances is more than
of the
the total value of the property (g). Thus there may be inde-
pendent insurance by the owner and bailee of goods (r), by the
owner and mortgagee of house property (s), by a vendor and
purchaser («.s), or by a landlord and his tenant (t). If each insures
his own interest only there is no double insurance, and each as
between his insurer and himself is entitled to a full indemnity in
respect of his interest, but if the one has, apart from the insurance,
a right of recourse against the other in respect of the damage, his
insurer is subrogated to that right, and thus in the result one
insurer may have to bear the whole loss. On the other hand,
a bailee, mortgagee, or lessee may insure the owner's interest as
well as his own, and if the insurance is with the owner's consent,
and he also has insured, there is a double insurance of the owner's
interest (m).
(o)LiebrawUv. McDowell Stove Co. Ont. A. R. 173; Planters'' Mutual v.

(1888), 35 Fed.Bep. 30. Rowland (1886), 66 Ind. 236; Poster
(p) Oodin V. London Assurance v. Equitable Mutual (1854), 68 Mass.
(1758), 1 Burr. 490. 216; De Witt v. Agricultural Inaur-
(q) North British and Mercantile v. am,ce (1898), 157 N. Y. 353 Burton v.
;
London, Liverpool, am,d Globe (1877), Oore District Mutual (1865), 12 Qxant,
5 Ch. I). 569; Glasgow Provident v. 156; Tuck v. Insurance Co. (1876),
Westminster Fire (1887), 14 R. 947; 56 N. H. 326.
(1888), 13 A. C. 699; iVicAoZsv. (Sco<ii«A . (ss) Acer v. Merchants' Insurance
Union (1885), 2 T. L. R. 190 Scottish; (1870), 57 Barb. 68.
Armcahle Heritable Securities V. North- (t) Andrews v. Patriotic (1886), 18
ern (1883), 11 B. 287 ; Andrews v. L. R. Ir. 287.
Patriotic {IS86), 18 L. R. Ir. 365. (u) Home Insurance v. Baltimore
(r) California v. Union Compress (1876), 93 U. S. 527; Bobbins v. Fire-
(1889), 133 U. S. 387; Traders' In- men's Fund (1879), 16 Blatchf. 122;
surance v. Pacaud (1894), 150 111. Fire Insurance v. Merchants (1886),
245; Lowell Manufacturing Co. v. 66 Ind. 339; Hough v. People's Fire
Safeguard Fire (1882), 88 N. Y. 591. (1872), 36 Ind. 398.
(») Morrow V. Lancashire {1898], 26
;
Godin V. London Assurance (1758), 1 Burr. 490

Oodin V. M, a merchant in St. Petersburg, was indebted to A, a London merchant.
London
Assurance.
M loaded goods on board A's ship for carriage to London. A insured the
goods partly on his own behalf, and partly at the request of M. sold the M
goods to T, and indorsed bills of lading to him, and T insured the goods on his
own behalf. In an action by T on his policy, it was held that he was entitled
to recover the full value. There was no double insurance, within the proper
signification of the term, because, although T might, as indorsee of the bills of
lading, be entitled to the benefit of A's policy, he could not obtain such benefit
without first paying off the debt to A, who had a lien upon it.
Lord Mansfield said, " If T was not to have the benefit of both policies in
all events then it can never be considered as a double policy ... for although
there be two insurances yet it is not a double insurance ; to call it so is only
confounding terms. If T could recover against both sets of insurers yet he

could not recover against the underwriters of A's policy without some expense,
nor without also first paying and reimbursing to A the premiums he paid,
and also the charges. is by no means within the idea of double insurance.
This
Two persons may two different interests each to the whole value
insure :
as the master for wage, the owner for freight. But a double insurance is
where the same man is to receive two sums instead of one or the same sum
twice over for the same loss by reason of his having made two insurances on
the same goods on the same ship. T is entitled to receive the whole from the
defendants on their policy, whatever shall become of A's policy ; and they
will have a right, in case he can claim anything under A's policy, to stand in
his place for a contribution to be paid by the underwriters to them." In so
far, therefore, as T did ultimately become entitled to the benefit of the other
policy there would be a double insurance to which the underwriters would
contribute rateably. In so far as A took the benefit of his policy to satisfy
his debt there was no double insurance, and no contribution because the
insurances were on different interests.
North British and Mercantile v. London, Liverpool, and Grlobe

(1877), 5 Ch. D. 569
North British Bamett and Co., wharfingers, held grain belonging to Rodocanachi and Co.,
and Mercan- merchants, and by the custom of the trade, the wharfingers were liable for any
'°^®> however occurring. B. and Co. insured with the London, Liverpool
Liverooof and -'-'' --•
Globe.
'
and Globe, grain in -'•
their warehouse at Rotherhithe, " the assured's own, in
•
trust, or on commission, for which they are responsible." R. and Co. insured
their grain with the North British and Mercantile. Both policies contained
the condition that if at the time of the loss there should be any other subsisting
insurances, whether effected by the insured, or by any other person covering
the same property the company should not be liable for more than a rateable
contribution. A fire occurred in the warehouse, and the grain was destroyed.
The loss was by agreement between the companies paid in full to the owners
without prejudice to their right of contribution inter se. It was held that this
was not a case of double insurance because the two companies had insured
distinct interests. The insurers of the wharfingers insured them in respect
of their own interest and liability, and the owners of the goods could have
made no claim on that insurance. Apart from the condition the North British,
on paying the loss to the merchants, would be entitled to subrogation to their

claim against the wharfingers, and as the wharfingers would be entitled to an
indemnity from the London, Liverpool, and Globe, the latter would have to
bear the whole loss. Since there was no double insurance there was no right
of contribution either on general common law principles or by reason of the
•pro rata clause which had no application. Mellish, L.J., said, " Now I do
not know of any English
cases on the subject of contribution as applied to
fire policiesbut I can see no reason why the principle in respect of con-
;
tribution should not be exactly the same in respect of fire policies as they are
in respect of marine policies, and I think if the same person in respect of
the same right insures in different offices there is no reason why they should
not contribute in equal proportions in respect of a fire policy as they would in
respect of a marine policy. The rule is perfectly established in the case of a
marine policy that contribution only applies when it is an insurance by the
same person having the same rights, and does not apply where different
The reason of that is obvious
persons insure in respect of different rights.
enough. Where different persons insure the same property in respect of their
different rights they may be divided into two classes. It may be that the
interest of the two between them make up the whole property as in the case
of a tenant for life and remainderman. Then, if each insures, although they
may use words apparently insuring the whole property, yet they would
recover from their respective insurance companies the value of their own in-
terest, and added together would make up the value
of course those values
of the whole property. Therefore it would not be a case either of subrogation
or contribution, because the loss would be divided between the two companies
in proportion to the interests which the respective persons assured had in the
property. But there may be cases where, although two different persons
insured in respect of different rights, each of them can recover the whole as
in the case of mortgagor and mortgagee, but wherever that is the case it will
necessarily follow that one of these two has a remedy over against the other,
because the same property cannot in value belong at the same time to two
different persons. Each of them may have an interest which entitles him
to insure to the full value because in certain events, for instance if the other
person became insolvent, it may be he would lose the full value of the property,
and therefore would have in law an insurable interest : but yet it must be that
if each recover the full value of the property from their respective offices with
whom they insure, one office must have a remedy against the other. I think,
whenever that is the case, the company which has insured the person who has
the remedy over, succeeds to his right of remedy over, and then it is a case
of subrogation."
Scottish Amicable v. Northern Insurance (1883), HE,. 287

Certain house property was disposed in security (mortgaged) to successive Scottish
incumbrancers. Each insured in his own name vrimo toco, and in the name of •^™*';'*"*^ ^-
Jjt OTLiIPTT}
the proprietors in reversion, and each pohcy contained the pro rata liability insurance.
clause. After a loss the first incumbrancers brought this action against
their insurers, who contended that they were only bound to pay a rateable
proportion with the insurers of the other incumbrances. It was held that
the clause did not apply since no individual interest was doubly insured except
that of the proprietor, and as there was not sufficient to satisfy the various
incumbrancers there could be no claim in respect of his interest. In the
Glasgow Provident v. Weshninster (u) this decision was further considered and
approved by the Court of Session.
Andrevv^s v. Patriotic (1886), 18 L. K. Ir. 355

Andrews v. Certain house property was insured by landlord and tenant independently.
Patriotic. rpjjg
tenant covenanted to repair but not to insure, and each insured simpliciter
on the property without specifying his interest. A fire having occurred the
tenant recovered the full loss from his insurers and subsequently became
bankrupt without having reinstated the premises. The landlord then sued
who contended that they were only liable for a pro rata contribu-
his insurers,
tion under the clause in their policy. It was held that landlord and tenant
had each insured only his own interest in the premises, and that as the landlord
could obtain no direct benefit from the tenant's insurance there was therefore
no double insurance, and the landlord was entitled to recover the whole loss
from the insurers whose only recourse would be against the tenant in respect
of Ms covenant to repair. Palles, C.B., said, " Prima facie you would not
expect to find a condition making void the policy or reducing the sum recover-
able by reason of the act of a third party over whom the assured had no
control, unless such act would involve the reinstatement of the premises or
an indemnity against the risk insured against being received by the assured
from some other source than that provided by the policy. I have to express
. . .
my decided opinion, and it is in my view a necessary part of our decision in this

case that there is no law in this country (Ireland) which entitles the landlord
of a house destroyed by fire to insist, in the absence of express contract, on
the money received by his tenant from an insurance company being specifi-
cally applied to the reinstatement of the premises. In my opinion the remedy
of the landlord in this country is a remedy in personam against the tenant
upon his covenant to repair, and is nothing more. He has no specific right,
such as the landlord has in England under the statute."
Whenassm-ed The judgment of Palles, C.B., in Andrews v. Patriotic raises
dJrecrbene'at
^^^ question whether insurances by different persons on different
from insur- interests may not be treated as double insurances if one person
another wiU or can get the benefit of both, as in the case suggested where
mterest. under the provisions of 14 Geo. 3, c. 78, a landlord could compel
his tenant's insurer to cause the insurance money to be expended
in reinstatement. Probably in the case of this statute the answer
is that no one is bound to invoke the statute, but may rely on
his own insurers to pay the loss, in which case there is no
double insurance. If, however, the landlord does invoke the
statute and compels reinstatement by the tenant's insurer,
then there is double insurance, and the tenant's insurer can call
upon .the landlord's insurer to contribute rateably to the cost of
(m) (1877), 14 R. 947.

reinstatement. The same observations apply to mortgagors and

mortgagees and other persons who have insured their own interest
but are also in a position to avail themselves of other parties'
insurances by calliag on the insurers to reinstate. Again, if the
assured is so placed that he must necessarily derive benefit from
another party's insurance, it may be that -pro tanto there is
double insurance even although the insurances are on different

interests.
NiehoUs v. Seottisli Union (1885), 2 T. L. R. 190 ; 4 K. 1094

^"
The bmlding society provided that any property mortgaged to ^^^^°^^
rules of a
the society should be insured in the name of trustees, and that the pre- jj^^g^_
miums should be charged to the member ; that in the case of loss the insurance
moneys should be applied in paying off the debt or at the option of the board
in repairing the damage. The society sold certain paper mills to A. and Co.
who mortgaged the property to the society in order to secure part of the pur-
chase price remaining unpaid. An insurance in X. Co. was effected in accord-
ance with the rules of the society, and subsequently A. and Co. insured the
property for their own benefit with Y. Co. Both policies contained the
usual pro rata liability clause. On a loss occurring A. and Co. sued their
insurers, who contended that they were only liable to a pro rata contribution.
A divisional Court sustained this contention on the ground that the society's
policy insured the interest of both parties, since the debt was to be paid off
with the insurance money. There was, therefore, a double insurance and
consequently the pro rata clause applied.
The decision in Nicholls v. Scottish Union is not altogether

satisfactory. It does not appear that the mortgagees insured
anything but their own interest. It is true they charged the
mortgagor with the insurance premiums and contracted to give
him the benefit of the insurance by paying off the debt, but there
was not an insurance of the mortgagor upon his own interest,
and the decision can only be supported on the ground that there
isa double insurance where the assured has a contractual right
to the benefit of another party's insurance on his own interest.
This is at least a doubtful proposition, and it is open to question

whether in such circumstances as appeared in Nicholls v. Scottish
Union the true view is not this, that each insured their own
interests, and that therefore each insurer ought to have paid in full
in the first instance, but that since the mortgagor had a contractual
right against the mortgagee to have his debt paid oflE from the
mortgagee's insurance moneys the mortgagor's insurer ought to
have been subrogated to the benefit of that contract, so that in
the result the whole loss should have fallen on the mortgagees'
insurers.
For the Whether or not the insurances must in every case be strictly
benefit o£ the
^^ ^^^ ^^ interests it is clear there can be no double insurance
iiame assured.
unless at or before the time of the loss the same person has become
entitled to the benefit of the whole or part of both insurances,
either directly as the assured or indirectly by being in a position
to claim the benefit of the insurance money.
De "Witt V. Agricultural Insurance (1898), 157 IST. Y. 353
Da Wilt V. A, the owner of a building, having insured it, sold it to B, but took a mort-
Agricultural gage for part payment of the purchase price. The policy was indorsed by
Insurance.
consent of all parties, " B is now recognised as owner of tliis policy and
property . . . loss, if any, payable to A mortgagee as interest may appear."
B then contracted to sell to C, and C insured the property in his own name.
Before completion. A, thinking that the property had been conveyed to C,
went to the first insurers, and for his own protection, and without the know-
ledge or authority of B or C, obtained an indorsement on the policy to the
effect that C was now owner. A fire having occurred B assigned the benefit
of this policy to C, who sued upon it. The company contended that the
policy was void by reason of the double insurance of C. It was held that
thferewas no double insurance, because at the time of the loss B, as vendor,
was insured under the policy sued on in respect of his own interest, the indorse-
ment without the authority of B or C being ineffective, and C as purchaser
was insured in respect of his interest. The fact that after the loss B assigned
the benefit of his insurance to C did not make it a case of double insurance.
Double in- If an insurance is effected in the name of or upon the interest
°^ ^ third party without his authority, such person has the option
*ted
îff 'th
out authority of adopting the insurance, and if he does so the adoption will be
assure .
retrospective so as to constitute a double insurance from the time
it was effected {x) ; but if he does not elect to adopt the insurance
it cannot be treated as a double insurance by his other insurers {y).
It would require very clear language to make the clauses relating

to double insurance applicable to other insurances of which the
assured had no knowledge or over which he had no control.
Cannon v. Home Insurance (1897), 49 La. Ann. 1367
Gannon, v. A mortgaged certain house property to B, and covenanted to insure in

Home his own name loss payable to B as mortgagee, and if he did not insure B
Insurance.
(x) Dajoe v. Johnston District Mut. U. C. Q. B. 110 Lumber Exchange v.
;
(1858), 7 U. C. C. P. 55; Morrow v. American Central (1898), 183 Pa.

Lancashire Insurance (1899), 26 Ont. 366 ; Lowell Manufacturing Co. v.
A. R. 173. Safeguard Fire (1882), 88 N. Y. 591.
(y) Park v. Phoenix Ins. (1859), 19
might effect such a policy and add the premiums to his security. The
property was sold under a writ of ^. fa. to C, who purchased it subject to the
mortgage, and insured it in his own name for his own benefit. B. assigned
his mortgage to D, and the latter insured in the name of C loss payable to D
as mortgagee. In an action by C on the first-mentioned insurance the in-
surers contended that the policy was void under the clause prohibiting double
insurance without consent, but it was held that as D had no authority under the
mortgage deed to effect insurance on behalf of C, and as C had not ratified the in-
surance, there was, in fact, no double insurance.
Ignorance of the assured that he is in fact covered by in- Assured igno-
surance effected by his authority or by or with the authority of existing

his predecessor in title does not reheve him from the consequences insurance.
of insuring elsewhere without consent or from the other conse-

quences of double insurance. Thus, in a Canadian case (s) A,
having insured his property, became insolvent, and his assignee
took out another policy in ignorance of the first insurance. After
loss action was brought by the assignee on the first insurance, but
it was held that it was void by reason of the second insurance
without consent.
There may be other insurance within the meaning of the con- Where the
ditions in the policy, even although such other insurance may anoe is
™idable.
prove to be voidable at the option of the insurer (a). Sometimes
the conditions are framed so as to include nominatim all other
insurances " whether valid or invalid," but apart from such
express words " other insurance " means prima facie other in-
surance which has attached and which is on the face of the
policy a subsisting insurance. The assured cannot rely on the

fact that the insurers might refuse payment on the ground of
misrepresentation or breach of warranty (6). On the other hand,
if on one of these grounds the insurers had before loss repu-
diated habihty, the assured would probably be entitled to say
that there was no subsisting insurance.
There is no double insurance unless some other company is in Where it has
fact on the risk (bh). Even although there is a valid contract to

insure, if the operation of the insurance is suspended until the
performance of some condition precedent, such as the payment
(z) Dickson v. Provincial (1874), U. C. Q. B. 250 Baieman v. Lumber-

;
24 U. C. C. P. 157. man's Ins. (1899), 189 Pa. 465.

(a) Hammond v. Citizens (1886), (66) Western Assurance v. Temple
26 N. Br. 371. (1901), 31 Can. S. C. 373 Manitoba ;
(6) Carpenter v. Providence Wash- Assurance v. Whitla (1903), 34 Can.

ington (1842), 16 Pet. 495, 509; S. C. 191.
Jacobs V. The Equitable (1860), 9
of the premium, there is no double insurance until the condition

precedent has been fulfilled.
Equitable Fire and Life v. Ching Wo Hong, [1907] A. C. 96
Equitable Fire A floating policy upon stock-in-trade in a shop contained a condition

and Life v. prohibiting additional insurance except with the consent of the company.
GJiing Wo
Hong.
During the currency of this policy the assured took another policy from
another company covering the same property. This policy recited that the
assured had paid a premium for insuring against loss or damage by fire,
etc., and was subject to the condition that the insurance would not be
it
in force, nor would the company be liable in respect of damage happening,

before the premium was actually paid. The premium had not been paid,
and both the insurers and assured had treated the policy as non-existing. It
was held that, as this policy had never attached, there was never any double
insurance.
Where^the Where before the loss there had been negotiations with the
ancris"L'su6d ^ge^t of another company, but no contract had been definitely

by company's concluded, and after the loss the agent without authority issued
authority. a policy which the company repudiated, it was held that this was
not an insurance " valid or invalid " (d). It would seem that if
for want of authority on the part of the person purporting to act
as agent no contract was ever made the assured is entitled on this

ground to say that he was not insured elsewhere, although the
agent might be liable to him for breach of warranty of authority ;
but in one Canadian case (e), where the company pleaded double
insurance, and the assured replied that the interim receipt rehed
on as evidence of double insurance was issued by the agent's
father without authority and the company denied liability on

that ground, it was held by the Court that such questions relating
to the validity of other insurance could not be tried in an action

upon the policy sued on, and as the assured was himself alleging
against the other company that there was a vaHd insurance he

could not be heard to deny its vaUdity. If the assured actually
payment in respect of a loss he cannot, as against another
receives
company, say that it was an ex gratia payment and that there
was no double insurance because there was no enforceable con-
tract (/).
Form of The form of the other insurance is immaterial if there is a
the other
{d) Taylorv. State Insurance {1S99), (/) Dafoe v. Johnston Dist. Mut.
107 Iowa, 275. (1858), 7 U. C. C. P. 55.
(e) Mason v. Andes Ins. (1873), 23
U. C. 0. p. 37.
.
contract to insure : it is sufficient to constitute a double insurance, insurance

,,,.,,
whether it be
1
contained in a policy,
T
mtenm
•
, J-
protection note, or
i_
not material.
otherwise {g)
Difficult questions may arise where two or more policies Where two or
contain conditions prohibiting double insurance. So long as the ôh prohibit

insurers have not repudiated
^ liability
•'
each policy
r J
must, for the double in-
, . . surance.
purpose of the others, be deemed to be a vahd and subsisting
insurance, and the assured cannot treat each policy in turn as
being invaUd in a question with the insurers upon the others.
Each must be deemed to be a valid insurance until repu-
policy
diated by the insurers, and therefore if a loss happens before
either is repudiated they destroy one another Qi).
Where one policy contained the condition prohibiting other

insurance without notice, and the other policy contained the
pro rata condition, and on a fire happening the first insurers
repudiated liability the second insurers were held to be liable only
for a proportion of the loss as the other policy was subsisting at
the time of such loss (i). ,
The burden of proving another subsisting contract upon the Onus on in-
same property and on the same interest lies upon the insurers (fc), p'Jgye other
and it has been said that in considering the effect of another insurance,
insurance the assured is not prevented by the rule against parol
evidence from showing that another insurance, although ex facie,
covering the same property was not intended by the parties to
cover the particular property in question [1).
A statement by the assured in his proofs of loss that he is
insured elsewhere is not conclusive evidence against him as to

the existence or as to the actual terms of such other insurance (m).
The majority of English fire offices do not now insert in their Conditions
'"^
double insurance without double
policies either the condition prohibiting
consent or the condition making notice of subsequent double insurance.
insurance a condition precedent of liability. Such conditions
(g) Greet v. Citizens (1880), 5 Ont. (k) Russell v. Fidelity Fire (1891),
A. R. 596 ; Mason v. Andes (1873), 23 84 Iowa, 93 ; Mead v. American Fire
U. C. 0. P. 37 ;Hatton v. Beacon Ins. (1897), 13 Hun. App. 476.
(1859), 16 U. C. Q. B. 316. (l) McMaster v. North American
(h) Gauthier v. Waterloo Mut. Ins. (1873), 55 N. Y. 222; Lowell
(1881), 6 Ont. A. R. 231 ; Huhhard v. Manufacturing Co. v. Safeguard Fire
HaHford Fire (1871), 33 Iowa, 325; (1882), 88 N. Y. 591.
Hayes v. Mitford Mut. Fire (1898), (m) Mead v. American Fire (1891),
170 Mass. 492. 13 Hun App. 476 McMaster v. ;
(i) Nicols V. London and Pro- North American Ins. (1873), 55 N. Y.

vincial- (1884:), 5 N. S. W. R. (Law) 222.
333.
are, however, still to be found in English policies and are very

common among colonial and American insurance companies.
They therefore call for some consideration.
Where any other insurance without consent is prohibited,
then such insurance is a breach of warranty. It does not merely
suspend the insurance during the double insurance, but discharges

the insurer absolutely (mm). Where the condition stated that
other insurance must be notified and the company's consent
obtained such notice and consent was held to be a condition
precedent to further liability {n).
Whether sub- Where the condition required all other insurances to be notified
suranoe need
^^ ^^^ °^ forfeiture, it was held that the substitution of another
be notified. insurance in another company instead of one already notified did
not require to be notified. The clause requiring notice of " other
insurance" meant additional not substituted insurance (o).
When there A mistake in the particulars of the additional insurance
inpMtloulars
notified is not necessarily fatal (oo). Where additional insurance
of insurance -âs effected after the. policy was issued and the assured gave
notice that additional insurance had been effected, but stated
that it was in the " Equitable " for £1200, whereas it was in the
" Beacon Life and Fire " for £1000, it was held that he had given
.sufficient notice (p). But where on an apphcation for insurance

the assured stated the wrong office as his insurers upon another
insurance, it was held that the policy was void under the con-
dition that any erroneous or untrue representation in the appli-
cation form would avoid the policy (g).
Where noti- If a Concurrent insurance which has been notified and endorsed
faraeT"'^™''^ subsequently lapses, or is cancelled, it is not necessary in the

absence of express condition to give notice that the insurance
has ceased to be effective (r). There is no implied warranty that
the other insurance mentioned in the apphcation will be main-

tained (s).
(mm) Georgia Home Insurance v. (y) Parsons v. Standard Ins. (MIQ),

Bosenfield (1899), 95 Fed. Rep. 358. 4 U. C. App. 326. This decision of
(w) McBride v. Oore District Mutual the Court of Appeal was not reversed
(1870), 30 U. C. Q. B. 451. by the Supreme Court on this point.
(o) Parsons V. /Standard Ins. (1880), See 6 U. C. App. 512, 521.
5 Can. S. C. 233 ; Lowson v. Canada (r) Moore v. Citizens^ Fire (1888),
Farmers' Fire (1881), 6 U. C. App. 14 Ont. A. R. 582; Hordernv. Gam-
512. mercial Union (1884), 5 N. S. W. R.
(oo) Benjamin v. Saratoga County (Law) 309.
Mutual (1858), 17 N. Y. 415. {s)Hoffmanv. Manufacturers (19,?,%
(p) Osser V. Provincial (1862), 12 38 Fed. Rep. 487.
U. C. C. P. 133.
The conditions requiring notice of other insurance vary con- What is a
siderably in detail. Sometimes the giving of notice is all that is notification,
required (i), and there will be no breach of the condition until,

after the other insurance has been effected, a reasonable time
has expired without notice being given (tt) ; but usually the
consent of the company to the double insurance is made a con-
dition precedent, and the consent must be notified by indorse-
ment on the policy or otherwise in writing (u). If other insurance
is effected without consent the company's liability is suspended
until consent is obtained and signified in the proper manner {x).
Like other conditions in the policy the condition relating to Waiver,

double insurance may be waived or any breach thereof may be
waived by the company or its agents having proper authority (y).
An indorsement on the policy may expressly or impliedly sanction

concurrent insurance up to a specified amount (yy). Generally
speaking the company's officer or agent with authority to make
the contract would have authority to waive the condition (2),
The making or continuing of the contract with knowledge of

other insurance would be a waiver of the breach. Thus, if
the policy is issued or a renewal premium accepted with full
knowledge of the other insurance, notice and consent in the pre-

scribed form is waived {a), and under certain circumstances the
knowledge of the agent may be the knowledge of the company {b).
Where an agent was authorised to bind the company by interim
receipt, but not otherwise, his issuing the receipt with knowledge
of other insurance was a waiver of the condition as far as the
interim protection was concerned, but the company's hability on
(t) H
endrickson -v. Queen Ins. {1811), (z) Jacobs v. The Equitable (1858),
31 U. C. Q. B. 547. 17 U. C. Q. B. 35.
(«) Commercial Union v. Temple («) Carroll v. Charter Oak (1863),
(1898), 29 Can. S. C. 206. 40 Barb. 292 Mclntyre v. East
;
(u)NoadV. Provincial (1859), 18

Williams MuL (1889) 18 Ont. 79; R
^- ^""'"^ ^''' (1883), 3 Ont. R.
U. C. Q. B. 584 ; Osser v. Provincial
f^'^
(1862) 12 U. C C. P. 133.
^^^ ^ Pidelity Ins. (1896), 99
^^^
Wetnaugh v PrownciaZ (1870),
(X) j 738 Shannon v. Gore District
;
20U. C. C. P 405; Emrv.Maâra j^^^^^^ (jg^g)^ 2 U. C. App. 396;
District (1876), 26 U. O. 398 ;OP. Northern Assurance v. Orand View
McCrea v. Waterloo County (1876), 26
(^qqj)^ jgg jj g_ ggg palatine Insur- .
U. C. C. P. 431. ance v. M'Elroy (1900), 100 Fed. Rep.

(y) Blake v. Exchange Mutual 391 ; M'Elroy v. British American
(1882), 78 Mass. 265. (1899), 94 Fed. Rep. 990; United
Parsons v. Standard i?'ire(1880),
(yy) Fireman's Insurance v. Thomas (1897 ),
5 Can. S. C. 233 ; Union National v. 82 Fed. Rep. 406 Hartford Fire v.;
German Insurance (1896),71 Fed; Rep. Small (1895), 66 Fed. Rep. 490 Union ;
473; Palatine Insurance v. Ewing National v. German Insurance (1896),

(1899), 92 Fed. Rep. HI. 71 Fed. Rep. 473.
—
the permanent insurance was held to be discharged because the

directors, when they issued the poHcy, had no knowledge of
the other insurance (c). After loss the insurers do not waive
the breach of the condition against double insurance by merely
investigating the claim and asking for further proof of loss
after knowledge of the double iiisurance and without taking
objection (d), and neither the local agent nor the inspector of
the company with authority to adjust claims can be presumed
to have authority to waive a breach of the condition (e).
Section V. —Contribution without Average (a)
Contribution When there are two or more insurances on any one risk the
principle of contribution applies as between the different insurers.

Apart from any condition in the policies, any one
insurer is bound
to pay to the assured the full amount which he would be
for
liable if his policy stood alone ; but having paid he is entitled to

an equitable contribution from his co-insurers on the same principle
as co-sureties are bound when any one is
to contribute inter se
called upon by the creditor to pay (b). The contribution clause
which is found in most fire policies has for its object the limitation
of the primary liability of each insurer to his assured, so that he
shall not be bound to pay more in the first instance than his
rateable proportion as between himself and his co-insurers.
The following is an example of the modern contribution
clause :
If at the time of any loss or damage happening to any of the property

hereby insured there be any other subsisting insurance or insurances eflfeoted
by the Insured or by any other person or persons on his behalf covering such
(c) Billington -v. Provincial (1877-), Insurance, 1904, by F. H. Kitohin;

2 U. C. App. 158 ; (1879), 3 Can. S. C. Policy Conditions and their Bearing
182. upon Loss Settlements, 1895, by W.
(d) Fair v. Niagara District (1876), Montgomery; Journal of the Federa-
26 U. C. C. P. 398. tion of Insurance Institutes, vol. i.
(e) Western Assurance, v. Doull p. 196 ; The Average Conditions of
(1886), 12 Can. S. C. 446. a Fire Insurance Policy, 1896, by
(a) Fire Loss Apportionments, 1906 S. J. Pipjsin, J.F.I. I., vol. i. p. 243 ;
by T. J. Milnes ; Fire Loss Appor- Contribution in respect of Fire Losses,
tionments, 1909, by John Laird and 1909, by H. C. Evans, J.F.I.I., vol.
James Laird Average and Contribu-
; xii. p. 143 ; Law
of Contribution as
tion in Fire Insurance, 1911, by H. S. it affects Insurance Companies, 1909.
Bell; Remarks on the Apportionment by W. T. Watson, J.F.I.I., vol. xiii.
of Fire Losses, 1869, by W. H. Hore ; p. 321.

The Principles and Finance of Fire (6) Vide supra, pp. 705, 706.
CONTRIBUTION WITHOUT AVEEAGE 721
property, either alone or together with any other property, this Company
sliall not be liable to pay or contribute more than its rateable proportion of
such loss or damage.
Where insurances are concurrent, that is to say where the Concurrent

'""'''
contributing policies are of the same range and cover precisely ^°
the same property, it appears to be generally accepted that the
proper basis of contribution is according to the amounts insured
upon the property, and not according to the liabilities of the
several policies for the actual loss.
Thus—
Property and value
insured.
. —
722 FIEE INSUEANCE CLAIMS
Sometimes, instead of taking only two apportionments as
above, a separate apportionment is taken in each possible order

of rotation of the several items. Thus where there are three
items of insurance upon which loss has occurred there would be

six apportionments, and contribution would be upon the mean
of the six. It is more usual, however, to rely upon the mean of
the two apportionments only.

The result of taking the mean of the apportionments as above
indicated may be that the loss is not fully met. Now from the
assured's point of view it seems clear that he is entitled to have
the items discussed in that order which will give him the greatest
indemnity, and if the mean of the apportionments does not give
him as large an indemnity as he is thus entitled to, the usual
practice is to take the balance of the assured's legal claim and

apportion it among the companies in the same proportion in which
they are contributing to the rest of the claim.
It has been suggested that when the mean apportionment
does not give the assured the fullest indemnity to which he is
entitled, the method of mean apportionment ought to be aban-

doned, and the whole apportionment ought to be according to
the method which gives the assured the best indemnity. This,
however, may work out in a very arbitrary manner, and the

more equitable method as between the companies is to adhere to
the mean apportionment and distribute the balance in the same
proportion.
The following case will illustrate the present practice in
apportioning losses :
l^-operty and value

insured
— —
CONTRIBUTION WITHOUT AVERAGE 723
Loss Y „ / B (4000 - 26661) 1333^ \ .,„„,

Total
,
insurance j
tooo^
4000 ^ ^ qqqq
1333i 4000^
'^
4333^ ^ 1
3000 4000 _ 2769 J.
Loss Z ^ _ / B 2000 ^
23^^^'
.
Total insurance -
-30TO I ^ (3000 2769^^
B2000
230tg
Assured 769'^V
Remit.— A pays 3333Jf; B pays 5897J;f; C pays 3000; Assured bears
7693V
II. Taking the losses in rotation from the least to the largest
LossZ (B 20001
Total insurance < „ onnri / 5000
3000
Loss Y t B 4000 )
Total insurance
^000" I (,^3QQj, _ ^^^^ 1200 PÔO
jOSS X
LossX .„
rr, X, ,
1 . f A 5000 )
^°*^^ '^^"^'^"^^ ^^î'
6000- I B (4000 - 3076}e) 923^, 1
A 5000
B 923A-
Assured 761?
Result. —A pays 5000;'. B pays 5200; C pays 2723i'3 ; Assured bears

76J--
III. Taking the mean of the two apportionments —

Result. — A pays 4166-5 g- ; B pays 6548f | ; C pays 2861 f § ; Assured bears
423^.
IV. Taking the losses in the rotation which gives the assured the greatest
indemnity
Loss Y ^ (B 4000 ) ,
Ar^nn Total insurance p onrirv VOOO

| f
4000 4000 _
^ ^^^^^
7000 ^ 1 -
„ 3000 4000 ,,,,„
^7000^^^ = ^^!^^
— — —
Loss Z f B 2000
Total insurance } 3,285^^
^000 C (3000 - 1714f ) 1285f
B i^ X
3285|
^ 1
= 1826A
„ 3000
C 1285fI X
""
= 1173?ri
32856 1
Loss X rn •
lotal1 insurance
. f
A 5000
_ ^^gg,, ^^^^^
U -,,..,
} 6,714-^
6000 | ^ ^^^^^^
5000 6000
A, X
1
6714f
17141 6000
B
X,
L X = 1531^;^
1
6714f
iJewi!/.— A pays 4,468-7'^; B pays 6,643f 4^? ; Cpa,ys 2,8881 fgf
V. It will be observed that both of the first two apportionments, and

consequently the mean of the two, results in the loss not being fully paid.
It is clear, however, that the assured is entitled to a full indemnity, because
if the items were taken in the rotation Y, Z, X, the loss would be paid in full.
The balance, therefore, amounting to 423^, which upon the mean of the first
two apportionments rests on the assured, must be divided up between A, B,
and C in the same proportion as they bear the rest of the loss. This gives
the following :
Final result (discarding fractions)
Apays 4167 + 140 = 4,307

B „ 5549 + 186 = 5,735
C „ 2861 + 97 = 2,958
13,000
Other Other methods of apportioning non-concurrent policies have

methods of been suggested by various writers, but so far the existing practice
apportioning
non-concur- has not been disturbed.
rent policies.
Mr. H. S. Bell suggests that the following method of apportion-
ment would give a more equitable result, viz. : (1) Exhaust
the specific insurances first ; (2) where there are two or more non-
concurrent poHcies and none more specific than another, eUminate
is
the risks covered by one insurance only. This method is in effect

an application to non-average contribution of the second con-
dition of average, and whatever practical value it may have in
simplicity and equality of distribution, it does not seem to have
any legal justification.
Taking the same example as before and applying to it Mr.
Bell's method, the following result is obtained :
A pays 5000 on loss X

B „ 2000 „ Z
B „ 1000 „ X
„ 1000 „ Z
This leaves B and C to contribute to loss Y.
„ , , . j B (4000 - 1000) 3000 \ «„„„

^"°"
Total insurance
| ^ ^g^QQ _ ^^q^ 2OOO I
3000 4000^2^00
5000 1
2000 4000^^300
5000 1
Result.—A pays 5000; B pays 5400; pays 2600.
Messrs. Laird suggest that in dealing with non-concurrent

insurances the basis of contribution in proportion to the sums
assured should be abandoned and that contribution ought to be
in proportion to the Uability of each insurer for the loss on each
item. This method was strenuously advocated by Mr. Hore
more than forty years ago, but the method of contribution in
proportion to sums assured was so firmly established in practice

that it successfully resisted and still resists the logic of Mr. Hore's
arguments. Contribution in proportion to liability has, however,
received judicial support in a recent case in the Commercial Court.
American Surety Co. v. Wrightson (1910), 16 Com. Cas. 37

A bank insured; Policy A, against loss of securities from fire, burglary, or American
dishonesty of employees in one undivided sum of |40,000 Policy B, against Surety Co. ; v.
loss through dishonesty of employees, the sum insured in respect of each Wrightson.
employee being specified and employee ; X
being covered to the amount of
$2,500. A loss of $2,680 occurred owing to the defalcations of employee X.
The insurers on Pohcy B paid $2,500, and then claimed contribution from the
insurers on Policy A. They submitted that the loss should be borne between
the two insurers in proportion to the total amount for which each might have
been liable for a loss caused by the defalcation of the employee X, or, in other
words, in proportion to the sums assured. Hamilton, J., doubted whether
the equitable doctrine of contribution applied at all to such a case, but held
that if it did the proper basis of apportionment was in proportion to the
amounts for which the insurers were liable for the loss which had in fact
occurred that is to say, in the proportion of
;
2680 , 2500
and
5180 5180
The above was a case of fidelity insurance, but the legal

principle ought to be equally applicable to the case of fire in-
surance, and it is therefore most probable that if the question was
. „ —
to be fought out in the Law Courts, contribution in proportion to

liabilities would prevail over contribution in proportion to the
sums assured.
Taking again the example already discussed, the contribution
in proportion to liabilities would work out as follows :
Liabilities A in X 6000
B in X J|y X 4000 = 2400
in Y^ X 4000 = 1600
in Z 2000
C in Yf X 3000 = 17I4f
in Z f X 3000 ==
1285f
Loss X ^ , , ,. ^_.,..
Total liability
I
A 5000 ^ „,„„
7400
-mo {32^00}
^2400^6^^,,,,^,
Loss Y ^ , (B 1600 \
-^QQ^ Total liability | 3314f

[ ^ ^^j^^
B1600
C 1714f
Assured bears 685^
Loss Z „ ,,,.,. ( B 2000 ^
^000" ^°**^ ^'^^''^^y 3285?

I C 1285f- I
„ 2000 3000 ,.„.

^3285f
><^ = ''2«A-
1285f 3000 _
^ 32851 ^ T- - ^^^^^^
ResuU.—A pays 4054'^; B pays 5372J5!Wj; C pays 28881 JM;
Assured bears 685iff f
Rule in NwJh In the apportionment of losses on non-commercial risks, such
V, "l^ndm, ^^ private house property, the offices apportion the loss inter se
Liverpool and without regard to the different interests which may be insured
"
Olobe adhered
to in com- m the property.
. ,. ,
In other words, they disregard the legal decision

, , . .
meroial risks -j^ j^^^ff^ British Co. V. London, Liverpool and Globe, and treat the
insurance as a double insurance subject to contribution instead
of treating it as several insurances upon separate interests, in
which case there would be no contribution, but a possible right
of subrogation.
In the apportionment of losses on commercial risks the
decision in the North British case is adhered to, and there .is no
apportionment unless there is double insurance in the strict

legal sense — ^that is to say, double insurance on the same interest
in the same property.
The following American and Canadian decisions may be

referred to on the question of contribution among non-concurrent
policies.
Lesure v. Lumber Co. Insurance (1897), 101 Iowa, 514
The policy sued on was an insurance for $10,000 on timber in any or all Canadian and
of three yards A, B, and C. The total insurance on the three yards was -^m^rican
r decisions on
,,
as follows :— contribution
among non-
§14,500 blanket on A, B, and C 1 current
$68,500
54,000 on yard A J policies.
46,500 on yard B Lesure v.
Lumber Oo.
115,000 Insurance.
A loss of $74,000 occurred in yards A and 0, but no loss occurred in yard B.

The policy sued on contained a contribution clause providing that the insurers
should not be liable for any greater proportion of the loss than " the amount
hereby insured shall bear to the whole insurance covering such property." It
was held that no loss having occurred in yard B, the specific insurance on that
yard was not to be reckoned in estimating the total insurance on that property.
Insurances affecting yardsA or C were alone to be reckoned, and therefore the
10,000 10,000
Company were liable for of the loss and not only of the loss.
68,000 116,000
Erb V. Fidelity (1896), 99 Iowa, 727
The policy sued on was for $1200 upon property worth $1400. small A Erb v.
part of the same property worth |I62 was, together with other property, Fidelity.
insured by other insurers for $250. The whole property covered by the
policy sued on was destroyed, and it was held that that policy must pay
$1200 the total sum insured.
Meigs V. London Assurance (1904), 120 Fed. Rep. 781 ;
134 Fed. Rep. 1021

The assured insured with one set of companies $130,000 on certain school Meigs v.
buildings. The policies contained the conditions, " Privilege granted to make London
additions, alterations, and repairs, and this poUoy to cover on and in the same," "^**"™'*'^*-
and " This company shall not be liable under this policy for a greater pro-
portion of any loss than the amount hereby insured shall bear to the
. . .
whole insurance." Subsequently the assured made an extensive addition to

the premises, at a cost of $60,000, and insured the additional buildings with
another set of companies for $60,000 inoontents. The second policies also
—
contained tlie above conditions. While all the policies were in force a fire
occurred resulting in the following loss :
On additional building $26,000

On original building 2,000
In an action brought by the assured against the second set of companies

itwas held that the additional building was an " addition " within the meaning
of the condition in the first policies, and was therefore covered by both sets of
policies. The first policies, after paying the loss on the original building
wliich was borne by them alone must, as to the balance of their total insurance,
contribute to the loss on the additional building, that is to say, the loss of
'
S26,000 would be borne in the proportion of by the first policies, and
188,000
!* '
by the second poUoies, and therefore the assured could only recover
188,000
against the second companies the latter proportion of the loss. •
Page V. Sun Insurance (1896), 74 Fed. Rep. 203
Page v. Sun The poUcy sued on was on block A, and there was a comprehensive policy
Insurance. issued by another office on blocks A and B in one individual sum. It was
held that, on a loss occurring in A, the whole amount of the comprehensive
policy was to be reckoned as contributing insurance covering block A.
Ogden V. East River (1872), 50 W. Y. 388
Oiiden V. The policy sued on was on block A, and there was a comprehensive policy
Eufit River. issued by another office on blocks A, B, and C. The whole premises were
destroyed, and it was held that the sum insured on A by the comprehensive
policy must be deemed to be that proportion of the whole sum insured which
the value of A bore to the total value of A, B, and C. The Court expressed an
opinion that if there had been a loss on A only, or partial loss on all the pre-
mises, the double insurance upon A would probably have been such amount
as could be recovered in respect of A on the comprehensive policy [h).
Unitarian Congregation v. Western Assurance (1866),

26 U. C. Q. B. 175
Unitarian The policy sued on insured $2000 on house, and $2000 on furniture. It
Congregation contained the contribution clause, " provided that the Company should
v. Western not be liable for a greater proportion of the loss than the amount hereby
Assurance.
insured shall bear the whole insurance on the property." Insurance in an-
otherCompany was $2000 on house and furniture. It was held that the
company were not entitled to take the blanket policy as $2000 on each head
but that as " the amount hereby insured " was $4000 and the " whole insurance
covering the property described " was $6000, they were hable to two-tliirds of
the loss on each item.
(h) See also Blake v. Exchange V. Hartford (1882), 9 Fed. Rep.

Mutual (1858), 78 Mass. 265; Barnes 813.
CONTRIBUTION UNDER THE AVERAGE CLAUSE 729
Golde V. Whipple & Co. (1896), 7 Hun. App. 48

The policy sued on was a floating policy, $3000 in goods contained in several OoUe v.
warehouses, " not to cover a greater amount than $600 in any one building." ^^JfP^
cfc Co.
A policy in another company was for the same sum on the same buildings,
but "not to cover a greater amount than $300 in any one building." A loss
of $100 occurred in one building. The majority of the Court held that the
insurers on the first policy were under the usual contribution clause liable to
two-thirds of the loss, the limit of risk on each building being thereby treated
as constituting a separate insurance for that amount. One judge dissented,
and thought that as the total insurance was unapportioned that ought to be
deemed the " amount hereby insured " for the purpose of prorating the
and that therefore the companies should have been held liable in
liability,
equal shares up to $300 on any one building beyond wMoh sum the first com-
pany would have borne the whole loss up to $600.
Where a policy contains the contribution clause the insurers are Contribution
not entitled to contribution from their coinsurers, and they pay ^^^^ '"j^ if
more than their proper proportion they must bear the loss. Con- ^°^^ t^^°
tribution only arises out of a legal obhgation to pay {i). On the bound to pay.
other hand, it has been held that the coinsurers reap no benefit
from an overpayment made without obligation. They must still
pay their own proper proportion, even although the insured has
been fully indemnified. The assured alone is entitled to the benefit
of the voluntary over-payment, and is not bound to account for it
to the other insurers. It is in the nature of a gift (i).
Section VI. —-Contribution under the Average Clause
The average clause usually contains what are known as the Average
''^^"®^-
two conditions of average : (1) the pro rata average condition, and
(2) the second condition of average (contribution). The pro rata
average condition is designed to prevent the assured obtaining
an undue benefit from under-insurance. It provides that where
the value of the subject matter of insurance exceeds the amount
insured, the assured shall be his own insurer for the difference,
and that the and the assured shall share all losses total and
office
partial in the same proportion that the sum assured bears to the
value of the property. As a rule the pro rata average condition
is only inserted in policies insuring commercial risks. It is seldom
found in insurances upon private house property.
(i) Lucas V. Jefferson (1827), 6 Cowen (New York), 635.

— —
Pro rata The following is a specimen of the modern fro rata average
condition of
average.
condition :
Whenever a sum insured is declared to be subject to average, if the pro.

perty covered thereby shall, at the breaking out of any fire, be collectively
of greater value than such sum insured, then the Assured shall be considered
as being his own Insurer for the difference, and shall bear a rateable share of
the loss accordingly.
Where a Lloyd's policy was expressed to be " subject to

average " it was held that it was subject to the above condition,
but was not subject to the second condition of average (j).
When non-concurrent policies are subject to the fro rata

average condition poUcies covering more than one item are liable
in respect of each item for the proportion which the total sum
assured bears to the total value of all the items covered by that
policy.
When upon any one item the total of the Uabihties calculated
as above is less than the loss upon that item, then the assured bears
the balance of such loss.
When upon any one item the total of the Uabihties is more
than the loss upon that item, then the contributing policies bear
the whole of such loss in proportion to such Uabilities.
Pro rata The fro rata average condition may be present without the
condition ap-
second condition of average, and if the case already considered as
plied without
the second subject to contribution without average (fe) is now taken under
condition of
average. the fro rata average condition, but without the second condition
of average, the following result is obtained :
Loss X Liability of A
6000 10,000 ^ 1
4000
B
15,000
X
''
— — = ,„„„
6000
1600
;
Assured bears the balance, 1400
Loss Y Liability of B
4000 4000
= 106619
X
4000 15,000 1
3000 4000
C = 1500
8000 1
Assured bears the balance, 1431^5
(j) Acme Wood Flooring Go. v. Martin (1904), 9 Com. Cas. 157.
(k) Vide supra, p. 722.
— —
CONTRIBUTION UNDER THE AVERAGE CLAUSE 731
Loss Z ^ . , .... . „ 2000 3000

— — = 2000
„„„„
^000"
Liability of B „^^^ x ^;
3000 1
>3125
p 3000 ^ 3000 = 1125
8000
B
T,
pays
2000
3125
3000
„„. X — 1 = —
^^
,„„„
1920
n 1125 3000
= 1080
Besult.—A pays 3000; B pays 4586 jf; C pays 2580; Assured bears
2833fj.
The second condition of average is designed to regulate the The second

contribution among non-concurrent policies which are subject to average,
average.
It provides that where part of the property insured by a policy
of wider range is also covered by a policy of lesser range, which
covers that part of the property only, the policy of wider range
shall only insure that part of the property in respect of the excess
of value not covered by the policy of lesser range.
The following is a specimen of the modern second condition
of average :
But if any of the property included in such average shall at the breaking
out of any fire be also covered by any other more specific insurance, i.e. by
an insurance which at the time of such fire applies to part only of the property
actually at risk and protected by this insurance, and to no other property
whatsoever, then this Policy shall not insure the same except only as regards
any excess of value beyond the amount of such more specific insurance or
insurances, which said excess is declared to be under the protection of this
Policy, and subject to average as aforesaid.
In apply 'ng the second condition of average the range of a

policy is not to be deemed restricted by reason of the fact that
part of the property covered is fully insured by another policy
of lesser range. Thus, in the following case :
Property and value

insured.
— —
with the above rule X cannot be altogether eliminated from policy
0, and that poUcy is stiU deemed to be a policy of wider range than

poUcy B, and the second condition of average applies, so that C
insures Y only in respect of the excess of value not covered by

pohcy B.
Application Now, taking again the example on p. 722 and considering it

of average
clause con-
on the assumption that the pohcies contain both the conditions
taining both of average, the following result is obtained :
conditions of
average.
Applying the second condition of average
Policy B (I) applies to X
only in so far as there is an excess of value over
the amount covered by policy A, that is to say, it covers 5000 only
of X, and the total value covered by policy B (I) is 10,000.
Policy C appMes to Z only in so far as there is an excess of value over
the amount covered by policy B (II), that is to say, it covers 1000
only of Z, and the total value covered by poUcy C is 6000.
Applying the pro rata average condition-

Loss X Liability of A 5000 6000
3000 (leaving a loss of 3000)
6000 10,000 1
„ 4000 3000
B TTT^r^ X
" 1200
10,000 1
Assured bears the balance, 1800
Loss Y T- u-i-i
Liabihty n>
of B ,^„^^ x -^
4000 4000
— = ,„„„
1600
4000 10,000 1
„ 2000 4000
C -;^x;^ X : 13331
6000 1
Assured bears the balance, 1066f
x -^ = 2000
Loss Z
"3000"
Liability of B |^
3000 1
(leaving a loss of 1000)
„ 2000 1000
-^TT^T^ X = 333J
6000 1
Assured bears the balance, 666f
Result.—A pays 3,000 ; B pays 4,800 ; C pays l,666f ; Assured bears

3,533J.
The average In order to avoid the difficulty which arises when a policy
condition.
subject to average falls to contribute with a policy not subject to
average, it is usual to provide in a pohcy not primarily subject to
average that where any of the property covered thereby is covered
by any other policy which is subject to average, then the iirst
policy shall be subject to average in hke manner.

—
SUBROGATION 733
The following is a specimen of the clause which is used for this

purpose :
In all cases where any other subsisting Insurance or Insurances, effected by

the Insured or by any other person or persons on his behalf, covering
any of
the property hereby insured either alone or together with any other property
in and subject to the same risk only, shall be subject to average, the
Insurance
on such Property under this Policy shall be subject to average in like manner.
Section VII. —Subrogation

The right of subrogation is the right which an insurer who has Necessary to
paid the insurance money has to receive the benefit of all the prfcolple o£
indemnity.
rights of the assured against thu-d parties which, if satisfied, will
extinguish or diminish the ultimate loss sustauied (k). The right
is a corollary of the general principle that insurance is only a

contract to indemnify the assured (fe). Whenever an assured
has received full indemnity in respect of his loss all remedies over
against third persons must be held and exercised for the benefit
of the insurer until he has been recouped the amount he has paid
on the poUcy (T). In Burnand v. Bodocanachi (m) Lord Blackburn

said :
" The general rule of law (and it is obvious justice) is that when there is
a contract of indemnity (it matters not whether it is a marine policy, or a

policy against lire on land or any other contract of indemnity) and a loss
happens, anything which reduces or diminishes that loss reduces or diminishes
the amount which the indemnifier is bound
and if the indemnifier has
to pay,
already paid it then if loss comes into the
anything which diminishes the
hands of the person to whom he has paid it, it becomes an equity that the
person who has already paid the full indemnity is entitled to be recouped by
having that amount back."
The insurer's right of subrogation arises whenever he pays the Arises on pay-
claim (to), and it arises upon payment of a partial as well as upon ^g^red
payment of a total loss (o), and although the insurers are not
(k) Castellain v. Preston (1883), 11 Mercantile v. London, Liverpool and

Q. B. D. 380. The right of subroga- GZo6e (1877), 5 Ch. D. 569 DarreZi v.
;
tion does not apply to contracts of Tibbitts (1880), 5 Q. B. D. 560 ;

insurance, such as life insurance which Randal v. Corkran (1748), 1 Ves. Sen.
are not contracts of indemnity: 97.
Solicitors' Life v. Lamb (1864), 2 De (m) (1882), 7 A. C. 333, 339.
G. J. & S. 251 Insurance Co. v.
; (w) Liverpool Steam Co. v. Phcenix
Braun (1877), 95 U. S. 754; Connec- (1888), 129 U. S. 397, 462 Fidelity ;
ticut Mutual V. New York, <fcc., Ry. Co. v. Gas Co. (1892), 150 Pa. 8.
(1856), 25 Conn. 265. (o)The Potomac (1881), 105 U. S.
(1) Castellain V. Preston (1883), 11 630; Over v. Lake Erie (1894), 63
Q. B. D. 380 ; North British and Fed. Rep. 34.
entitled to the benefit of what is recovered until the assured has

received a full indemnity the right of subrogation as an equitable
right or charge upon the assured's choses in action arises upon
payment of the insurance money, although such payment by itself
does not completely indemnify the assured.

to claims The insurers are entitled to be subrogated only to those claims
which will
diminish the which will diminish the loss in fact paid for. There is no subro-
loss paid for gation in respect of loss which the insurers have not paid for. Thus
where a man insured his property against fire and an explosion
and consequent fire occurred, causing damage to the property,
and personal injury to the assured, the insurers upon payment
in respect of the damage to the property caused by fire would be
entitled to be recouped from what the assured might afterwards
recover under that head of damage, but would have no claim
to what he might afterwards recover in respect of the personal
injuries or the damage to the property by explosion (p). The
record in the action against the party liable would be conclusive
evidence of the amount in fact recovered upon each head (p).
without There isno right of subrogation before payment nor can the
express^
assignment.
insurer, apart from a special condition in the poUoy to that
effect demand an express assignment of the insurer's rights as
(j>jp),
payment [q). On the other hand, the insurer, upon

a condition of
making payment, does not require to make any express reservation
of or claim to the assured's rights (r). In the absence of anything
to the contrary, the right of subrogation follows from the nature
of the contract without any assignment or condition.
Rights of The right of the assured to recover compensation from third
assured
against third personswho are Uable to him in tort or contract is not diminished
parties shift by the fact that he has received indemnity from his insurer (s).
in equity to
insurers, Payment of the insurance money merely shifts the equitable
right to receive such compensation pro tanto from the assured
( p) Law Fire Assurance v. Oakley 4 Bing. N. C. 272 Port Glasgow Sail-

;
(1888), 4 T. L. R. 309. cloth Co. V.Caledonian By. (1892), 19

{pp) Niagara Fire v. Fidelity Co. R. 608, (1893) 20 R. (H. L.) 35;
(1888), 123 Pa. 516. Chicago Ry. v. Pullman Car Co. ( 1890),
{q) Insurance Co. of N. A. v. 139 U. S. 79 The Propeller Monti-
;
Fidelity Co. (1889), 123 Pa. 523 ; cello V. Mollison (1854), 17 How.
Forest Oil Oo.'s Appeals (1888), 118 U. S. 152 Fretz v. Bull (1851), 12
;
Pa. 138 ; Kingv. StateMutual (1851), How. U. S. 466 ; Brown v. McCrM

61 Mass. 1. (1889), 17 Ont. R. 712; Merrick v.
(r) Caetellain v. Preston (1883), 11 Brainard (1860), 38 Barb. 574; afi.
Q. B. D. 380 West of England v.
; 34 N. Y. 208 Collins v. New York
;
Isaacs, [1897] 1 Q. B. 226. Central (1875), 5 Hun. 503 Hayward

;
(s) Clark v. Blything (1823), 2 V. Cain (1870), 105 Mass. 213.

B. & C. 254 Yates v. Whyte (1838),
;
SUBROGATION 735
to the insurer. The legal right to compensation remains in the but legal
assured (f), and therefore unless there has been an express assign- remains
ment of the legal right, actions at law brought for the benefit of '" assured.
the insurer are brought in the name of the assured (u). In Courts
of Equity or of Admiralty the insurer has always been allowed
to sue in his own name {x).
As regards third persons, the insured and insurer are to be Third parties
regarded as one, and where action is brought in the name of the question
insurers' right
assured it can make no difference to the defendant, whether the
to sue 111
insurer has paid the loss or not, or whether he paid it before or assured's
"^™''-
after the commencement of the action {y). It is immaterial to
the defendant that an insurer bringing an action in the assured's

name has not paid or is not liable for the whole amount claimed
in the action (z). In Thomas <& Co. v. Brown (a) Mathew, J.,
thought that an insurer could not sue in the assured's name if
the policy was one " without recourse," that is to say, where the
right of subrogation is expressly excluded. This is no doubt true
as between insurer and assured, but if he intended to say that such
a defence could be pleaded to an action by the insurers in the name
of the assured against the party liable, it is difficult to concur with
the opinion.
Where the insurer sues in his own name to enforce his equitable Payment of
righthe must show that he has paid the assured, but he need not ™oneTwit.h-
show that he was legally bound to pay. Where the claim against out legal
him was one which the assured might honestly and reasonably
make, and to which he, as insurer, might honestly and reasonably
accede, he is subrogated upon payment, and a wrongdoer cannot
raise the defence that the loss was not covered by the policy (&).
AU claims of the assured arising out of tort or contract or any Subrogation

other ground of legal responsibihty vest in the insurer by subro- arirêÔTt'of
gation The value of
(c). benefits received by the assured from tort or
claims which have been satisfied before payment ought to be
(«) King v. Victoria Ins., [1896] (y) Mason v. Sainsbury (1782), 3

A. 250; Grandall v. Goodrich
C. Dougl. 61.
(1883), 16 Fed. Rep. 75. (z) Mobile By. Co. v. Jurey (1883),
(m) London Ass. v. Sainsbury 111 U. S. 584.
(1783), 3 Dougl. 245; WeuUeans v. (a) (1899), 4 Cora. Cas. 186.
Camida<SoM<feem (1894), 21 Ont. A. R. (6) King v. Victoria Ins., [1896]
297; Rockingham Mut. Fire v. A. 250; Insurance Go. v
C. The
Bosher (1855), 39 Me. 253. "C. D. Jr." (1870), 1 Woods, 72;
(x) St. Louis By. v. Commercial Fidelity Gas v. Gas Co. (1892), 150
Ins. (1890), 139 U. S. 223; Liverpool Pa. 8.
Steam Co. v. Phcenix (1888), 129 U. S. (c) Oastellain v. Preston (1883), il
397, 462; Garrison v. Memphis Ins. Q. B. D. 380.
(1856), 19 How. U. S. 312.
deducted from the indemnity at the time of payment (d). If,

however, the insurers were ignorant of the fact that a benefit had
been received, or if the value of the benefit was not readily ascer-
tainable, the insurers having paid the full indemnity may after-
wards recover back the value of the benefit (e). After the insurers
have paid they have an equity in respect of all the assured's un-
satisfied claims. When the assured receives any benefits from
such claims he must account to the insurers therefor and repay
to them anything which he receives beyond a complete indemnity.
If the claims are not satisfied, and the assured does not take
proceedings, the insurers may bring an action in the name of the
assured and recoup themselves from the proceeds.

Mason v. In Mason v. Sainsbury (/ ) the statutory remedy against the
Samsbmy.
hundred under the Eiot Act for damage caused by riot was held
to accrue for the benefit of the insurer and so all actions for negli-
gence against persons responsible for the fire such as actions
against gas or electric companies for defective installation, actions
against railway companies for defective engines causing unnecessary
danger from sparks, may be prosecuted for the insurer's benefit {g).
Worth. Britisli and Mercantile v. London, Liverpool and Globe

(1877), 5 Ch. D. 569
North British' B. & Co., being wharfingers, held grain belonging to R. & Co., merchants,
and Mercan- and by custom of the trade the wharfingers were liable for any loss however
ie V. London,
occurring. Both insured the grain, each firm for its own benefit, and on a
Liverpool and i
Globe. 'oss occurring it was held that R. & Co.'s insurers upon paying the loss were
entitled to be subrogated to their claim against B. & Co., the result being that
B. & Co.'s insurers bore the whole loss notwithstanding the pro rata conditions
in the policies.
Darrell v. Tibbitts (1880), 5 Q. B. D. 560
Darrell v. A dwelling house at Brighton was let, and the lessees covenanted to repair
Tibbitts. " except casualties by fire, demolition by storm or tempest, of the building,
or any part thereof, or destruction by foreign enemies." The landlord
insured against fire and damage by explosion. Owing to the negligence of
the local authorities a pipe in the street was burst by a steam roller and there
was a consequent escape of gas, explosion, and damage to the house. The
company, in ignorance of the terms of the lease, paid the loss to the landlord.
Subsequently the local authority paid compensation to the lessees, who re-
instated the premises. It was held that the company were entitled to recover
from the landlord the amount they had paid to him. The judges in the Court
(d) of England v. Isaacs,

West (/) (1872), 3 Dougl. 61.
[1897] Q. B. 226 ; Connecticut Fire
1
v. Erie (1878), 73 N. Y. 399. (?) Commercial Union v. Lister
(e) Castellain v. Preston (1883), 11 (1874), L. R. 9 Oh. 483.
Q. B. D. 380.
SUBROGATION 1'i7
ofAppeal suggested three different ways in which the company's claim might
be put (1) as an action at law upon an implied promise by the assured when
:
he received payment to repay in so far as he should be subsequently com-

pensated ; (2) as an action at law for money had and received to recover the sum
which they had paid upon the ground that that money was paid upon the con-
dition that the person to whom it was paid had sustained a loss, that in point
of fact no loss had been sustained, and, therefore, that the money paid by
the company ought in justice to be returned to them (3) as a kind of suit ;
in equity founded upon the principle that as the assured had received from
other sources compensation for his loss he ought to put the company in the same
position which they would have held if the house had been repaired before
they were called upon to pay the amount of the damage.
Andrevsrs v. Patriotic (1886), 15 L, R. Jr. 355
A landlord and tenant having insured independently each to cover his Andrews v.
Patriotic.
own interest the landlord was held entitled to recover the full amount of a fire
loss, notwithstanding the pro rata clause, and the Court were of opinion that
the landlord's insurers could, by subrogation to the landlord's claim against
his tenant on the covenant to repair, recover the loss against the tenant.
The tenant could in turn recover the loss against his insurers, and the tenant's
insurers would ultimately bear the whole loss.
The right of the insurer to be subrogated is not confined to

claims which the assured may make in respect of the loss, but
extends to all claims which if satisfied will diminish the loss.
Castellain v. Preston (1883), 11 Q. B. D. 380
The owner of a house having insured

it, contracted to sell it. Before com- Castellain v.
pletion of the purchase the house was destroyed by fire. The insurers paid Preston.
the vendor the amount of the loss, and the purchase was thereafter completed,
the vendor receiving the full contract price from the vendee. It was held
that the insurers were entitled to recover the price from their assured, the
vendor. Brett, L.J., said, " It seems to me that in order to carry out the
fundamental rule of insurance law this doctrine of subrogation must be carried
to the extent which I am now about to endeavour to express, namely, that as
between the underwriter and the assured the underwriter is entitled to the
advantage of every right of the assured, whether such right consists in contract
or unfulfilled, or in a remedy for tort capable of being insisted on or
fulfilled
already insisted on, or in any other right, whether by way of condition or

otherwise, legal or equitable, which can be or has been exercised or has accrued,
and whether such right could or could not be enforced by the insurer in the
name of the assured, by the exercising or acquiring which right or condition
the loss against which the assured is insured can be or has been diminished.
That seems to me to put this doctrine of subrogation in the largest possible
form, and if in that form, large as it is, it is short of fulfilling that which is the
fundamental condition I must have omitted to state something which ought
to have been stated." The fundamental condition referred to by the Lord
Justice in the above passage is that the contract of insurance is one of indemnity
i.L. 47
738 FIRE INSUEANCB CLAIMS
and indemnity only, and it is upon that alone that he bases the right of sub-
rogation. He
repudiates the suggestion that the right of subrogation arises
from the position of an insurer as a surety. " Underwriters are not always
sureties. They have rights which sometimes are similar to the rights of sureties,
but that again is in order to prevent the insured from recovering from them more
than a fuU indemnity." Bowen, L.J., said, " It is clear that the office would
be entitled to the benefit of anything received by the assured before the time
when the policy is paid, and it is established by the case of Darrell v. Tibbitts (h)
that the insurance company is entitled to that benefit whether or not before
they pay the money they insist upon a calculation being made, and if it after-
wards turns out that in consequence of something which ought to have been
taken into account in estimating the loss a sum of money or even a benefit not
being a sum of money is received, then the office, notwithstanding the payment
made, is entitled to say that the insured is to hold that for its benefit, and
although was not taken into account in ascertaining the sum which was
it
paid yet when it has been received it must be brought into account, and i£ it
is not a sum of money but a benefit that has been received its value must be
estimated in money."
The dictum of Bowen, L.J., in the above case to the effect

that the insurer is not only entitled to cash payments but also
to the value of all benefits received by the assured otherwise
than in cash, is well illustrated by the following case.
West of England Fire v. Isaacs, [1897] 1 Q. B. 226
West of A let his house to B. The latter covenanted to repair, and to insure in
England Fire the Royal Exchange Assurance in the ioint names of A and B. B did so insure
and afterwards sublet to C. By the sublease B covenanted to insure and
lay out the insurance money in rebuilding, and C covenanted to repair. C
insured in his own name and solely for his own benefit in the West of England
Assurance. A loss by fire happened which was agreed as between the insurance
companies and their assured at £100. The West of England paid that amount
to C and thereafter the lease expired. A sued B for breach of covenant to
repair and recovered £250 B sued C, and settled for £140, C xmdertaking
;
not to make any claim in respect of B's covenant. The Royal Exchange paid
B £100. The West of England Assurance then brought this action against
C to recover the £100 paid by them to him, and it was held that they were
entitled to do so. It was held that in settling B's claim for less than the
actual cost of repair C had received a benefit in diminution of his loss, and
that for that benefit he must account to his insurers. The benefit might be
valued at £100, and therefore the insurers were entitled to recover that amount.
Alternatively C had released B from his liability to expend the insurance money
on reinstatement or to pay damages for breach of his covenant, and C's
insurers were entitled to compensation for the loss of a right to which they
were subrogated.
Phoenix Assurance v. Spooner, [1905] 2 K. B. 753

Phmnix Mrs. Spooner owned a house and two shops. These premises were insured
Assurance v. by her against fire by the insurance company. During the currency of the
Spooner.
(h) (1880), 5 Q. B. D. 560.
S DEROGATION 739
policy the Plymouth Corporation determined to acquire the property and

served Mrs. Spooner with a notice to treat under the Lands Clauses Consolida-
tion Act, 1845. Before anything further had been done in pursuance of the
notice the premises were destroyed by fire, and the insurance company paid
Mrs. Spooner £925 the agreed amount of the loss. Mrs. Spooner then agreed
with the Corporation to accept compensation from them on the basis of
crediting them with the sum received by her from the insurance company.
The insurance company then sued Mrs. Spooner for £925 as money received
for their use or alternatively as the value of the benefit which she had received
from the Corporation in diminution of her loss or might have received from
them if she had not renounced her claim. It was held that the insurance
company were entitled to recover. The insurance was one of personal
indemnity of Mrs. Spooner and she could not by any arrangement with the
Corporation secure to them the benefit of the insurance as against the in-
surance company.
The insurer is not subrogated to, and therefore the assured Gifts to
^^^"^^
is not bound to account for money or benefits received by way
of gift for the sole benefit of the assured (i).
The insurer is not entitled to be recouped until the assured has Insurer en-
received what
in fact a full indenmity as to his loss, including indemnity's
is
the cost of recovering compensation from third ^ parties (k).

'
Even *° ^°^? ^P*^ ^ costs before
. .
where the pohey is a valued pohcy or where the insurer and assured insurers can .
""
have agreed the purpose of settlement, neither figure ômplMa!
loss for the
is conclusive on the question of subrogation, and the assured is *i°°-
entitled to prove that the value was more than the agreed value,
or that the loss was greater than the agreed loss, and to decline
to make repayment until he has been satisfied as to the differ-
ence (I). It has been said that the damages which the assured
recovers from a wrongdoer must prima facie be deemed to be a full
indemnity (m) ; but such damages do not necessarily represent
the actual damage, and the assured is entitled to retain both
damages and insurance money, if together they do not in fact
give him more than a complete indemnity for his loss and
costs (n).
In fire insurance cases the insurer is only entitled to be sub- When insurer
rogated to so much of the assured's rights as is sufficient to recoup hoUs°baianoe

him for his actual payment and costs (o). Even where he has ^°^ assured.
(i) Gastellain v. Preston (1883), 11 (m) Stoughion v. Gas Go. (1895),

Q. B. D. 380 ; Burnand v. Bodo- 155 p^ 428
cawac/i«(1882), 7 A. C. 333. at
,-
7 n- ,^ r
/
i^)
\
NaHonal '
F^re v. McLaren
National Fire v.
ik) McLaren
(1886), 12 Ont. R. 682 ; Eddyv.Lon- {1«»6), 12 Ont. R. 682.
don Assurance (1892), 65 Hun. 307. (») Mobile By. Co. v.Jurey (1883),
(l) Burnand V. Bodocanachi (1882), 111 U. S. 584.
7 A. C. 333.
740 FIEE INSURAKOE CLAIMS
paid upon a total loss there is not necessarily any such abandon-
ment of the sfes recujperandi as would entitle the insurer, upon
recovering from a wrongdoer more than the amount which he had
paid to the assured, to retain the balance for his own benefit.
If goods are damaged and the insurers agree to pay a total loss
upon the assured surrendering the salvage, there would probably
be an abandonment which would carry with it the right to the
full benefit of the spes recuj)erandi(j)). The same would not apply
to a case of total loss upon a building where the assured receives

the sum insured upon the terms of surrendering the salvage to
the insurers because there is no abandonment of the property, that
is the site, and the surrender of the salvage would not necessarily
import a surrender of all claims in respect of the damage done.
Assured is
The assured is entitled to control any proceedings brought in
dominus litis his name until he has received complete indemnity, that is to say,
until he has
a complete if the insurer has not paid what is in fact a complete indemnity
indemnity.
for all damage insured or uninsured arising from the same cause
of action as the damage in respect of which payment has been
made the assured remains dominus litis until he has recovered a
complete indemnity, and if he undertakes to prosecute his claim
for the whole damage the insurers cannot interfere (g). The
assured must conduct the litigation with proper regard for the
and will be liable in damages for any misconduct
insurer's interest,
or forany abandonment of rights (r). If the assured recovers
judgment the insurers have a lien thereon for the amount to which
they are entitled to be subrogated (s).
When th3 There is probably no duty on the part of the assured to take
assured
any active steps to prosecute his claim. If there is any danger
refuses to
take proof a claim being lost by lapse of time, loss of evidence or other
cause, the insurers have the remedy in their own hands by
paying the loss and then commencing proceedings in the
assured's name. If the assured upon tender of a proper
indemnity as to costs refuses the use of his name the insurer
can, by proceedings in equity, compel him to give the use of
his name and probably, instead of taking double proceedings,
the same purpose can now be effected by joining the assured as
( p) Comegysv. Fosse (1828), 1 Pet. L. R. Ir. 355 Commercial Union v.

;
193. Uster (1874), L. R. 9 Ch. 483 West ;
(q) Commercial Union v. Lister oj England Fire v. Isaacs, [1897] 10

(1874), 9 Ch. 483; Law Fire
L.R. Q. B. 226.
Ass. V. Oakley (1888), 4 T. L. R. 309. (s) White V. Dobinson (1844), 14
(r) Andrews v. Patriotic (1886), 18 Sim. 273.
SUBROGATION 741
defendant to an action brought in the name of the insurers

against the parties liable. The insurers cannot repudiate the
assured's claim against them, and at the same time insist upon his
taking steps to enforce his claim against third parties so as to

preserve their right of subrogation (<).
After the assured has received complete indemnity the insurer insurer is
**
is dominus litis in respect of future proceedings, and in America J^l^ôm-
it was held that where an assured, having been completely pkte
indemnified by the insurers, nevertheless prosecuted an action
on his own behalf against third parties he was bound to hand
over to the insurers the entire sum recovered without making
any deduction in respect of his costs (m).
On the principle that as far as third persons are concerned the Settlement
insurer and assured are one, any settlement or abandonment of a °*
"-^"'l^thi d
claim by the assured prima facie binds the insurers {x). j-aities.
AVhen before loss the assured has contracted with a third party Relea,se of
that such third party shall not be liable to him in case of loss,
fOT^'^/o^g'^^"
or that his liability shall be limited, the insurer is bound by such
contract (y). The concealment of such contract at the time the
insurance was effected, or i.he making of such contract during the
risk, might, according to the conditions of the policy, be good ground

for avoiding the contract of insurance (z), but the insurer is bound
by the contract as regards third parties, because he cannot be

subrogated to any claim which the assured himself could not have
enforced (a). A contract between the assured and a third party,
otherwise liable to him in case of loss, that the third party shall have
the benefit of any insurance is a bar to the insurers exercising their
right of subrogation (b). Thus, where a carrier contracted with
the owner of goods that in case of loss for which the carrier was
liable he should have the benefit of the owner's insurance and the
owner insured in his own name
was held that the owner's insurers
it
could not recover from the carrier (&). And this would seem to
be so even where the contract between the insurer and assured
is one to indemnify the assured only. Thus, if a vendor of property
{«) Andrews v. Patriotic (1886), 18 (o) Oermania Fire v. Memphis Ry.

L.R Ir 355. Co. (1878), 72 2Sr. Y. 90; Savannah
(u) Hardman v. Brett (1889),
37 Fire v. Pelzer Manufacturing Co.
Fed. Rep. 803. (1894), 60 Fed. Rep. 39; Hartford
(x) West of England F%reY. Isaacs, Fire v. Chicago Ev. Co. (1894) ^ 62
[1897] 1 Q. B. 226. Fed. Rep. 904 ^ >'
iy) Phoemx Co. v. Erie Transpmta- (6) Phoenix Co. v. Erie Transporta-
tion {U86], 111 V. S. 312, Z22. tionCo. (1886), mV.S. 312.
(z) See p. 309.
being insured agreed with the purchaser that he should have the
benefit of the insurance, there would be no subrogation to the
vendor's claim for the purchase money. In one American (c) case,
where a railway company carried goods on the terms that they
should have the benefit of the owner's insurance, and the owner
had insured on the terms that no carrier should have the benefit
of the policy, but that the insurers should be subrogated to all
rights against them, was held that the insurers, having paid the
it
owner were entitled to be subrogated and to recover

loss to the
damages against the railway company for a loss by negligence.

Two reasons were given for the decision (1) that the owners only
contracted to give the railway company the benefit of any poUcy
which was in fact available for their benefit ; but they did not
contract to effect a policy which was so available ; the policy they
did effect was not available for the railway company's benefit, and
there was no breach of contract in effecting such a policy ; (2) the
railway company being common carriers could not contract them-
selves out of liability for negligence. On the second point the
American law differs from EngUsh law, and the case is therefore
ofno value as an authority in England. On the first point the
decision is an EngHsh Court the case
at least very doubtful and in
would probably have been decided in favour of the railway company.
After loss but After a loss has occurred but before the insurers have made
before pay- , ^ ^
ment. payment, any release or settlement made by the assured with
third parties to the prejudice of the insurers will free the iasurers
from liability upon the policy {d). The insurers are in the same
position as sureties where the creditor has released or given time
to the principal debtor (e). The assured is not, however, pre-
cluded in the case of a doubtful claim from making a reasonable
settlement for the benefit of himself and the insurers, and such a
settlement is no defence to the assured's claim on the policy.
If the insurer desires to have the question of settlement in his
own hands he must either make an express condition to that effect,
or pay a full indemnity to the assured so as to become dommus

litis. If the assured does release a third party before payment
has been made by the insurers, the release is good and as effective
against the insurers as it would be against the assured (/). But
(c) Inman-v. South Carolina By. Co. (e) Andrews

v. Patriotic (1886), 18
(1889), 129 U. S. 128. L. R 355.
Ir.
,J^ iD,-j ,-. ^ r, ^ ,,o„„x if ) Fidelity Oo.v. Gas Co. (18Q2),

id) Fidehty Co. v. Gas Co. (1892), 150 Pa. 8 Connecticut Fire v. Erie
;
150 Pa. 8. Rail Co. (1878), 73 N. Y. 399.

SUBEOGATION 743
where the release of the third party was not made unconditionally,
but subject to the express condition that it should be without
prejudice to the assured's claim against the company it was held
that the release was only operative as between the assured and the
third party, and that it did not prevent the assured recovering
from the insurers or the insurers recovering by subrogation from
the third party (g).
After payment of the assured by the insurers a release or settle- After pay-
ment made by the assured against the interests of the insurer is ™°° '
good ground for a claim for damages against the assured Qi). The
equitable right to the assured's claim against third parties being
vested in the insurers after payment of the insurance money a
release of such rights is inoperative against the insurers if the
party liable had notice of the insurer's right to subrogation (i).
If the party hable accepts the release of the assured and gives
good consideration therefor in ignorance of the rights of the insurers
the release is apparently a good answer to the insurers' claim against
him, and the insurers' only recourse is for damages against the
assured (k). Even although the assured has been paid the insur-
ance money, if he has not received a complete indemnity he is
probably entitled as dominus litis to make a bond fide settlement

in the joint interests of himself and the insurers of all claims
arising out of thesame cause of action.
The insurers cannot by way of subrogation become entitled Insurers have
to any claim which the assured himself could not have made (i). "j^ht than
assured.
Subrogation is to the rights of the assured only. The insurers are
not subrogated to the rights of a mere payee who is entitled to
receive the money but whose interest is not separately insured (m).
When the insurers have paid a loss brought about by the no right to
negligence of the assured or his servants they have no claim claim com-
" " pensation •'
against him for damages. So where two ships owned by the from assured
same person came into collision by the fault of the master and crew „ence%tc.,
of theone ship and to the injury of the other an underwriter who
(g) Connecticut Fire v. Erie Rail Go. {k) West of England Fire v. Isaacs,
(1878), ,73 N. Y. 399 ; Fidelity Co. v. [1897] 1 Q. B. 226.
Gas Co. (1892), 150 Pa. 8. (/} St. Louis v. Commercial In-
ih) West of England Fire V. Isaacs, surance (1890), 139 U. S. 223;
[ISQI]! Q.B. 22& ; Phoenix Assurance Phoenix Ins. v. Erie Transportation
Co. V. Spooner, [1905] 2 K. B. 753. (1886), 117 U. S. 312, 322.
(i) Smidmore Australian Oas
v. (m) Wager v. Providence Ins.
Light Co. (1881), 2 N. S. W. B. (Law) (1893), 150 U. S. 99 ; Anderson v.
219 ; Hart v. Western Railway Co. Saugeen Mut. (1899), 18 Out. R.
(1847), 54 Mass. 99 ; Connecticut Fire 355.
V. Erie (1878), 73 N. Y. 399.
had insured the injured ship and accepted abandonment from

the owner paid him the amount of the insurance, and then claimed
to recover it back as damages for which as owner of the neghgent
ship he was alleged to be responsible, the Court held that the
insurers could not recover, because to do so they must show some
right of their assured to do so, and as their assured had no right
of action against himself the claim failed (n).
or for wilful For the same reason, where the insurance was against fire and
damage by
his wife. the premises were wilfully destroyed by the felonious act of the
assured's wife, was held that the insurers, having paid the loss,
it
could not recover damages either against the assured or his wife,
because the assured could not sue himself and he could not sue
his wife (o).
Damage by In an American case, where an insurance company had insured
one part
owner. A and B part owners, and a loss occurred caused by the negligent
act of A, it was held that, although the insurers could not recover
from A what they had paid him in respect of his share of the loss,
they were subrogated to B's claim against A, and could therefore
recover from A what they had paid to B (p).
Subrogation In America there is a conflict of authority as to whether the
to mortga-
gee's debt and right of a mortgagee to the security and to payment of his debt
seoutity.
is a right to which the mortgagee's insurers are entitled to be
subrogated upon payment of the loss to the mortgagee (g). The
decisions against the right of subrogation seem, however, to be
based on the theory that the insurers are only subrogated to
rights of the assured to recover satisfaction for the loss (r).
Castellain v. Preston (s), by recognising the right of the insurers

to be subrogated to a vendor's right to the purchase money on an
agreement to sell the property insured, shows that the right of
subrogation is not limited to the right of the assured to recover
satisfaction, but include all which will diminish
rights of the assured
the loss. The right of a mortgagee to have the debt repaid is
undoubtedly such a right, and on principle there can be no doubt
that the mortgagee's insurer is prima facie entitled to be subrogated
to the mortgagee's right against the mortgagor. There seems to
(n) Simpson v. Thomson (1887), 3 JBoyden (1864), 91 Mass. 123 ; Car-

A. C. 279. penter V. Providence Washington
(o) Midland Insurance v. Smith (1842), 16 Pet. 495, 501 ; Excelsior
(1881), 6Q. B. D. 561. Fire v. The Royal (1873), 55 N. Y.
{p) Williams v. Hays (1892), 64 343, 359.
Hun. 202. (r) Provincial Insurance v. Reesor
iq) King v. State Mutual Fire (1874), 21 Grant, 296.
(1851), 61 Mass. 1 ; Suffolk Fire v. («) (1883), 11 Q. B. D. 380.
SUBROGATION 745
be no English decision directly in point, but in North British and

Mercantile v. London, Liverpool and Globe {t), Mellish, L.J.,
cites the case of mortgagor and mortgagee as an illustration of
the principle that, where two persons are each interested in the
same property to the full value, each is entitled to insure and
recover the full value from their respective insurers ; but in order
that the insurers may not ultimately pay more than the total value
of the property between them one of them must be subrogated to
the right of their assured against the other party interested in the
property. And in Westminster Fire v. Glasgow Provident (m),
the majority of the consulted judges in the Court of Session

expressed the opinion that when a bondholder's insurers paid the
loss to the bondholder he was bound to assign to them his rights
against the debtor.
Whether or not there is a right of subrogation in the case Cases where
of a mortgagee's insurance depends partly on the terms of the subrogation
mortgage and partly on the terms of the insurance policy. *° ™o'^'^-
There is no subrogation (1) where the mortgagee is merely rights,
payee of the insurance money payable upon the interest of the

mortgagor, and is not separately insured in respect of his own
interest ; (2) where the mortgagee is insured but the insurers have
also agreed to indemnify the mortgagor as well as the mortgagee
and such agreement is enforceable by the mortgagor ; (3) where
the mortgagee has contracted to insure the mortgagor or to give
him the benefit of his insurance by applying the insurance money
in reduction of the mortgage debt.
A policy expressed to be payable " to mortgagee in case of Where mort-
loss" is not 'prima Jacie an insurance of the mortgagee's interest {x).
mw-ely^payee.
The mortgagee is merely in the position of having a charge upon
the mortgagor's policy effected upon the mortgagor's interest.
Payment to the mortgagee prima jacie extinguishes the debt
, pro tanto, and if the payment exceeds the debt the mortgagee will
hold the balance in trust for the mortgagor (y). Clearly in such a
case thereis no subrogation (z). But where the mortgagor wilfully
burned the premises insured and the insurers voluntarily paid the
loss to the mortgagee, and took an assignment of the mortgage, it
(t) (1877), 5 Ch. D. 569. {y) Graves v. Hampden Insurance

{u) (1887), 14 R. 947, 966. (1865), 92 Mass. 281.
(x) Livingstone v. Western Insur- (z) Imperial Fire v. Bull (1889), 18
ance (1869), 16 Grants Ch. U. C. 9 ; Can. 697 ; Klein v. Union Fire
S. C.
Anderson v. Saugeen Mutual (1899), (1883), 3 Ont. R. 234.
18 0nt. 355.
74G FIEE mSUEANOE CLAIMS
was held that they were entitled to enforce the whole debt against
the mortgagor without giving credit for the sum paid to the
mortgagee (a).
Mortgage If a policy " payable to mortgagee in case of loss " contains
clause.
a condition that the mortgagee's right shall not be affected by the
acts or deeds of the mortgagor, this is probably not in itself a
separate insurance of the mortgagee upon his own interest, but only
a derivative contract to pay upon the mortgagor's interest without
reference to the mortgagor's acts and deeds which might as between
the mortgagor and the insurers invalidate the policy (6). If so,
there is no subrogation on payment to the mortgagee unless it is
expressly stipulated for in the policy (c). Such a stipulation is
frequently contained in a mortgage clause. The ordinary form

of this clause entitles the insurers to be subrogated to the rights
of the mortgagee against the mortgagor if by reason of double
insurance, aHenation of property, or other breach of a condition,
the poHcy is unenforceable in the hands of the mortgagor {d). And
if as against the mortgagor who has insured elsewhere the insurers
are onlybound to pay a rateable proportion of the loss, they are
upon payment of the whole loss to the mortgagee entitled to be
subrogated to his rights against the mortgagor to the extent of
the difference between the sum which would have been payable
by them and the sum in fact paid by them to
to the mortgagor
the mortgagee (e). If before payment the mortgagee has released
any of the securities for the debt, and so is unable to comply wth
the provisions of the clause, the insurers are discharged from
Hability (/). Where the policy contained the mortgage clause,
and the insurers paid the amount of the loss to the mortgagee, which
amount was insufficient to extinguish the mortgage debt, it was
held that they were not entitled to rank pari passu with the mort-
gagee, but that the mortgagee was entitled to repayment of his
debt in full before the insurers were entitled to any benefit from
the debt or securities {g). In a Canadian case Qi) where the policy
(a) Westmacott v. Hanly (1875), 22 Dominion Fire (1883), 8 Ont. A. R.

Grants Ch. U. C. 382. 644.
(6) Anderson v. Saugeen Mutual (e) PhcsnixIns.v.Floyd (1879), 19
(1899), 18 Ont. R. 355 but see ; Hun. 287.
Hastings v. Westchester Fire (1878), (/) Attleborough Bank y . Security
73 N. Y. 141 Ulster Co. Savings v.
; Co. (1897), 168 Mass. 147.
Leake (1878), 73 N. Y. 161. (g) Eddy v. London Assurance
(c) Allen V. Watertovm Fire (1882), (1892), 64 Hun. 307.
132 Mass. 480. {h) Anderson v. Saugeen Mutual
(d) Ulster Savings v. Leake
Co. (1899), 18 Ont. R. 355.
(1878), 73 N. Y. 1861 ; Howes v.
SUBROGATION 747
"
was issued to a mortgagor " loss, if any, payable to mortgagee
and contained the mortgage clause and the company had a good
defence against the mortgagor on the ground that proofs of loss
had not been delivered, it was held that as proofs of loss were made
a condition precedent to action, but not a condition precedent to
Hability therewas a subsisting liability to the mortgagor although
he could not sue. The insurers were not therefore on payment to
the mortgagee entitled to be subrogated to his rights against the
mortgagor.
Where the mortgagor's policy is assigned absolutely to the Where mort-
mortgagee with consent of the insurers, that is prima jade a separate jgassigned to
mortgagee,
insurance of the mortgagee on his own interest, and not merely
an assignment The mortgagor ceases to
of the chose in action.
be the assured and consequently the insurers, on payment to tho

mortgagees, are subrogated to the rights against the mortgagor (i).
Where the and mortgagee there where mort-

policy insures both mortgagor
is clearly no right of subrogation on payment to the mortgagee,
Mortgagee
that is to say, the right of subrogation is extinguished by the are both
T 1 • 1 •» •
rT\ 1
insured.
obhgation to mdemnify the mortgagor [k).
Where a policy is granted to a mortgagee in his own name it may Where mort-
be intended to cover both his own and the mortgagor's interests, or fg^^gureT^
it may be intended to cover the interest of the mortgagee only. If
the mortgagor is not named, then, except in the case of an insurance

upon goods, the policy in so far as it is for the benefit of the mort-
gagor is void under the statute 14 Geo. 3, c. 48. Thus, if the
policy is intended to insure the mortgagee only, or if the mortgagor
is not mentioned, and therefore not in law insured, the right of
subrogation does arise upon payment of the mortgagee subject
to this, that if as between mortgagor and mortgagee the mortgagee
was bound to insure for the benefit of the mortgagor, or to apply
the insurance money in discharge of the debt, there is no claim by
the mortgagee against the mortgagor to which the insurers can
be subrogated. Where a mortgagee insures on his own interest
and on his own behalf without any obligation to the mortgagor,
he is not bound to account to the mortgagor in case of loss (i)
The mortgagee is not a trustee of the property mortgaged in
the sense that he caimot use his position for his own profit,
and he is therefore entitled to receive the insurance money and
Burton v. Oore District Mutual
(i) (l) Dobson v. Land (1850), 8 Hare,
(1865), 12 Grants Ch. U. C. 157. 216.
(k) Kernochan v. New York Bowery
(1858), 17 N. Y. 428.
748 FIEE INSUEANCE CLAIMS
subsequently recover the full debt from the mortgagor (m) .

If the
mortgage contains a covenant by th e mortgagor to insure and, failing

such insurance, power to the mortgagee to insure and add the
premium to the debt, and, on failure of the mortgagor to insure,
the mortgagee insures in his own name and charges the premiums
in account with the mortgagor such insurance is prima facie
deemed to be made for the benefit of the mortgagor as well as the
mortgagee, and the mortgagee bound to apply the insurance

is
moneys in discharge of the debt (n). But the power to make

such insurance does not bind the mortgagee to insure for the
benefit of both, and he may effect insurance on his own interest
only with a proviso that in case of payment the insurers shall be

subrogated to his rights under the mortgage (o).
When mort- When mortgagor and mortgagee insure independently in different

gagor and
mortgagee
ofiices, each solely on his own interest, each is primarily entitled
insure in to a full indemnity, that is the total loss up to the value of his
different
offices. interest which in each case may be the total value of the property.
If the mortgagee was bound to apply his insurance money
towards the extinction of the debt, that is a benefit which the
mortgagor can claim, and consequently the mortgagor's insurers
can recover from him the value of that benefit, that is the amount
of the debt, the ultimate result being, if the mortgagee insured for
the amount of his debt and the mortgagor for the full value of his
property, that the mortgagee's insurers pay the amount of the debt,
and the mortgagor's insurers the difference between that amount
and the total loss if the latter exceeds the former. On the other
hand, if the mortgagor was not bound to apply his insurance money
towards the extinction of the debt, he has his debt which he can
still enforce, and to that claim his insurers are subrogated, the
ultimate result then being that the mortgagor's insurers pay the
total loss and the mortgagee's insurers pay nothing. In the above
cases, as the policies are hypothetically on different interests there
is no double insurance and therefore no place for the apphcation
of the pro rata clause. A more difficult case is where the mortgagee
has insured for thefull value of the subject matter and for the
benefit of bothmortgagor and mortgagee, and at the same time

the mortgagor has insured in another office for the full value and
(m) Concord Union Mutual v. Wood- (n) Howes v. Dominion Fire (1883),
bury (1858), 45 Me. 447; White v. 8 Ont. A. R. 644 ; Provincial Insur-
Brown (1848), 56 Mass. 412 Ex-
; ance V. Reesor (1874), 21 Grant, 296.
celsior Fire v. The Royal (1873), 55 (o) Foster v. Van Reed (1877), 70
N. Y. 343, 359. N. Y. 19.
SUBROGATION 749
solely for his own benefit. Here, as far as the mortgagor is con-
cerned, there is a double insurance, and primarily each office is
liable to pay half of the loss to him. The mortgagor, however,

is entitled as against the mortgagee to demand that the mortgagee
shall apply the whole of the insurance monej'' in reduction of tho
debt. The mortgagor's insurers are entitled to this benefit, and
therefore the ultimate result ought to be, notwithstanding the
fro rata clause, that the mortgagee's insurers bear the total loss.
In Nicholls v. Scottish Union (p) the facts presented in substance

the above problem, the action being brought by the mortgagor
against his insurers. It was held that as his interest was also
insured by the mortgagee's policy there was double insurance,
and under the pro rata clause he could only recover half the loss
from his insurers. It is doubtful whether the mortgagee's policy
in this case did in fact insure the mortgagor, but at any rate the
mortgagee was bound to apply the insurance money on his policy
towards extinction of the debt, and therefore as between the
insurers the ultimate result ought to have been that the mortgagee's
insurers bore the whole loss. The question of subrogation and
its ultimate result was not, however, discussed or decided.
Some of the American Courts have decided that where a vendor Subrogation
has insured the property contracted to be sold his insurers have a.iv^ *? ^fnôr's
> ^ no
.
.
rights against
right to be subrogated to the right to receive the purchase money, purchaser,
and they point out the distinction between insuring receipt of tho
purchase money, in which case it is stated there would be subro-
gation, and insuring the property, in which case it is stated there
is no subrogation because there is no claim arising out of the
loss (q). Castellain v. Preston (r) disposes of this distinction
as far as English law is concerned by deciding that the vendor's
insurer is entitled to be subrogated to the benefit of the
purchase price even although the liabihty to pay it does
not
arise out of the loss. The Court were of opinion that the
vendor's insurers are not only entitled to have the
purchase
price applied in reduction of the money paid
by them as an
indemnity to the vendor, but are also entitled to
exercise the
vendor's lien as against the purchaser to enforce
payment. They
were doubtful as to whether the vendor's insurers
could bring a
(1^^^)' 2 T. L. R. 190 14 R. Insurance Co. v. Updegraff

iftL?' ;
^ y jj (185Z) 21>
1094. Pa. 619.
\ ),
•" ^^ 11 Q. B. D. 380
win/^r-.-^^ ^w ^f n'^'
WO'^hi-ngtonF^re^. J"' (1883),
Phoenix
seealso
Assurance Co. v. ^Voê^
;
^,,
Kelly ,?„Ja?^^'
Svooner
(1870), 32 Md. 421, 443, 458 ; [1905] 2 K. B. 753.
performance in the vendor's name, but on general

suit for specific
principles there seems to be no reason why they should not be

entitled to exercise this right, which might be their only chance
of obtaining repayment. There is, however, no subrogation to
the vendor's claim for the purchase money where the vendor has
contracted with the vendee, that he shall have the benefit of the
insurance (s), or where the policy does, in fact, insure both vendor
and vendee (i).

Rights of The insurers of landlord and tenant are also entitled to sub-
landlord and
tenant inter rogation, and the ultimate loss falls upon the insurer of the party
se.
who, but for the insurance, would have ultimately suffered damage.
The landlord's insurer who has paid him the loss is entitled to the
benefit of the tenant's covenant to repair (m), or if the tenant has
reinstated the premises the landlord must account to his insurer
for the value of the reinstatement (x). If the landlord has reserved
a rent payable even in case of loss by fire, he cannot, having been
paid a complete indemnity in respect of the damage to the premises,
continue to receive the rent without accounting to the insurers.
Obviously, if the assured has the insurance money which can be
profitablyemployed elsewhere, and does not employ it to reinstate

the premises the receipt of rent would be something in excess of
an indemnity (y).
Liability of The liability of a tenant to his landlord for the destruction
tenant for
accidental of the premisesby fire has never been very satisfactorily expounded.
loss by fire.
The Statute 14 Geo. 3, c 78, s. 86, provides that no action shall
be broaght against any person in whose building or on whose
estate any fire should accidentally begin, but " no contract or
agreement made between landlord and tenant shall be hereby
defeated or made void." It seems to be generally assumed that
this relieves a tenant from liability unless (1) he has covenanted
to repair ; (2) the fire is caused by his wilful act or negligence (z).
The further question, however, does arise whether a tenant may

any express covenant, be liable for an entirely
not, in the absence of
accidental fire on the ground that it is a permissive waste, and
if so, whether the statute exempts him from that liabiUty.
Tenant's The questionof a tenant's liabihty for waste is one that has been
liability for
waste.
(«) Washington Firev. Kelly (1810), (x) Darren v. Tibbitta (1880), 5
32 Md. 421. Q. B. D. 560.
(t) Benjamin v. Saratoga Mutual (y) Caatellain v. Preston (1883), 11
(1858), 17 N. Y. 415. Q. B. D. 380, 406.
(m) Andrews v. Patriotic (1886), 18 (z) Fawcett's Landlord and Tenant
L. R. Ir. 355. (2nd edition), p. 309.
SUBROGATION 751
much discussed, but the decided cases are very conflicting.

Liability for waste apart from express covenant was imposed upon
tenants by the statutes of Marlbridge (52 Hen. 3) and Gloucester
(6 Edw. 1, c. 8). It has been held that the statutes do not apply
to tenancies at will or yearly tenancies (a). Such tenants are
liable for wilful damage, for the wilful act terminates their tenancy,
and they can be sued in a common law action for damages in the
nature of waste or for trespass (6), but they are not Uable for
negligence or permissive waste (c). Tenancies for years and life
tenancies are clearly within the statutes, but with regard to them
the question arises what is the meaning of waste. Does it include
permissive as well as voluntary waste, and, if so, is damage caused
by the Act of God and without negligence permissive waste, or is
it confined to dilapidation as the result of negligence ? In Davies v,

Davies [d), Kekewich, J., held that a tenant for years was liable
for permissive waste, which he defines as waste which has not come
about by his own acts, but comes about by a revolution or by
wear and tear, or by the action of the elements, or in any other
way, not being his own act. In the case of In re Carticright (e),
Kay, J., held that a tenant for life was not liable for permissive
waste, but only for voluntary waste or acts of wilful destruction.

In Saner v. Bilton{f) and Manchester Bonded Warehouse v.
Carr (g), it is said in the case of tenancies for years that the tenant
is not hable for waste in the case of damage arising from an
apparently proper use of the premises, and that waste is confined
to the result of wilful or negligent acts. In view of this conflict
of authority it is impossible to state definitely whether a tenant
is ever, in the absence of a covenant to repair, liable for damage
not caused by his wilful act. All that can be said is that he may
be liable for permissive waste which may include not only damage
caused by his negligent act or omission, but damage done by
causes over which he has no control. If under the statutes of
Marlbridge and Gloucester he is liable for such damage, it may
be argued that the Statute 14 Geo. 3, c. 78, s. 86, does not exempt
him from liability, since the liability arises from a contract or
Fawoett's Landlord and Tenant

(a) M. & W. 257 ; Torriano v. Young
(3rd 352
edition),
p. Woodfall's ; (1833), 6 Car. & P. 8.
Landlord and Tenant (18th edition), (d) (1888), 38 Ch. D. 499.
p. 702. (e) (1889), 41 Ch. D. 532 ; followed
(5) Countess of Shrewsbury (1601), by North, J., in Parry and Hopkin,
5 Co. Rep. 13a ; Eurchell v. Hornsby [1900] 1 Ch. 160.
(1808), 1 Campb. 360. (/ ) (1878), 7 Ch. D. 816.
(c) Harnett v. Maitland (1847), 16 (g) (1880), 5 C. P. D. 507.
agreement between landlord and tenant, and although not the

subject of express covenantmay be within the proviso, saving
such contracts or agreements from being defeated.
Tenant's Where the fire is caused by the negligence of the tenant or his
liability for
negligence.
servants an action may lie for permissive waste as indicated in
the last paragraph, and if so, the Statute 14 Geo. 3, c. 78, s. 86,
will not afford any defence because a fire caused by negligence

does not begin accidentally within the meaning of the statute (h)
If, however, for the reasons already indicated, no action for waste
lies in respect of the fire caused by the tenant's negligence, the
landlord cannot sue him for the damage done as if it were the
negHgent act of a stranger (i). Thus, where six stables were let
to different tenants and they were all burned down through the
negligent keeping of a fire by one of them who was a tenant at
will, the landlord was not entitled to recover from the tenant in
respect of the stable demised to him, but was entitled to recover in

respect of the five other stables, because as to them they were as
strangers to one another (i).
Tenant's Under a general covenant to repair without any exception

covenant to
repair. of damage by fire a tenant is liable to reinstate the premises if
accidentally destroyed by fire (fc), and even where the tenant has
covenanted to insure the premises for a specific sum, his liability
under the covenant to repair is not limited to that amount (T).
The measure of damages for breach of the covenant to repair is
the pecuniary loss to the landlord arising from the fact that the
repairs have not been done (m). It is not necessarily the cost of
doing the repairs. Thus, where the premises were old and worn
at the time of the demise and were burned down, the landlord was
not entitled to the whole cost of erecting new premises, but damages
for breach of the covenant to repair were assessed at such cost
less the increased value of the new premises over the old (n).
Where the premises are left in disrepair at the end of the term,
the landlord is entitled to compensation for loss of user during
the execution of repairs (o). The breach of the covenant to
(h) FilUter v. PMppard (18i1), 11 {I) Digby v. Atkinson (1815), 4

Q. B. 347 ;infra, p. 696. Camp. 275.
(i) Panton v. Isham (1694), 3 (m) Wigsell v. School for Indigent
Levinz, 359. Blind (1882), 8 Q. B. D. 357.
(fc) Bullock V. Dommitt (1796), 6 (n) Yates v. Dunster (1855), 11
T. R. 650 ; Pym v. Blackburn (1796), Ex. 15.
3 Ves. 34 ; Chesterfield v. Bolton (o) Woods V. Pope (1835), 6 C. & P.
(1739), Comyn, 627 Glarkev. Glasgow
; 782; Birch v. Clifford (1891), 8
Assurance (1854), 1 Macq. 668. T. L. R. 103.
SUBROGATION 753
repair is continuous until the repairs have been executed, and

therefore receipt of rent although a waiver as to the past is not
a waiver as to the future, and if the covenant was to repair within
a reasonable time the time does not begin to run afresh from the
receipt of the rent (j?).
A lessor is not bound to repair the premises during the tenancy Landlord's
*°
unless he has expressly covenanted to do so (q), and therefore if
^^pîf^
they are burned down he is not bound to reinstate them (r).
Where a lease contains a covenant on the part of the tenant Tenant's

covenant to
to insure, the tenant usually covenants to insure and keep insure.
insured in the name of the lessor or in the joint names of lessor
and lessee for a specified sum either in a named office or generally
in some substantial fire office. The tenant must insure within a
reasonable time after the execution of the lease (s). If afterwards
the policy is allowed to lapse for however short a time there is a
breach of the covenant But the tenant is not bound to keep
(<).
up the some effective policy is always in

original policy. If
force that is sufficient (u). A covenant to insure in the joint names

of lessor and lessee is fulfilled by an insurance in the name of the
lessor alone (x) ; but a covenant to insure in the name of the lessor
is not fulfilled by an insurance in the joint names of lessor and
lessee (y). Where a tenant having covenanted to insure in joint
names insured in his own name and showed the policy to the land-
lord, who approved of it and afterwards received rent, it was held
that there was a breach of the covenant, and although the breach
was waived up to the time the last rent was received, there was
a continuing breach after that date, for which the tenant was
liable (z). Apparently, if a policy is effected and kept in force, the
fact that for some reason it is avoidable at the option of the com-
pany does not constitute a breach of the covenant to insure if in
fact the company does not avoid it (a). Where the covenant in a
lease provided that the lessees should " at all times during the said
term keep insured against loss or damage by fire all buildings,
(p) Bofcerv. Jones (1850), 5 Ex. 498. (m) Flower v. Peck (1830), 1 B. &
(q) Gott V. Gandy (1853), 2 E. & B. Ad. 428.
845; Arden v. Pullen (1842), 10 (a;) Havens v. Middleton (1853),
M. & W. 321. 10 Hare, 641.
(r) Bayne v. Walker (1815), 3 Dow. (y) Penniall v. Harborne (1848), 11
233. Q. B. 368.
(«) Darlington v. Ulph (1849), 13 (z) Martin v. Gladwin (1845), 6
Q. B. 204. - Q. B. 953 Flower v. Peck (1830), 1
;
(«) Pitt V. Shewin (1811), 3 Camp. B. & Ad. 428.

134; Wilson V. Wilson (185i), 14 (a) Pi« v. iammff (1814), 4 Camp.
C. B. 616 ; Job v. Banister (1857), 26 73.
L. J. Ch. 125.
I.L. 48
erections, and fixtures of an insurable character, which at any

time during the said term may be erected or placed upon or fixed
upon the demised premises," it was held that the covenant apphed
to buildings erected at the time of the demise as well as to those
erected during the term (&).
A covenant to insure in the case of a lease within the Bills of
MortaUty was held to be a covenant which ran with the land, and
was therefore enforceable by and against assignees although not
mentioned in the lease was so decided because by 14
(c). It
Geo. 8, c. 78, s. 83, money
the landlord could compel the insurance
to be applied in reinstatement, and therefore the covenant to in-
sure was a covenant which affected the land (c). If section 83
is applicable beyond the Bills of Mortality, and it was so decided
in Ex parte Gorely (d), then in England all covenants to insure

run with the land without reference to the place where the premises
are situated.
Where the covenant to insure is broken and the premises are
burned the landlord is entitled to recover from the tenant, as
damages for breach of the covenant, the amount of the loss which
but for the breach would have been recovered from the insurers (e).
In the event of the tenant failing to insure the landlord cannot

charge him with the premiums of an insurance effected by himself
unless the lease gives him authority to do so ; but, on the other
hand, he is entitled to recover from the tenant damages for breach
of the contract to insure even although there has been no fire,
and a jury may give more than nominal damages (/).
Hey V. Wyche (1842), 2 G. & D. 569

Mey V. A lessee having covenanted to insure in the joint names of lessor and lessee
Wyche. assigned his leasehold interest, and the assignee covenanted with him to ob-
serve the covenants in the lease.The assignee did not insure, and the lessee
insured in his own name, and brought an action on the covenant against
the assignee. The jury found in his favour for the amount of the premiums,
and the Court refused to disturb the verdict. They held that, although the
lessee was not entitled to recover specifically an indemnification in respect of
the premiums, he was entitled to more than nominal damages in respect of
the risk which he ran.
(6) Sims V. CaatigKone, [1905] (e) Newman v. Maxwell (1899), 80

W.N. 112. L. T. 681 Williams v. Lassell and
;
(c) Vernon v. Sm/ith (1821), 5 Sharman (1906), 22 T. L. R. 443.

B. & Aid. 1.
(/) Hey V. Wyche {1842), 2 Gr.&V.
{d) And see ante, p. 696. 569.
SUBROGATION 755
Logan V. Hall (1847), 4 C. B. 598

A let to B, who covenanted
to insure, and B sublet to 0, who covenanted Logan v.
to insure in the same terms as the head lease. Neither B norC insured, and HaU.
A brought ejectment against B. It was held in an action by B against C on
the covenant in the sub-lease that B could not recover damages in respect of
the loss of his reversion because that was lost in consequence of B's breach of
the covenant in the head lease, and not directly in consequence of C's breach
of the covenant in the sub-lease.
Leather Cloth Co. v. Bressey (1862), 3 Giff. 474

A, a lessee, covenanted to keep the premises insured in the Alliance or Leather Cloth
such other office as the lessors should appoint. A sublet to B, who cove- ^°*
'^'•
nanted to pay " any sums of money expended on fire insurance." A, thinking
although erroneously, that B was using the premises for a hazardous purpose
insured at a high premium in an office, not the Alliance, and not appointed by
the lessors. It was held that he could only recover from B such sum as he
should have paid in the Alliance for the actual non-hazardous risk.
Unless there is an express term in the lease suspending the pay- Tenant's
ment of rent in the event of the premises being destroyed by fire,
rent^p^^L
the tenant is liable for the rent although the premises are unfit reinstate-
for occupation {g). And this is so even although the tenant is
not bound to repair and the landlord having insured has re-
Qi),
ceived the insurance money and refuses to expend it in reinstate-

ment {%). In such a case, however, if the tenant offered to sur-
render the lease the landlord might in equity be bound either to
accept the surrender or remit the rent (fc). Even if the landlord
has covenanted to repair, the destruction of the premises is no
answer to the landlord's claim for rent (Z), nor is the tenant
entitled to any damages for non-user of the premises during re-
instatement or for unreasonable delay in executing the work (m).
Where there is no demise of the premises but merely an agree-
ment for use and occupation on the impUed or express under-
standing that the agreement shall subsist only so long as the
premises are fit for occupation as in the case of letting furnished
apartments the contract comes to an end if the premises are
(g) Marshall v. Schofield (1882), 52 Sim. 146 ; Loffi v. Dennis (1859), 1

L. J. Q. B. 58 ; Izon v. GoHon (1839), E. & E. 474.
S»^«''v- Holtpzaf- (h) Brown v. QuUter (1764), Amb.
^f^'^fo^^p-fî'
fell (1811), 4 Taunt. 45; Monk v. 620.
Cooper (1121), 2 Strange, 763. (I) Surplice v. Farnsworth (1844), 7
"" ^''"'** (^'^^)' 3 Anstr. M. & Gr. 576 ; Manchester Bonded
bS7; ^7.
«oi^ Bel/our v. Weston (1786), 1 Warehouse Co. v. Carr (1880), 5
T R. 310; Holtzapffel v. Baker C. P. D. 507.
(1811), 18 Ves. 115. (to) Green v. Eales (1841), 2 Q. B.
(i) Leeds v. Cheetham (1827), 1 225.
destroyed by fire (n), and the rent will be apportioned and be

payable up to the date of the fire, but no longer (o).
Where an agreement for a lease is made on condition that the

landlord will execute certain repairs within a specified time, and
a fire prevents the landlord from doing so, the landlord cannot
obtain specific performance of the agreement because he has not
performed the condition precedent and the tenant is therefore
released from his liability {p).
"
A covenant to pay the rent reserved " damage by fire excepted
means that, in case of fire, there shall be an abatement in respect
of the portion of the premises rendered unfit for use and for the
period during which the unfitness lasts (q).
In an agreement for the lease of a mill it was agreed that the

tenant should covenant to repair and that the lease should contain
all usual and necessary covenants. It was held that an exception
of " damage by fire " ought not to be inserted in the covenant
to repair (r).
Subrogation Where the owner of goods is insured the insurers are subrogated
to claims of
to his remedy against carriers, warehousemen, and other bailees
responsible for the safety of the goods (s). Where a common
carriers and
other bailees. carrier or wharfinger is absolutely responsible for the safety of
the goods and is liable for their loss, whether caused by his negli-
gence or otherwise, he is commonly called an insurer of the goods,
but he is an insurer, and is not therefore

not, strictly speaking,
entitled to claim contribution from insurers (<). The insurers who
have paid the owner are entitled to recover the whole loss from
the carrier or wharfinger who is liable to the owner. The owner's
insurers are only deprived of the right of subrogation when they
have in fact insured both owner and bailee (u), or where the owner
has so contracted with the bailee as to deprive himself of the right
of recourse, as where he has contracted that the bailee shall have
the benefit of insurance (a;), or that the bailee shall not be liable
(to) Taylor v. Caldwell (1863), 3 5 Ch. D. 569; Mobile By. Co. v.

B. & S. 826. Jurey (1883), 111 U. S. 584; London
(o) Packer v. Gibhins (1841), 1 and Lancashire Fire v. The Borne Ry-
Q. B. 421. (1894), 144 N. Y. 200; Liverpool,.
(p) Counter w. Macpherson (1845), London and Globe v. McNeill (1898),
5 Moo. P. C. 83. 89 Fed. Rep. 131.
(q) Bennett -v. Ireland (1858), E. B. («) Hall and Long v. Bailroad Go.
6 E. 326. (1871), 13 Wall. 367.
(r) Sharp v. Milligan (1857), 23 (u) Wager v. Providence Insurance
Beav. 419. (1893), 150 U.S. 99.
(s) North British and Mercantile v. (x) Phcenix Co. v. Erie Transporta-
London, Liverpool and Globe (1877), tionCo. (1886), 117 U. S. 812.
SUBROGATION 757
for loss by fire (y), or that he shall not be liable for any loss even
although caused by the negligence of himself or his servants {z).
In America it is held to be against public policy for a common

carrier to contract himself out of liability for negligence (a), but
in English law a carrier as well as any other bailee may within
certain limits contract himself out of liability for negligence if he
does so in express terms. A contract with a bailee on the terms
that he shall not be liable for loss by fire does not exempt him from
liabihty if the fire is caused by the negligence of himself or his
servants (b). If a bailee is to be relieved from liability for negli-
gence, such hability must as a rule be excluded specifically (c).
But where was known that there were two recognised rates of
it
carriage, one involving common law liability and the other on the
terms that the carrier should not be liable for any loss, even although
caused by negligence, a contract on the latter terms was implied
from the fact that the lower rate was charged, and that the owner
insured on a policy expressed to be " without recourse against
lighterman " {d). The owner of goods lost in transit is entitled
to recover from the carrier the value at the place of delivery, and
although the consignor has paid freight in advance and could not
recover it on non- delivery, the owner can recover as the value of
the goods a sum representing cost, freight, and insurance (e).
Where a bailee has contracted to insure for the benefit of the

bailor, so, he is liable in case of loss by fire
but has omitted to do
to pay damages for breach of contract such sum as the owner
as
would have recovered on the policy if it had been effected (/).
Eeinsurers are entitled to be subrogated to all the rights of the Subrogation
original insurers, including the rights of the assured to which the to rights of
insurers.
original insurers are subrogated (</).
Assicurazioni G-enerali v. Empress Assurance, [1907.1 2 K. B. 814

The Empress Assurance gave an open Bowring and Co., Assicurazioni
cover to C. T.
under which the latter could declare interests by certain boats other than vessels w^^^gg
Assurance.
(y) Germanm Fire V. Memphis Ry. McNeill (1898), 89 Fed. Rep. 131;
Co. (1878), 72 N. Y. 90; Savannah Germania Fire v. Memphis Ry. {1818),
Fire v. Pelzer Manufacturing Co. 72 N. Y. 90.
(1894), 60 Fed. Rep. 39. (c) The Xantho (1887), 12 A. C.
(z) Thomas and Co. V. Brown {\89Q), 503, 515.
4 Com. Cas. 186 ; Hartford Fire v. (d) Thomas and Go. v. Brown
Chicago Ry. (1894), 62 Fed. Rep. 904. (1899), 4 Com. Cas. 186.
(a) Liverpool Steam Co. v. Phoenix (e) Dufourcet v. Bishop (1886), 18
(1888), 129 U. S. 397 ; Inman v. Q. B. D. 373.
South Carolina Ry. (1888), 129 U. S. (/) Bateman, Ex parte (1856), 8
128. De G. M. & G. 263.
(6) Liverpool, London & Globe v. {g) Hatch Mansfield v. Weingott
belonging to Martin Taylor. Bowring and Co. put forward two shipments
by Martin Taylor's boats, and these were accepted by the Empress in ignorance
of the fact that the boats were Martin Taylor's. The Empress reinsured
with the plaintiffs to the extent of half their interest in the two shipments.
On the loss of the cargoes the Empress settled the loss and were paid by the
plaintiffs one half in respect of the reinsurance. The Empress subsequently
recovered from Bowring and Co the amount of the loss which they had paid
as damages for the fraudulent misrepresentation of their servant as to the
fact that the shipments were by Martin Taylor's boats. It was held that the
plaintiffs were entitled to recover half of the damages from the Empress
less the reasonable costs incurred by them in recovering the damages from
Bowring and Co.
Subrogation In the case of a guarantee policy where the contract is one of

In guarantee
policies.
insurance and not suretyship, the insurers, on paying the debt to
the insured creditor, are entitled to be subrogated to his claims
against the debtors and sureties, and the insurers and sureties
do not stand in the relation of co-sureties Qi). The result is that

the insurers, instead of being merely entitled to contribution
from the sureties, may recover from them in the name of the
creditor the whole debt (h).
Liability of AVhere a fire is caused by the negligence of any person or his

persons
causing fire
servant, such person is liable for all the natural consequences of
by negli- the fire, however widely it may spread (i). Every person making
gence.
use of dangerous elements, such as fire, gas, and gunpowder owes
a duty to all neighbours and passers-by to use proper care in
handhng them, and therefore, where damage is done through want
of such proper care, the person responsible for the negligence is
liable to indemnify the person who has suffered the damage (fc).
Statutory Statutory power granted to a corporation, such as a railway

powers do
not excuse. company, does not free them from responsibility for the conse-
quence of negligent acts done in the execution of their power (l).
Thus, a railway company may be liable for fire caused by sparks

from their engines if the engines were defective in construction
or negligently used. The question of whether or not there has
been negligence is one of fact. The fact that sparks from an
engine have set fire to property adjoining the line is 'prima facie
(1906), 22 T. L. K. 366 ; The Ocean L. R. 9 Ch. 483 ; Fidelity Co. v. Gas

Wave (1873), 5 Biss. 378. Co. (1892), 150 Pa. 8 ; Crandall v.
(A.) Parr's Bank v. Albert Mines Goodrich (1883), 16 Fed. E«p. 75.
Syndicate (1900), 5 Com. Gas. 116. (k) Parry v. Smith (1879), 4
(i) Tuberville v. Stamp (1697), 1 C. P. D. 325 ; Crook v. Midland Great
Comyn, 32 ; Vaugham v. Menlove Western, [1909] A. C. 229.
(1837), 3 Bing. N. C. 468 ; Filliter v. (I) Radley v. L. cfe N.-W. By.
Phippard (1847), 11 Q. B. 347; (1876), 1 A. C. 755.
Commercial Union v. Lister (1874),
SUBROGATION 759
proof of negligence (m), but not conclusive proof(w). The fact

that thecompany used engines of the usual type and construction
in the ordinary manner and for authorised purposes does not
necessarily negative negligence (n). The use of a higher power
engine of greater efficiency may increase the danger from sparks,
but such use alone is not negligence if the best known and prac-
ticable means available, in engines of the type used, for preventing
the emission of sparks have been employed (o). In a Scottish
case the negligence alleged against a railway company was the
fact that they did not use a contrivance then in common use
called a " spark arrester." There was evidence to show that it
was not suitable modern high-power engines. It reduced their

for
efficiency, and other means alleged to be equally good were
adopted for the prevention of sparks. It was held that the

absence of the " spark arrester " was not conclusive evidence of
negligence (o).
Where fire is caused not by negligence, but by the wilful act Where the
of a third person, the burning is felonious, and the wrongdoer

rmounte is to
liable both to a civil action for damages and to criminal prosecution ^lony.
for the felony (p). The civil right to damages arises on the com-
mission of the offence, but the policy of the law is said not to allow
the person injured to pursue his civil right by action if he has
failed in his duty of bringing or endeavouring to bring the felon to
justice in a criminal court (p). The person injured has a duty to
the State which must not be evaded, and he should perform this
duty before he will be allowed to satisfy his personal claim (p).
At the same time the prosecution of the felon is not a condition
precedent to the civil cause of action, and if the offender has been
brought to justice by some other person, or he if is dead or has
fled from justice and the person injured has done all that can be
reasonably expected of him to satisfy the criminal law he may
pursue his civil remedy (q).
In the case of certain dangerous things the common law Absolute
imposed not only a duty of strict diligence on the persons dealing foXTa™*^
with them, but an absolute duty of insuring the safety of all dangerous
persons who might be injured by their use (r). A liability therefore
(to) Piggot v. The Eastern Counties Ch. D. 667 Midland Insurance

; v.
Ry. (1846), 3 C. B. 229. Smith (1881), 6 Q. B. D. 561.
(n) Aldridge v. O. W. By. (1841), {q) Ball, Ex parte (1879), 10
3 Man. & Gr. 515. Ch. D Midland Insurance
667; v.
Port Glasgow Sailcloth Co. v.
{o) Smith{lS81),eQ.B.'D.561.
Caledonian By. {1892), IQ 11.608. (r) Bylands v. Fletcher (1868),
{p) Ball, Ex parte (1879), 10 L. R. 3 H. L. 330.
attaches in respect of damage done even although the utmost

care has been exercised in the use of the article in question (r).
Where fire is used for driving engines or for purposes of manu-

facture or trade under conditions which involve a substantial
risk to neighbouring property, such fire is undoubtedly a dangerous
element in this sense, and there is an absolute duty upon the
person using it to indemnify neighbouring proprietors against
damage (s). In the case of fire used for ordinary domestic pur-
poses, it may be doubted whether the Common Law did impose
an absolute duty but where fire broke out
of insuring safety
(t) ;
on the premises any person there was a presumption that that

of
person was responsible, and that it was caused by the negligence
of him or his servants (w). The presumption might be rebutted by
proof of inevitable accident, such as impetuous and sudden winds
or earthquake shock, or the act of trespassers, such as burglars,
and apparently, if such cause were proved, these would be a good
defence (u).
Statutory Where a corporation, such as a railway company, has statu-

powers
relieve tory power to use fire for the purposes of its undertaking, such
grantee from authority frees it from the common-law liability of insuring
absolute re-
sponsibility. safety, and it is liable only for negligence (x), but apart from
express statutory power to run locomotive engines a railway
company would be absolutely liable for all damage done by such
engines (y).
Railway Fires By the Eailway Fires Act, 1905 (2), a railway company can no
Act, 1905.
longer plead its statutory powers as a defence to an action for
damage done by sparks from locomotive engines to agricultural
land or agricultural crops where the claim does not exceed £100.
As regards claims under that amount the company is placed on
the same footing as if the engines were run without statutory
powers (a), that is to say, there is absolute liability for damage
without proof of negligence, provided notice of claim is given
within seven days, and particulars of damage within fourteen
(r) Rylands v. Fletcher (1868), Central Ry. v. Weallans (1894), 24
L. R. 3 H. L. 330. Can. S. 0. 309.
{s) Jones V. Festiniog Ry. (1868), Jones v. Festiniog Ry. (1868),
(y)
L. R. 3 Q. B. 733 ; Furlong v. Carroll
' L. R. 3 Q. B. 733 Weallans v. ;
(1881), 7 Ont. A. R. 145. Canada Southern (1894), 21 Ont.

(t) Canterbury v. A.-G. (1842), 1 A. R. 297 reversed 24 Can. S. C. 309.
;
Phillip, 306, and authorities there (2) 5 Edw. 7, c. 11 ; see similar

cited. provison in Canada, 3 Edw. 7, c. 58,
(m) Tuberville v. Stamp (1697), 1 s. 239, considered in Blue and Des-
Comyn, 32. champs v. Red Mountain Ru., [1909] ^
(x) Hammersmith Ry. v. Brand A. C. 361. "
1868), L. R. 4 H. L. 171 ;
(a) Sec. 1.
SUBROGATION 761
days of the occurrence of the damage (&). When damage is
caused by an engine used by one company on a Une worked by

another, the party injured may proceed against either company,
but company working the Hne pays the damage the company
if the
using the engine is bound to indemnify it (c). A railway company
has under this Act power to enter upon any land for the purpose
of extinguishing any fire caused by sparks, and is Hable for damage
done by the exercise of this power, such damage to be settled in
manner provided by the Lands Clauses Consolidation Act, 1845 (d).
In 1707 an Act for the better preventing of mischiefs that may Liability of
happen by fire provided that no action should be brought against °ooi'dental°'^

any person in whose house or chamber any fire should accidentally fires, 14 Geo.
'
begin (e), and in 1774, this provision was incorporated in the 8(3.
London Building Act of that year, and the immunity extended

to any person in whose house, chamber, stable, or bam, other
building, or on whose estate any fire shall accidentally begin (/).
This provision applies to the whole of England, and not merely
to the metropolis (g). It does not apply to Ireland, and in the
opinion of Lord Watson it does not apply to Scotland The (h).
effect of the provision in England is to modify the common-law

liability of the person upon whose property a fire arises. Where
before he might have been absolutely liable as the keeper of a
dangerous thing, he is now only liable for negligence, and in no
case is negligence presumed ; some special act of negligence
on the part of himself or his servant must be averred and
proved before he can be rendered liable. Sir William Blackstone,
in his Commentaries, expressed an opinion that the statute
exempted the owner of property from liability even where
the fire was caused by his own negligence (i). The statute can
certainly be construed in that sense, since " accidentally " may,
as in an accident poKcy, include incidents directly caused by the
negligence of the party in whose favour the provision is made.
The point has never been definitely decided. In Canterbury v.
A.-G. (k) it was considered by Lord Lyndhurst, who expressed no
decided opinion either way, and in Filliter v. Phippard (l) it was
argued before the Court of Queen's Bench, who expressed a strong
(6) Sec. 3. (g) Richards v. Easto (1846), 15

(c) Sec. 1 (2). M. & W. 244, 251. See ante,^. 696.
U\ 9
Sftp i. (^) Weatminater Fire v. Olaagow
\u,, oeo.
Provident (1888), 13 A. C. 699, 716.
(e) 6 Anne, c. 31, s. 6, made per- (^) i gla. Com. 431.
petual by 10 Anne, c. 14, s. 1.
(^.) (1842), 1 Phillip, 306.
(/) 14 Geo. 3, 0. 78, s. 86. (l) (1847), 11 Q. B. 347.
opinion that the statute did not free the owner of property from
liabiKty for his own or his servant's negligence. Although the
case before them was one where the fire had been caused by the
wilful act of the owner, and the opinion of the Court was therefore
obiter, it has now stood so long without contradiction that it may
probably be safely accepted as rendering the true construction of
the statute.
Liabaity for
[f]jg community being collectively responsible for the keeping
by riot. of the peace, the city, town, or hundred were at an early date
rendered liable to the individual for damage done by any riotous
assembly of the people. This hability was defined in the Eiot
Act, 1714 That Act applied to England and Scotland, and
(ot).
gave compensation for damage done to places of worship, houses,

barns, and outhouses by
and riotous acts. This
felonious
provision for compensation was extended by a series of acts in
the reign of George 3, so as to include damage to other kinds of
property not specified in the Act of 1714. Thus, in 1801, damage
to wind and water mills (n), in 1811, to trade buildings and
machinery (o), in 1815, to colliery plant (p), and in 1816, damage
to all buildings and all furniture goods and commodities therein (g)
were provided for. These statutes gave compensation only for
damage caused by acts which were felonious as well as riotous (r),
and where the intention of the rioters was to wholly destroy and not
merely to damage the property attacked (s). They gave com-
pensation in respect of property damaged or destroyed, but not
in respect of property which had been stolen (i), and there was no
provision whereby insurers who had paid an indemnity on an
insurance policy might recover compensation otherwise than in
the name of their assured (u).
Riot (Dam- In 1827 (x) all the above-mentioned Acts were repealed in so
lise.
'
f^-r a-s they related to compensation for damage done by riot in
England, and they were replaced by a consolidating Act of that year

which was amended by an act of 1832 and finally, these last-
(y),
mentioned acts were repealed and replaced by the Eiot (Damages)

Act, 1886 (z), which now contains the whole law of compensation
(m) 1 Geo. 1, c. 22, s. 7. (t) Smith v. BoUon (1816), Holt,

(w) 41 Geo 3, c. 24. 201.
(o) 52 Geo. 3, o. 130. (u) London Assurance v. Sainsbury
{p) 56 Geo. 3, o. 125. (1783), 3 Dougl. 246.
(?) 57 Geo. 3, c. 19, s. 38. (a;) 7 & 8 Geo. 4, c. 31.
(r) iJe»dv.CTor-fce(1798),7T.R.496. ()/) 2 & 3 Will. 4, c. 72.
(a) Drake v. Footitt (1881), 7 (z) 49 & 50 Vict. o. 38.
Q. B. D. 201.
;
SUBROGATION 763
for riot as far asEngland is concerned. This Act applies to all

buildings and the property therein and to all trade, agricultural
and mining machinery, and gives compensation in respect of all
property stolen or destroyed by any persons riotously and
tumultuously assembled together (a). Compensation is payable
by the police authority of the district as indicated in the schedule
to the Act,and the police authority are empowered to raise the
money on the police rate (b). Where a person injured is insured,
and has been paid compensation by his insurers, the Act shifts
the right to compensation pro tanto to the insurers, so that they to
the extent to which they have indemnified their assured may
proceed against the police authority in their own name (c).
A wall may be a building within the meaning of the Act (d). Essential
The act causing the damage need not now be felonious, but it
^ ^^
must be caused by a riotous assembly (d). There are five
necessary elements of a riot : (1) number of persons, three at least
(2) common purpose ; (3) execution or inception of the common

purpose ; (4) an intent to help one another by force if necessary,
against any person who may oppose them in the execution of their
common purpose ; (5) force or violence not merely used in demolish-
ing, but displayed in such a manner as to alarm at least one person
of reasonable firmness and courage. Thus, in the following
circumstances there was held to be no riot. Seven or eight
youths of ages from fourteen to eighteen were collected upon a
pavement, shouting and using rough language, some of them
standing with their backs against a wall, others running against
them or against the wall with their hands extended, and after they
had gone backwards and forwards in this way for about a quarter
of an hour the wall fell with a " splash." As soon as the wall fell
the caretaker of the premises came out into the street and the
youths cleared off in different directions.The Court held that
there was no evidence of elements 4 and 5 above mentioned, and
therefore the damage was not one for which the owner of the
premises could recover against the police authority under the
Riot (Damages) Act (e).
Compensation for riot in Scotland still depends upon the Compensa-

tion for not
earlier statutes which were repealed as to England m 1 827.
.
Except in Scotland.
(a) Ss. 2, 6. politan Police, [1907] 2 K. B.

(6) S. 4. 853.
(c) S. 3. (e) Field v. Receiver of Metro-
id) Field V. Receiver of Metro- politan Police, [1907] 2 K. B. 853.
764 FIRE INSURANCE
the statute relating to wind and water mills which has been
repealed as being superfluous (/), these statutes are still in force
in Scotland {g). The right therefore in Scotland is still subject
to the same defectsand limitations which existed in England
before 1827. The right is enforceable by action against the town
clerk of the city or burgh, or the clerk of supply of the county,
or stewartry as the case may lê (/i). If less than £20 damage is
concluded for the action is to be brought in the Sheriff Court (i).
Action must be commenced within one calendar month, and on

judgment being obtained the final decree is to be extracted and
lodged with the clerk who shall convene the magistrates, or the
commissioners of supply as the case may be, who shall make an
assessment to be paid out of the Burgh General Assessment or
the County General Assessment (fe).
Compensa- In Ireland compensation may be obtained for any maUcious

tion for
malicious injury to property of any description, whether real or personal,
injury to provided the party aggrieved is examined on oath before a Justice
property in
Ireland. of the Peace within three days, and within six days a notice in
writing is served on the High Constable of the Barony and the

Churchwardens of the Parish, or at the nearest police station (Z).
The claim is preferred against the County Council, and proceedings

are brought in the County Court (m). The compensation money
is raised by means of the poor rate as a separate item thereof (m).
Section VIII. — Third Party Claims
The right of action upon fire, accident, and all similar policies is
assignable in equity so as to enable the assignee to sue in the

name of the assured, and, under the Judicature Act, so as to enable
the assignee to sue in his own name (o). When it is said that
fire policies are not assignable, that only means that if the assured
parts with his interest in the property he cannot assign the policy
to the purchaser so as to give him the right of claiming an indemnity
(/) S. L. R. 50 & 51 Vict. c. 59. 11 & 12 Viot.-c. 69; 16 & 17 Vict.

(gr) That is 1 Geo. 1, c. 22, s. 7 ; c. 38.
52 Geo. 3, c. 130 ; 56 Geo. 3, c. 125. (m) Local Government (Ireland)
{h) 3 Geo. 4, c. 33. Act, 1898, s. 5.
(i) 7 Will. 4 and
1 Vict. ^. 41, (n) Local Government (Ireland)
s. 22 ; 7 Edw. 51, h. 42.
7, o. Act, 1898, s. 56.
(fc) 31 &
32 Vict. c. 82, s. 3 ; (o) McPhilKps V. London Mutual
55 & 56 Vict. c. 55, s. 341. (1896), 23 Ont. A. R. 524.
[1) 6 &1 Will. 4,0. 116, s. 135;
THIED PAETY CLAIMS 765
from the company. But that would be more than assigning

the chose in action, would be creating an entirely new right and
it
an entirely new liability. The policy promises to indemnify

A against loss by fire. He can assign his right of action against
the company to B, so that if A suffers a loss B may recover in
respect of it, but he cannot, without the company's consent, convert
their promise to indemnify A into a promise to indemnify B,
because that would not be an assignment, but an attempted
novation. And even although the promise is to pay the executors,
administrators, and assigns of A, that does not mean that the
company will indemnify an assignee upon a loss suffered by him,
but only that they will pay the indemnity due to A upon his own
loss to an assignee if A has assigned the chose in action (p). The
contract of fire insurance is prima facie one of purely personal
indemnity, and if all interest, both legal and equitable, has

passed from the assured himself, neither he nor the person who has
acquired the interest can sue upon the policy.
Ecclesiastical Commissioners v. The Royal £!xcliange (1895),

11 T. L. R. 476
The Dean and Chapter of Canterbury insured certain farm buildings in Ecclesiastical
the Royal Exchange Ofifice. On August 17, 1894, an Order in Council was Commis-
pubUshed ratifying a scheme under 31 & 32 Vict. c. 114, by which Order the
^^"j^^'^^J^'î
land and farm buildings in question were transferred to the Ecclesiastical Exchange,.
Commissioners. On August 19, the premises were destroyed by fire, and it
was held that neither the Dean and Chapter nor the Commissioners could
recover on the policy.
Unless the policy expressly or impliedly promises to indemnify personal

them yfpresenta-
as well as the assured himself it is not available even in the
tives and
hands of persons to whom the property has passed by operation trustee in
°^'
of law on death or bankruptcy. Thus, in Mildmay v. Folgham (r) ^° "^
it was held that where the promise was to pay the assured, his
executors, administrators, and assigns, the heir at law of the assured
to whom the premises had passed on his death could not recover
in respect of a fire happening after the death (s).
But the conditions of a fire policy are now usually framed so

as to make the policy available to indemnify the assured, and all
{p) Sadlers Co. v. Badcock (1743), the name of a receiver thus, " E. S. K.
2 Alk. 554 ; Lynch v. Dalzell (1729), receiver for H. and H.," was held to
4 Bro. P. C. 431. be available to hia successor in the
{r) (1797), 3 Ves. 471. receivership {Steel v. Phcenix Insur-
(«) In America a policy effected in ance (1892), 51 Fed. Rep. 715).
;
766 FIRE INSURANCE
persons to whom the property may pass by his will or by operation

of law. It will thus be available in the hands of a trustee in bank-
ruptcy or the executors or administrators of the assured (i). Under
the Land Transfer Act, 1897 (u), real property as well as personal
now devolves upon a deceased person's executors or administrators,
and is available in their hands to pay his creditors, and the heir
or devisee can obtain a legal title only by deed of conveyance from,
or assent by, them. The heir or devisee has, however, the equit-
able title which passes to him on death, subject to the claim of
the executor or administrator for the benefit of creditors, and the

equitable title would no doubt be sufficient to entitle him to
recover as the person to whom the property had passed by will
or operation of law.
Condition in A fire policy usually provides that it shall be available in the
favour of
purchaser. hands of purchasers or incumbrancers if notice of the new interest
is given to and accepted by the company. The notice and accept-
ance amounts to a new contract to indemnify the purchaser or
incumbrancer upon his own interest.
Assignment A marine policy differs from a fire policy in that it is assignable
of marine
policies. unless it contains terms expressly prohibiting assignment {x),
but in order to make the policy available to indemnify a person to

whom the interest in the property has passed, the assured must
at or before the time of parting with the interest have agreed to
assign the policy to the purchaser (y), and no agreement to assign
is implied from the mere sale of the interest in the property
insured (z).
Assured's It has already been stated that a fire, burglary, or other similar
right to
recover for
policy is not necessarily a contract of mere indemnity, and there-
benefit of fore the insurance may be effected in such terms as to enable the
others.
assured to recover for the benefit of the person who has really
suffered the loss, although such person is not a party to the insur-
ance. The assured may also have insured not only on his own
interest and his own behalf, but on the interest and behalf of
others, and he or the persons for whom he has insured may thus
recover more than the loss of the nominal assured. This subject
has already been discussed under the head of insurable interest (a).
{t) See Pitt V. Laming (1814), 4 Powlea V. Innea (1843), 11 M. & W.

Camp. 73. 10.
(m) 60 & 61 Vict. c. 65, s. 1. (z) Marine Insurance Act, s. 15
(x) Marine Insurance Act, 1906, North of England Oil Cake Co. v.
6 Edw. 7, c. 41, B. 50. Archangel (1875), L. R. 10 Q. B. 249.
(y) Marine Insurance Act, s. 51 j (a) Supra, p. 150.
THIRD PAETY CLAIMS 767
Prima facie the purchaser of real property is not entitled to Vendor and
^^"^^ ^^'^^'
the benefit of any insurance effected by the vendor on the pro-
perty (6).
Although the legal estate does not pass until there has been
a formal conveyance, yet in equity the purchaser of real property
isthe owner from the time a binding contract is made between
him and the vendor (c). The consequence is that the purchaser
'prima Jacie takes the benefit of any increase and bears the burden
of any decrease in the value of the premises happening between
the date of the contract and the date of completion (c). Thus,
unless there are any special terms to the contrary, the purchaser
of a building which is destroyed or damaged by fire before the
date of completion is not entitled to withdraw from the bargain
or to deduct anything from the purchase price on that account.
If the vendor has agreed to do anything to the premises in the
way of alteration or repair before completion, that places the risk
of fire upon him until the work has been done {d), but in the
ordinary case the purchaser takes all risk.
Rayner v. Preston (1881), 18 Ch. D. 1
R purchased from P a workshop which had been insured by P against fire. Bayner v.
Between the date of the contract and the date of completion a fire took place Preston.
and the property was damaged. The loss was paid to P, and R claimed the
benefit of it. The Court of Appeal held that he was not entitled to any benefit
from and based their decision on the following grounds: (1) The contract
it,
for the purchase of real property passed the benefit of contracts necessarily
connected with the use and enjojrment of the property but not of collateral
contracts. A contract to reinstate the buildings might be so connected, but
a contract to pay an indemnity was not. Here the only liability of the company
was to pay the money, and there was no liability to rebuild, although the
company might elect to do so. (2) The vendor could not be considered as
a trustee for the purchaser in respect of the insurance. He was only a trustee
in respect of the actual subject matter of the contract ; he was not a trustee
even of the rents accruing before the time for completion. (3) The statute
14 Geo. 3, c. 78, may have given R a right to insist on the company rebuilding,
but it gave him no right to claim the purchase money from P after it was paid
over. Even if R was induced to refrain from
(4) insisting on his rights under
the statute by a misrepresentation on a point of law by P's solicitors he
could have no claim on that ground against P, since he was not entitled to
rely upon what was merely a statement of opinion.
The vendor of property is not bound to insure pending com- When vendor
is bound to
(6) Paine Mellor (1801), 6 Ves.
v. Dawson
(c) v. Solomon (1839), 1 insure.
Dr. & Sm. 1.
349; Poole v. Adams (1864), 33
{d) Ooimter v. Macpherson (1845),
L. J. Ch. 639.
6 Moo. P. C. 83.
768 FIRE INSUEANCE
pletion unless he has contracted to do so (e). But since the vendor

contracts to give the purchaser a good title he must keep up the
insurance if the title depends upon it (/). Thus, where the pro-
perty is leasehold subject to forfeiture for breach of the covenant
to insure, the vendor must insure up to the day fixed for corn-
Sale of lease- pletion (/). A single day's non-insurance will incur forfeiture,
^"'f^rf ^Pi^''*
and although the lessor has not taken advantage of it he may do
so if he has not waived the forfeiture (g). Non-insurance is a
continuing breach, and therefore acceptance of rent or other
waiver of the breach is only a waiver as to the past and not as to
the future. By the Conveyancing Act, 1881 {h), section 3 (4) and
(5), the purchaser of a leasehold shall, on the production of the
receipt for the last payment due for rent under the lease, assume,
unless the contrary appears, that all the covenants and provisions
of the lease have been duly performed and observed up to the date
of actual completion. Production of the receipt is therefore
prima facie evidence that the covenants have been performed,
but if the purchaser has knowledge of a breach that has not been
waived he may decline to accept the title (i). Sometimes it is
an express condition of the sale that possession under the lease shall
be deemed conclusive evidence of the due performance or sufficient
waiver of the covenants up to the date of completion, but such

a condition only operates up to the date of the contract, and if a
breach incurring liability to forfeiture is committed or continued
after that date the purchaser may object to the title (k). Under
the Conveyancing Act, 1881, section 14, a lessor cannot now enforce
a forfeiture for breach of any covenant, except the covenant to
pay rent, until after service of a notice, and a demand that the
breach be remedied and compensation made, and a reasonable
time has elapsed without the notice being complied with. And
in any action for forfeiture the Court may give relief on such terms
as it thinks fit. But although the effect of a breach of covenant
involving forfeiture has thus been greatly mitigated, the vendor
(e) Paine v. Mellor (1801), 6 Ves. against forfeiture for breach of the
349. covenant to insure provided there
(/) Palmer v. Gorm (1856), 25 was an insurance on foot at the time
L. J. Ch. 841 Dowson v. Solomon
; of completion and he had obtained
(1839), 1 Dr. & Sm. 1. the receipt for the last rent due.
(g) Wilson v. Wilson (1854), 14 This is now repealed by the Con-
C. B. 616. veyancing Act, 1881, under which
[h) 44 & 45 Vict. c. 41. the purchaser gets only the same
(i) Lord
St. Leonards' Act, 1859 right to relief as any other lessee.
(22 &
23 Vict. c. 35, s. 7), protected a (fc) Houiell v. Kightley (1856), 21
bond, fide purchaser of a leasehold Beav. 331.
THIRD PARTY CLAIMS 769
of a leasehold is still bound to give a title which cannot be

defeated, and therefore if there has been a breach of the covenant
to insure which at the date fixed for completion has not been
waived or compensated, the purchaser may undoubtedly refuse
the title. If the purchase is not completed on or before the day
fixed, the vendor is not bound to insure up to the actual date of
completion unless the delay was solely due to his default ; but
he ought to inform the purchaser when the insurance expires so
as to give him the opportunity of insuring on his own account.
The vendor of a leasehold having insured in pursuance of the
covenant to insure is no doubt bound to do all that he can to
give the purchaser the benefit of the insurance money, since it
is paid under a contract necessarily connected with the use and

enjoyment of the property sold. Thus, if the insurance were
in the joint names of the vendor and his lessor, it would be the
vendor's duty not to sign the receipt for the insurance money
without obtaining from the lessor reasonable security that it
would be expended in reinstatement for the benefit of his

purchaser.
Where a lessee has an option to purchase the premises and the Lessee with
buildings are insured under the lease in the joint names of the purchase,
parties, the lessee on exercising the option is entitled to the full
benefit of the insurance.
Reynard v. Arnold (1875), L. E. 10 Ch. 386

A let premises to R with an option to purchase within a certain time at Reynard v.
£800. R covenanted to insure the premises in their joint names for £800, the -'^''""o^-
policy moneys to be applied towards reinstatement. R insured accordingly

in their joint names for £1080. A without R's knowledge insured in another
company in his own name for £600. Damage by fire occurred to the amount
of £600, and the two offices apportioned the loss, A's insurers paying £220 4«.
and the other insurers being ready to pay £379 16s. R then gave notice to
exercise his option, and demanded that all the policy moneys should be
applied in part payment of the price. A insisted that the whole moneys
should be applied in reinstatement, and gave notice to the insurers accord-
ingly. R took proceedings, and it was held that he was entitled to a declara-
tion that all the policy moneys belonged to him absolutely, without any obliga-
tion to expend them in rebuilding. On exercising the option he was entitled
to the full benefit of the joint policy, but that had become to a great extent
unproduetve in consequence of the existence of the other policy of which he
had no notice. He therefore had a right to say that A must q,ccount for what
he received under that other policy.
l-Ij. 49
770 FIRE INSURANCE
Edwards v. West (1878), 7 Ch. D. 858
Edwards v. A let premises to B

term of years, with an option to purchase for
for a
West. £15,200 on or before a certain date. A covenanted to insure the premises
for £14,000, and if damage should be done less in extent than £4000 should
apply the money in reinstating the premises, but if greater damage than £4000
should be done the lease and obligations thereunder should terminate. The
premises were almost completely destroyed by fire, and the company paid to
A £12,000 in respect of the damage. B then elected to purchase, and claimed
that the £12,000 should be treated as part of the purchase money. The Court
held that B had no claim to the benefit of the insurance money. The exercise
of the option did not make the lessor a trustee for the lessee from the date
and the only contract in respect of the insurance was to reinstate
of the lease,
if the damage was less than £4000. Otherwise the lessee was not entitled to
any benefit from the policy.
Purchaser's Whether apart from any contractual right to the benefit of

right under
14 Geo. 3,
the vendor's pohcy a purchaser has any right to call upon the
0. 78, sec. 83. vendor's insurers under 14 Geo. 3, c. 78, s. 83, to apply the
insurance money in reinstatement has already been discussed,
the author's conclusion being that the purchaser has that right
unless it is contrary to the express terms of the contract, as where
the conditions of sale provide that the purchaser shall take all
risks, or, as in the case of Edwards v. West (T), where there is an

express covenant by the vendor to give the purchaser the benefit
of his insurance in certain specified circumstances with the
necessary implication that he is not to have the benefit of it in
other circumstances (m).

Purchaser's When a purchaser insures he insures frvmCi facie entirely for
insurance.
his own benefit, and at his own cost, and if the sale is afterwards
set aside the vendor cannot claim the benefit of the insurance,
nor can the purchaser charge the vendor with the premiums.
Fry V. Lane (1888), 40 Ch. D. 312
Fry V. Lane. The purchaser of a contingent reversionary interest insured the vendor's
lifeto provide against the failure of the contingency. The sale was set aside
on the ground of unfair dealing, and it was held that the purchaser was not
entitled to charge the premiums on accounting with the vendor.
Foster v. Roberts (1861), 7 Jur. N". S. 400

Foster v. ^ ^^s entitled to a vested reversionary interest in a trust fund of £1000.
Roberts. He obtained a loan of £300 from an insurance company, and to secure the re-
payment he effected in the same oifice policies on his life for £600, and mort-
gaged the policies, and the reversionary interest to the company. B bought
{I) (1878), L.'R. 10 Ch, 386. (m) Vide supra, p. 702,

the reversionary interest for £370, that is on payment of £70 to he took an A

assignment of the policies and the reversionary interest subject to the com-
pany's mortgage. B paid the premiums on the policies during the life of A.
A died, and subsequently the reversion fell into possession. A's widow
brought an action against B to have the sale of the reversion set aside on
the ground of inadequate consideration, and for a declaration that B should
hold it and the policies merely as security for the sums paid by him. The
Court set aside the sale and held that the widow was entitled to the reversion
less the sums paid by B but that B was entitled to the policies as he had
;
voluntarily paid the premiums and taken the risk.
The buyer of goods is not entitled to claim from the seller the Buyer and
benefit of the seller's insurance unless the seller has contracted to g^^^^g"
give the buyer such benefit.
Martineau v. Kitching (1872), L. E. 7 Q. B. 426

Sugar refiners sold an entire filling at a provisional price to be paid in a Martineau v.
month, and the sugar to be two months at the seller's risk, the buyer to receive Kitching.
the sugar as required, when it would be weighed, and the actual price ascer-
tained. The sellers had floating policies covering goods, inter alia, " sold and
paid for but not removed." A fire occurred after the two months had expired
and destroyed some of the sugar which had not yet been removed or weighed.
The sellers recovered on their policy, but not sufficient to cover the loss on their
own goods. The buyers claimed that the sellers were bound to apply the
policy moneys so as to indemnify the buyers or otherwise to make good to them
the loss of the sugar. The Court held that they were not entitled to any
relief, and (1) that the property in the sugar had passed to the buyers, and
that it was no longer at seller's risk (2) that there was no obligation to insure
;
on behalf of the buyers { 3 ) that the insurance was effected by the sellers to cover
;
their own risk only. The Court expressed a doubt as to whether if the sellers
had insured expressly on goods for which they were not responsible they
would have been bound to hand over the proceeds to the buyers. Cockburn,
C. J., said, " Now, supposing that the vendors are not under an agreement, and
no consideration is given to keep up an insurance on these goods, and that they
had effected an insurance which covered the goods at the time of the loss,
would they be bound to hand over the proceeds to the party whose goods they
had insured ? I doubt it extremely, but it is not necessary to decide it. No
doubt if they had received an amount covering the goods they would have
received it, or at all events would have kept it, wrongfully as against some one,
but in my view the wrongful detention of any of the moneys so received
would be as against the insurance company, because it is perfectly clear that
the contract of insurance against loss by fire is a contract of indemnity."
But when sellers have contracted with the buyers to insure if seller Con-
or to give the buyers the benefit of existing insurances the buyers *'^^"*^ *°
are entitled to the whole of the policy moneys recovered in respect

of the goods sold, and the sellers are not entitled as against the
772 FIEE INSURANCE
buyers to any surplus over the contract price or the actual value
of the goods.
Landauer v. Asser, [1905] 2 K. B. 184
Landauer v. Goods were sold on a c.i.f. contract " insurance 5 per cent, over net invoice
Asser.
amount." The sellers insured for more than that amount, and delivered
the policy to the buyers with the shipping documents. Upon a loss happening
the underwriters paid the whole amount insured. It was held that the buyers
were entitled to the whole moneys, and were not trustees for the sellers for
the difference between their actual loss and the amount recovered.
Ralli V. Universal Marine (1862), 31 L. J. Ch. 313
Ralli V. A policy was effected by the owners upon a cargo of wheat, valued at £7000.
Universal
Afterwards the market fell, and they sold it for £5358, including all shipping
Marine.
documents, freight, and insurance. The buyers were held entitled to the
whole £7000 paid by the underwriters in respect of a total loss.
Where the assured made a gift of certain personal property,

which he had insured, and undertook to hold the policy in trust
for the donee, it was held that if the insurers paid a loss to the
assured the donee could recover the moneys from him or his
personal representative (11).
Mortgagor Formerly, in the absence of covenant a mortgagee was not

and
mortgagee. entitled to insure the mortgaged premises and charge the premiums
in account against the mortgagor (m). Any insurance therefore
which he effected was at his own cost and for his own benefit.
If the mortgagor covenanted to insure and failed to do so the

mortgagee had probably the right to insure at the mortgagor's
expense, in which case he could charge the cost in account with
the mortgagee and would hold the proceeds subject to the mortgage
debt for the mortgagor's benefit. But unless the mortgage deed
gave the mortgagee express power to insure and" add the cost of
insurance to the mortgage debt he could not tack it so as to obtain
priority over subsequent mortgagees {n). Where there was
and add the cost of insurance to the mort-
express power to insure
gage debt the mortgagee was not entitled to charge premiums
for insurance unless he did in fact insure (o). And where an
insurance company, being mortgagees and having express power
(11) Payne v. Payne (1908), The (n) Brook v. Stone (1865), 13 W. R.

Times, Nov. 5. 401.
(m) Ddbson v. Laud (1850), 8 (o)Lawley v. Hooper (1745), 3
Hun. 216 ; Bellamy v. BricJcenden Atk. 278 Hutchinson v. Wilson
;
(1861), 2 John&H. 137, (1794), 4 Br, C, C, 488,

: :
THIRD I'AIITY CLAIMS 773
to insure and charge the premiums on their security, went through

the form of insuring in their own office, it was held they were not
entitled to charge such premiums (j>).
By the Conveyancing Act, 1881 {q), where a mortgage is made Conveyano-
by deed, the mortgagee has power at any time after the date of
"ec. 19;'
the mortgage and keep insured against or damage statutory

" ° deed to insure 1 o loss o power to
by lire any building or any effects or property of an msurable insure.
nature, whether affixed to the freehold or not, being or forming
part of the mortgaged property, and the premiums paid for any
such insurance shall be a charge on the mortgaged property in
addition to the mortgage money and with the same priority, and
with interest at the same rate as the mortgage money.
The amount of an insurance effected by a mortgagee under
the power conferred by the Conveyancing Act, shall not exceed
the amount specified in the mortgage deed or if no amount is
therein specified then shall not exceed two thirds of the amount
that would be required in case of total destruction to restore the
property insured (r).
The mortgagee has no power under the Act to effect an insurance

in any of the following cases (namely) (s) : —
(i) Where there is a declaration in the mortgage deed that no
insurance is required
(ii) Where an insurance is kept up by or on behalf of the
mortgagor in accordance with the mortgage deed
Where the mortgage deed contains no stipulation respect-
(iii)
ing insurance, and an insurance is kept up by or on behalf of

the mortgagor to the amount in which the mortgagee is by the
Act authorised to insure.
Apart from statute the mortgagee is not frimd facie entitled to Benefit of
the benefit of an insurance effected on the property by the mort- "gura*^*"^'^
gagor (<). And "even where a mortgagor of chattels covenanted to
insure and did so in his own name, it was held that the mortgagee
had no claim to the insurance moneys as against the mortgagor's
trustee in bankruptcy
(u). In order to entitle the mortgagee
to any claim on the policy there must be a covenant not only to
insure but to insure for the benefit of the mortgagee or to apply
the poHcy moneys in reinstatement or otherwise for the benefit
{p} Grey v. Ellison (1856), 1 Giff. {«) 44 & 45 Vict. c. 41, s. 23 (2).
438 ; but see Fitzwilliam v. Price (t) Farmers' Loan Co. v. Penn
(1858), 4 Jur. (N. S.) 889. (1900), 103 Fed. Rep. 132.
(?) 44 & 45 Vict. 0. 41, s. 19(l)ii. {u) Lees v. Whiteley (1866), L. R.
(r) 44 & 45 Vict. c. 41, s. 23 (1). 2 Eq. 143.
774 FIRE INSURANCE
of the mortgagee (x). In the case, however, of a mortgage of
leaseholds where the mortgagor has insured in pursuance of his

covenant in the lease the mortgagor is bound to keep up the
insurance in order to preserve the leasehold from forfeiture and
the mortgagee is apparently entitled to the benefit of such
insurance (y).
Benefit of Similarly apart from statute the mortgagor cannot claim
mortgagee's
insurance. the benefit of a policy effected by the mortgagee unless it has
been effected on behalf of both mortgagor and mortgagee, or the
mortgagee has covenanted to apply the policy moneys in re-
instatement or in extinction of the debt or otherwise for the
benefit of the mortgagor {z). If the security is in the form of
a conveyance to the creditor in trust to pay himself and hold
the balance in trust for the debtor, the creditor is then in the
position of any other trustee and bound not to take advantage
of the trust for his own benefit except is no far as he may be a
beneficiary under the trust, and therefore if he insures he must
apply the insurance money to the trust (a).
Conveyancing By the Conveyancing Act, 1881 {b), all money received on an

Act, 1881,
sec. 23 insurance effected under the mortgage deed or under the Act shall,
(3).
if the mortgagee so requires, be applied by the mortgagor in making
good theloss or damage in respect of which the money is received,
and without prejudice to any obligation to the contrary imposed

by law or by special contract a mortgagee may require that all
money received on an insurance be applied in or towards discharge
of the money due under the mortgage.
What insur- The third sub-section of section 23 of the Conveyancing Act,
ances are
within the which gives the mortgagee power to enforce reinstatement, is
section. limited to insurances effected under the mortgage deed or under
the Act. There is some doubt as to what is the meaning of a
(x) But see Wheeler v. Insurance satisfied his debt out of the mort-
Co. (1879), 101 U. S. 439. gaged estate. In an action brought
((/) Garden v. Ingram (1852), 23 in the joint names of mortgagor and
L. J. Ch. 478. mortgagee, it was held that the
(z) On the same principle by which plaintiffs were entitled to recover for
a creditor who insures his debtor's the benefit of the mortgagor. Ap-
life is, apart from agreement, en- parently the ground of the decision
titled to the policy absolutely. In was that the mortgagee's- insurance
an Irish case {Kenny v. Employers' was not merely a personal indemnity,
Liability Assurance, [1901] 1 Jr. R. but an insurance intended to cover
301) the mortgagee having appointed the interests of mortgagor and
a, receiver in pursuance of his powers mortgagee.
under the Conveyancing Act, 1881, (a) Andrews, Ex parte (1816), 2
insured, in his own name only, the Rose, 410.
fidelity of the receiver. The receiver (6) 44 & 45 Vict. c. 41, s. 23 (3), (4).
made default, and the mortgagee
,
mortgage effected " under this Act." If there is no provision for
insurance in the deed, but the mortgagor has insured in a sum

exceeding two-thirds of the value, the mortgagee has no power
under the Act to insure and it is difficult to resist the conclusion
that the intention of the Legislature was that the mortgagee
should have the benefit of the mortgagor's insurance, and that
it is an insurance " under this Act." In the fourth sub-section
of section 23, where the mortgagee is given power to require
money received on a policy to be applied in discharge of the debt,
the enactment is applied generally to all money received " on an

insurance." some limitation must be implied as otherwise
Clearly
the words of the sub-section would apply to an insurance effected
by the mortgagor on his life or by some stranger with a separate
interest on the property. It is conceived that the limitation
from sub-section 3 must be read into sub-section 4. It is sub-
mitted therefore that both sub-sections are limited to insurances

effected on the mortgaged property under the provisions of the
mortgage deed or " under this Act," and that the latter expression
includes any policy kept up by or on behalf of the mortgagor if
the amount of the insurance is at least two-thirds of the value

of the property. In this connexion it should be remembered
that under Lord St. Leonards' Act, 1859 (c), a person entitled to
the benefit of a covenant to insure of a mortgagor was
on the part
entitled to the benefit of any subsisting insurance not effected in
terms of the covenant. This is now repealed by the Conveyancing
Act, 1881, and the Court would not readily hold that the mortgagee
has under the Conveyancing Act less right to the mortgagor's
insurances than he had under Lord St. Leonards' Act.
The right of the mortgagee to demand that the insurance Meaning of
money shall be applied towards discharge of the mortgage debt preVdioe to
is any statutory or contractual rights which the mort- any obliga-
subject to
tion to the
gagor or any other person may have m respect oi the insurance contrary "in
,
i ,
.
j> _Li •
money. The right of the mortgagee is in effect an imphed term section 23 (4).
in the contract between mortgagor and mortgagee, and as such
must yield to any statutory or contractual obligation towards

third parties or to any express term in the contract between
mortgagor and mortgagee. Where the insurance company exercises
its option under a reinstatement clause in the policy, there is a
contractual obligation towards the company which prevents the
(c) 22 & 23 Vict. 0. 35, i. 7.

776 FIRE INSURANCE
sub-section coming into operation, and it seems reasonably clear
that the mortgagee would have no right as against the company

to make it pay in cash when it had elected to reinstate. Where
the provisions of section 83 of the Metropolitan Building Act,
1774, are applicable (d), it is submitted that the mortgagor could
not demand reinstatement under that section because the Con-
veyancing Act imports an implied term into his contract with his
mortgagee that the insurance money shall be applied in discharge

of the mortgage debt, and the statutory right to call upon the
insurers to expend the insurance money in reinstatement cannot
be exercised to the prejudice of contractual obligations (e). It
seems to follow that any third parties taking their title from the
mortgagor subsequent to the date of the mortgage are equally
bound by this section in the Conveyancing Act, and cannot take
advantage of section 83 of the Metropolitan Building Act. This
category would include subsequent mortgagees and others becom-
ing entitled to or interested in the equity of redemption. On the
other hand, third parties whose interests are independent of the
mortgagor, or who have acquired title from him before the date
of the mortgage would be entitled to demand reinstatement not-
withstanding the provisions of the Conveyancing Act, which
would thus become ineffective. This category would include
ground landlords in the case of leaseholds and prior' mortgagees.
Policy effect- When a mortgagee has appointed a receiver under the Con-
ed by re-
ceiver.
veyancing Act to receive the income of the property the receiver
shall, if so directed by the mortgagee, insure and keep insured
against loss or damage by fire out of the money received by him,
any building effects or property comprised in the mortgage, whether
af&xed to the freehold or not, being of an insurable nature (ee).
A policy thus effected is the property of the mortgagor subject

to the right of the mortgagee to have the policy moneys applied
in reinstatement or in discharge of his debt.
Tenant for A tenant for life is not liable to the remainderman for per-
and re-
Jife
mainderman.
missive waste. That is to say, unless the terms of the settlement
expressly lay the obligation upon him he is not bound to execute
any repairs to the premises during his life tenancy. This was
held by Kay, J., in the case of In re Cartwright (/ ), where the sub-
Obligation to ject of the settlement was a freehold estate. And in In re Parry (ig)
repair.
(d) Ante, p. 696. (ee)44&45Vict.c.41,s.24(l),(2),(7).

(e) Reynard v. Arnold (1875), L. R. (/) (1889), 41 Ch. D. 532.
10 Ch. 386. (?) [1900] 1 Ch. 160.
THIKD PARTY CLAIMS 11*7
this decision was followed by North, J., who applied it to the
case of a settlement of a leasehold estate, and held that, even
although there was a covenant by the lessee to repair, where

the tenant for life allowed the premises to fall into disrepair the
remainderman on coming into possession could not recover the
cost of necessary repairs from the estate of the tenant for life.
The tenant for hfe who is not bound to repair is not bound to obligation to
'"S""'^-
insure the premises unless that obligation is laid upon him by the
terms of the settlement.
A statutory exception to the two rules just mentioned is created
by the Settled Land Act, 1882 Qi), which lays upon a tenant for
life the obhgation at his own expense

and insure to maintain
improvements made under the provisions of the Act in such maimer
and in such amount as the Board of Agriculture Qih) may in any
case prescribe.
If a tenant for life does insure without any obligation to do Benefit of
^
so he is prima facie entitled to the proceeds of the policy for his tenanTfor
own benefit (i).
I'f^-
Seymour v. Vernon (1852), 21 L. J. Ch. 433

A receiver was appointed in an administration suit, and the receiver insured Seymour v.
the property out of the rents of the estate. Certain stables on the estate êmcm.
were burned down, and no one desired them to be rebuilt. It was held that
the person who was ultimately held to be tenant in tail in possession of the
estates, was entitled to the insurance money as his personal property free from
the settlement.
"Warwicker v. Bretnall (1882), 23 Ch. D. 188

The guardian of an infant tenant in tail in possession kept up insurance Wartvkker v.
on a mill which stood on the property. The insurance premiums were paid Bretnall.
out of the rents of the estate. On the mill being burned down it was not deemed
to be for the interest of any person to rebuild it, and the policy moneys were
held to belong absolutely to the infant as his personal property.
Gaussen v. "Whatman (1905), 93 L. T. 101

A tenant for life directed the trustees of the settlement to keepup in- Gaussen v.
surances out of his income. The mansion house was damaged by fire, and it Whatman.
was held that the policy moneys were the absolute property of the tenant
for life.
(h) 45 & 46 Vict. c. 38, s. 28. L. J. Ch. 433 Warwicker v. Bretnall

;
(hh) The powers and duties of the (1882), 23 Ch. D. 188 ; Gaussen v.
Land Commissioners were transferred Whatman (1905), 93 L. T. 101 contra ;
to this
department on its creation in Welsh v. London Ass. (1892), 151
1889 (52 & 53 Vict. c. 30). Pa. 607.
(i) Seymour v. Vernon (1852), 21
778 FIEE INSUBANOE
Insurance If the tenant for life having insured does during his life treat
moneys treat-
ed as part of the insurance or the policy moneys as part of the settled estate,
settled estate.
it will follow the settlement instead of passing as his personal
property (k). But in Gaussen v Whatman it was held that the
fact that the tenant for life, having recovered on the pohcy, had
invested it in the names of the trustees, and allowed it to remain
so invested for fourteen years pending his decision as to whether
or not he would rebuild, was not an abandonment of it for the
benefit of the settlement.

Remainder- But although not otherwise entitled to the benefit of the
man's statu-
tory rights insurance of the tenant for life the remainderman may obtain
under 14 the benefit of by exercising his right under 14 Geo. 3, c. 78,
it
Geo. 3, c. 78,
s. 88. s. 83, and calling on the insurers to apply the policy moneys in
rebuilding the premises destroyed (l).
Tenant for The terms of the settlement may lay upon the tenant for life
life bound
to insure.
an obligation to repair, and if so he would be liable to reinstate
the premises if burned down (m), but the remainderman would
not necessarily have any lien on the policy moneys. If, however,
the tenant for life was by the terms of the settlement bound to
insure and did insure in pursuance of this obligation the moneys
would belong to the estate {n).
Whether in- Where property is placed in the hands of trustees to pay the
surance by
trustees
income of the whole or part of it to a beneficiary for his life the
should fall
question as to whether the burden of insurance ought to be
on capital
or income. laid on the capital, or whether it ought to be paid out of the
income of the equitable tenant for life, depends upon the terms
of the will or trust deed under which the trust is created (o).
Primclfacie the obligation of an equitable tenant for life of freeholds

is the same as that of a legal tenant for life, and he is not liable
for permissive waste or to have the burden of insurance placed upon

him. But where an onerous property such as a leasehold is placed
in trust with a direction to the trustees to pay the income to
an equitable tenant for life, that means that he is to receive

not the gross income, but the net income, and all payments
which are necessarily incidental to the production of the
income must be deducted from it. Thus, where leaseholds are
(k) Norris v.
Harrison (1817), 2 {n) Quiche's Trusts, In re, [1908] 1
Madd. 268. Ch. 887.
(I) QuickC's Trusts, In re, [1908] 1
Ch. 887. (o) Pinfold V. ShilKngford (1877),
(to) Gregg v. Ooates (1856), 23 46 L. J. Ch. 491.
Beav. 33.
,
left in trust the equitable must bear the burden

tenant for life
of all and if there is a

the current obligations under the lease,
covenant to insure he must pay the insurance premiums (j)). The
equitable tenant for life is not, however, bound to make good
breaches of covenantcommitted before his title vested in possession.
This was decided by the Court of Appeal in In re Courtier (q),
and in In re Baring (r) Kekewich, J., took the view that the
judgment of the Court of Appeal was based on the theory that the
tenant for life ought not to bear the burden of any of the covenants
in the lease,and therefore was not bound to permit the cost of
current repairs and insurance to be deducted from his income.
In In re Bedding (s). In re Betty (i), and In re Kingham (u),

Stirling, J., and the Vice-Chancellor of Ireland respec-
North, J.,
tively dissented from Kekewich, J., and refused to follow In re
Baring (r). Finally, in In re Gjers {x), Kekewich, J., in deference

to the other decisions, followed them in preference to his own
view. All the previous cases are summed up by North, J., in

In re Betty (i).
Betty, In re, [1899] 1 Ch. 821

A testator left his and liouse-
estate consisting of house, gardens, furniture
"^"2'> '" >«•
hold effects to trustees in trust to permit his adopted daughter to have the
personal use and enjoyment of them during her life and after her decease
upon trust to sell and convert the same into money to form part of the
testator's residuary estate. The house and gardens were leasehold property.
North, J., held that the adopted daughter was equitable tenant for life, and
that in the absence of any indication in the will as to what charges should be
borne by the tenant for life and what by the estate, she ought to perform the
covenants incident to the relation of landlord and tenant, that is, she must
pay the rent and perform current repairs, and insure if there was a covenant
to insure, but not otherwise. She was not bound as tenant for life to pay
for insurance on the furniture, but as she was also trustee and executrix the
learned judge thought she ought to insure the furniture at the expense, and for
the benefit, of the estate.
Trustees and executors are not bound to insure trust property

r c J P'^*^
°*
trustees to
unless they are directed to do so and are supplied with funds for insure,
the purpose, and they are not even bound to inform their bene-
ficiaries when existing insurances expire unless they have acted
so as to induce the beneficiaries to rely on them for the insurances
being kept on foot (y).
(p) Fowler, In re (1881), 16 Ch. D. {r) [1893] 1 Ch. 61.

723; Debney v. Eckett (1894), 43 (s) [1897] 1 Ch. 876.
W. R. 54; In re WaUron, [1904] 1 (t) [1899] 1 Ch. 821.
Ir-R.240. (u) [1897] 1 Ir. R. 170.
(1886), 34 Ch. D. 136 ; Brereton
((?) (x) [1899] 2 Ch. 54.
V. Day, [1895] 1 Ir. R. 518. (y) Dowson v. Solomon (1859), 1
;
780 FIRE INSURANCE
But trustees are bound to see that obligations upon which the
existence of the trust property depends are duly performed (z).
And therefore in the case of leaseholds with a covenant to insure

and repair they are bound to see that these covenants are performed
and, if necessary, to perform them themselves in so far as the funds
at their disposal will permit (2). If the tenant for life is in posses-
sion the Court will, at the instance of the trustees, appoint a receiver
of the rents, who will apply them as far as is necessary for that
purpose (z).
Trustees If persons in a fiduciary position do insure trust property they

must account
for proceeds must hold the insurance for the benefit of the trust, and will not
of insurance. be allowed to allege that they made the insurance on their own
interest, and for their own benefit (a). The general rule that
persons in a fiduciary position cannot use it to obtain a benefit
for themselves applies so as to compel trustees to give the trust
the benefit of all insurance on the property which is the subject
matter of the trust even although such insurance has been effected
entirely from their own private funds (b).
Trustees' Trustees have authority to insure trust property out of trust

authority to
insure out of
funds (1) at Common Law (2) if authorised by the trustee
;
trust funds. by Statute.

(3)
At Common At Common Law and without any express authority conferred

Law.
upon them by the trust, trustees may insure the trust property
out of capital. The policy moneys received on such insurance
is part of the trust estate, and follows the same trusts as the
property destroyed.
By terms of The trustees may be authorised expressly or impliedly from
trust.
the other terms of the trust (as in the case of a bequest of lease-
holds with a covenant to insure) to insure the trust property

out of the income of the trust estate. Where power is thus given
by the terms of the trust to insure out of income the power is
presumably to insure for the benefit of the estate and not solely
for the benefit of the person entitled to the income for the time
being, and therefore the policy moneys, if not appHed in reinstate-
ment, are to be applied as capital subject to the same trust which
affected the property destroyed.
By statute. Trustees have statutory power to insure the trust property
Dr. & Sm. 1 ; Fry v. Fry (1859), 27 (a) Parry v. Ashley (1829), 3 Sim.
Beav. 146 ; Garner v. Moore (1855), 97.
3 Drew, 277. (6) Andrews, Ex parte (1816), 2
(z) Fowler, 7n re (1881), IG Ch. D. Rose, 410.
723.
'
out of income (1) under the Conveyancing Act, 1881 ; (2) under
the Trustee Act, 1893.
The Conveyancing Act (c) provides that if and so long as any Conveyancing
'^
person who is beneficially entitled to the possession of any land

is an infant, and being a woman is also unmarried, the trustees
may insure against fire and pay the premiums out of the income
of the land.
Trustee Act,
The Trustee Act, 1893 {d), re-enacting a similar provision in
the Trustee Act, 1888 (e), provides that any trustee may insure
against loss or damage by fire any building or other insurable
property to any amount (including the amount of any insurance
already on foot), not exceeding three quarters of the full value
of and pay the premiums for such
such building or property,
insurance out of the income thereof, or out of the income of any
other property subject to the same trusts without obtaining the
consent of any person who may be entitled wholly or partly to
such income.
Earl of Egmont's Trust, In re, [1908] 1 Ch. 821
It was held by Warrington, J., that chattels such as jewels, and family Earl o/
portraits settled as heirlooms to follow the same trusts as the land were Egmont s
" insurable property (notwithstanding the fact that a heirloom once de- '
stroyed can never be replaced) and that, therefore, the trustees had power
to insure them and pay the insurance out of the income from the lands.
According to the decision of Swinfen Eady, J., in the case of Benefit of
Quiche's Trustees the tenant for life is jprimd facie entitled to the efiected by
sole benefit of a policy effected by trustees out of income in trustees out
of income.
pursuance of their statutory powers under the Trustee Act, and
the remaindermen can only acquire the benefit of such insurance
in cases where they are in a position to enforce the provisions
of 14 Geo. 3, c. 78, and require the policy moneys to be applied
in reinstatement. This case, however, may require to be recon-
sidered, for it is certainly somewhat startling to find that the power
given to trustees to insure out of income is a power which can only
be exercised for the benefit of the tenant for life and which cannot
be exercised for the benefit of the estate except indirectly by
reason of the remainderman's statutory rights under 14 Geo. 3,
c. 78.
(c) 44 & 45 Viet, o, 41, s. 42 (1), (d) 56 & 57 Vict. c. 53, s. 18.
(2), (3). (e) 51 & 52 Vict. o. 59, s. 7.
782 PIEE mSUEANCE
Quicke's Trustees, In re, [1908] 1 Ch. 887
Quiche's The trustees of settled land insured during the minority of the infant
Trustees, tenant for life, the mansion house, and certain furniture, and other chattels
In re,
settled with it. The tenant for life was not bound to insure, but the trustees
exercised their powers under the provisions of the Conveyancing Act and
Trustee Act, and paid the premiums out of the income from the land. The
mansion house and chattels were destroyed by fire and the insurance company
admitted liability. The infant tenant for lite claimed the policy moneys as
his absolute property. The trustees and remaindermen contended that it
should be applied in reinstatement. The trustees took out a summons to
have the question decided, and it was heard by Swinfen Eady, J. Counsel
for the trustees stated the case to the Court, and counsel for the tenant for
life argued in support of his claim, but the case was not argued for the re-
maindermen. Swinfen Eady, J., pointed out that the remaindermen were
entitled to reinstatement of the mansion house under 14 Geo. 3, c. 78, sec. 83,
and held that the mansion house policy moneys should be so applied, and that
the tenant for life was not entitled to any charge thereon. As to the chattels
policy moneys, he held that, as the statute did not apply, the tenant for life
was entitled to such moneys absolutely.
The trustees of a settlement have, under section 40 of the

Settled Land Act, 1882, power to give the insurance company a
complete discharge for moneys paid to them in respect of insurances
on property comprised in the settlement.
Settled Iiand Act, 1882, see. 40
40. The receipt in writing of the trustees of a settlement, or where one

trustee is empowered to act of one trustee, or of the personal representatives
or representative of the last surviving or continuing trustee for any money or
securities paid or transferred to trustees, trustee, representatives or repre-
sentative, as the case may be, effectually discharges the payee or transferor
therefrom, and from being bound to see to the appKoation or being answerable
for any loss or misapplication thereof, and in case of a mortgagee or other
person advancing money from being concerned to see that any money advanced
by him is wanted for any purpose of this Act, or that no more than is wanted
is raised.
Landlord and Unless the landlord has agreed to insure for the benefit of the
tenant.
tenant or to apply the insurance money in reinstatement, the
tenant has no claim to the proceeds of an insurance policy effected
Benefit of ^J ^^^ landlord for his own benefit. Apart from express contract
landlord's and his rights, if any, under 14 Geo. 3, c. 78, s. 83, he cannot
msurance. î n x ,.
compel the landlord to apply the policy moneys m reinstatement (j)
i i i i i
(f) Loffi v. Dennis (1859), 1 for the lessee, and the latter was held
EI. & El. 474 ; see Langelier v. entitled to the policy money as
Ghwrlehoia (1903), 34 Can. S. C. 1, against the lessor's creditors,
where the lessor insured " in trust "
or in discharge of rent payable during the time the premises are

unfit for occupation (g) or otherwise to apply them for his benefit.
in a similar position as regards his tenant's Benefit o£
The landlord
insurance. If
1
is
the msurance
• •(•111
is by
effected the tenant for his
! 1 •
tenant a
insurance,
own benefit the landlord has no right to the proceeds. He can

claim benefit only by reason of the covenants in the lease or the
Statute 14 Geo. 3, c. 78, s. 83. Formerly by Lord St. Leonards'

Act, 1859 (k), a person entitled to the benefit of a covenant to insure
on the part of a lessee was entitled to the benefit of any subsisting
insurance not effected in terms of the covenant. This provision
is now repealed by the Conveyancing Act, 1881, section 14 (7),
and therefore if a lessee has covenanted to insure in the joint

names of lessor and lessee, or otherwise for the benefit of the land-
lord, and instead of doing so insures in his own name for his own
benefit, the landlordwould apparently have no right to the
insurance moneys and apart from his right under 14 Geo. 3,
c. 78, s. 83, it would seem that his only remedy would be an action
against his tenant for breach of covenant.
When under the terms of a lease an insurance is effected either Policy in
'°'" "*"^^'
by landlord or tenant in their joint names, it is impliedly for the
benefit of both parties and the tenant might properly refuse to
sign the receipt for the policy moneys until the landlord gave proper
security for the application of the moneys in reinstatement.
The right of landlord or tenant who has otherwise no claim on
a policy effected by the other for his own benefit to call upon the
insurers to reinstate in terms of 14 Geo. 3, c. 87, s. 83, has
already been discussed, and in the author's opinion the landlord
or tenant has such a right (i). If so the repeal of the provision in
Lord St. Leonards' Act is of no consequence, for the landlord has,

by 14 Geo. 3, a right to the benefit of any policy effected by the
tenant, and it is submitted that it was because it was thus super-
fluous that the provision was repealed.
{g) Leeds v. Oheetham (1829), 1 (h) 22 & 23 Vict. c. 35, s. 7.

Sim. 146. (i) Vide supra, pp. 700, 701.
CHAPTER VIII
Claims fok Premiums
Section I. —Insurer's Claim for Premium
Premium An insurance company can sue the assured for the premium only
payable if
binding con-
if there is a complete binding contract to insure the risk in respect
tract to in- of which the premium is claimed. It has already been observed
sure is made.
that the " acceptance " of a proposal does not necessarily conclude
a binding contract (a). It may be merely an intimation by the
insurers that they are prepared to make a contract by the issue of
a policy against cash, and in life insurance the prima facie inference
is that no binding contract is intended before the policy is issued.
In fire, and other risks, a preliminary binding contract

accident,
is more readily inferred than it is in life, and if there is a definite
agreement to insure the assured is not at liberty to withdraw

from the bargain any more than the company is, and if he fails
to pay the premium the company may recover it.
General Accident v. Cronk (1001), 17 T. L. E. 233
General Acci- In this case the defendant, who was a farrier, filled in and sent to the com-
dentV. Cronk. pany a proposal form for a policy of indemnity against claims in respect of
driver's accidents. In the form it was stated that the proposal and declara-
tion should be the basis of a contract between himself and the company, and
that if the risk was accepted he would pay the premium. A policy was
executed three days afterwards, and was expressed to cover the risk from the
date of the proposal, and for a period of a year from that date. Some days
afterwards the agent called with the policy, but the assured did not accept it
and wrote company sajdng that he did not desire to proceed with the
to the
insurance. It was held that there was a binding contract, and that the com-
pany was entitled to sue for the premiums. The issue of the policy was not
a counter-offer. If the wrong form of policy was tendered the defendant
might have refused it, and insisted on receiving the right one, but he could
not withdraw from the contract, which was complete when his proposal was
accepted.
{a) Vide supra, p. 206,

INSUEEE'S CLAIM FOE PEEMIUM 785
Star Fire and Burglary v. Davidson (1902), 5 F. 83
The defendants inquired whether the company were prepared to insure Star Fire and
Burylary v.
theirpaper works, and the company wrote that they were prepared to take
£5000 at the same rate as the other offices, and asked for a specification of the
risk. The defendants wrote back that they would be glad to give the company
the business, and suggested where a specification of the risk could be obtained.
The company then sent a completed policy insuring the premises for £5000,
and asked for the amount of the first premium. The policy recited that the
defendants (hereinafter styled the member) had by a proposal and declaration
applied to be admitted a member of the company, and whereas the member had
paid the sum of £43 as the premium for the policy the company agreed with
the insiued (subject to the conditions on the back thereof, and to the Memo-
randum and Articles of Association of the company which were to be taken as
part of the policy), that if the property should be destroyed thej' would pay
the loss. The Articles of Association provided that every member of the
company should be liable to contribute to the assets of the company in the
event of the company being wound up. The defendants declined to accept
the poUcy or pay the premium. The Court held that the company were not
entitled to recover the premium. There was no contract except in the letters.
These contained a proposal for insurance and no more. There was no agree-
ment by the defendants to become members of a mutual company. There
was a complete misapprehension by the defendants as to the fact that the
company was a mutual company. There was, therefore, no consensus in
idem placitum, and no contract upon which the company could sue for the
premium.
In workraen's compensation insurance the premium is usually Premium in
calculated by taking a percentage of the total wages paid by the compensation

employer during the year of risk. The exact amount of the pre- insurance,
mium payable cannot therefore be ascertained until the year of risk

has expired, and the usual course commencement
is to accept at the
of the risk payment on account of premiums based on an estimate
a
of the amount of wages. The employer is required to keep
a wages book, and to supply the company with a correct account
of all wages paid during any year of insurance, and the difference
between the actual premium and estimated premium is to be met

by a further payment by the assured or refund by the company
as the case may be. In one case where the assured, after the
expiration of the insurance dechned to render an account of wages,
alleging that they were less than the estimated amount, the com-
pany brought an actioij against the assured in the Chancery
Division, and the Court ordered the assured to render an account
and pay the costs of the action (b).
(6) General Accident v. Day (1905), and Suffolk Accident (1911), 27 T. L. R.

21 T. L. R. 88. See Bradley v. Essex 455.
I.L. 50
786 CLAIMS FOE PEBMIUMS
Option to In an American case a company agreed in consideration of

renew policy.
one dollar " on the expiration of the present insurance policy of
W. P. to renew the same for three years," at a specified rate. It
was held that this agreement gave the assured an option to
demand such renewal, but that he was not bound to accept
the renewal policy, and an action for the premium failed (c).
Section II. —Beturn of Premium

No risk no The general rule appUcable to claims for the return of premium
premium.
is that if the insurers have never been on the risk they have not
earned the premium, and ought to return it. Thus, if a contract
of insurance is set aside on the ground of misrepresentation or
mistake, or for some other reason the policy is held to have been
void db initio, or to have been avoided before the risk began to
run, the assured any express condition to the
is, in the absence of
contrary, entitled to claim repayment of any premiums which
he may have paid (d). " Equity," said Lord Mansfield, " implies
a condition that the insurer shall not receive the price of running
a risk if he runs none " (e).
Entire pre- If, however, the risk has once commenced to run under a
mium earned
wlien risk
valid policy the whole of the premium for that risk is immediately
attaches. deemed to be earned, and even although the insurer should
shortly afterwards be relieved of the risk for the remainder of the
term the assured is not entitled to a return of any part of the
premium (J). Thus if the day after a risk has attached there
is a breach of warranty or the interest of the assured ceases the
whole premium is earned, and there can be no return.
Divisibility Where for some reason the risk does not attach as to part
of risks.
of the insurance, but does attach as to the remainder, the assured
cannot recover any part of the premium (g), unless the risk is
clearly divisible into separate distinct risks {h).
In respect of In respect of time the insurance is usually divisible into the

time.
periods for which the premiums are payable. Thus an insurance
(c) Barker v. Pullman Co. (1904), bridge (1781), 2 Dougl. 781 Tyriev. ;
134 Fed. Rep. 70. Fletcher (1777), 2 Cowp. 666; Stone

(d) Bermon v. Woodbridge (1781), V. Marine Insurance (1876), 1 Ex.
2 Dougl. 781 ; Stevenson v. Snow Div. 81 ; Provident Savings Life v.
(1761), 3 Burr. 1238. Bellew (1904), 35 Can. S. C. 35.
(e) Stevenson v. Snow (1761), 3 ig) Canadian Pacific v. Ottawa Fire
Burr. 1238, at p. 1240. (1907), 39 Can. S. C. 405.
(/) Anderson v. Fitzgerald (1853), (h) Stevenson v. Snow (1761), 3
4 H. L. C. 484, 508 Bermon v. Wood-
; Burr. 1238.
EETUEN OP PREMIUM 787
on condition that a premium is paid every week is primd facie

divisible into separate weekly insurances but, on the other hand, ;
the policy may be framed as an annual insurance with an annual

premium payable in instalments, in which case the risk for the
year would be indivisible (i), and the whole premium would be
earned immediately the year began to run.
There is no doubt that when the insurers set aside the con- Contract set
tract on the ground of innocent misrepresentation (k), conceal- fnsurera'for
ment (I), or mistake (m), the assured is, apart from special con- innocent
dition, entitled to a return of premium.
.
ni-»ithere never was
So also if
misrepresen-
tation, con-
any contract, as where there never was in fact mutual consent (n) ;
erro™ fn*'
where the assured withdrew his proposal before final acceptance (o); essentials, or
or where the agent who had no power to contract submitted to consent,

the directors terms different from those in fact proposed, and the
risk was accepted, and the poUcy issued upon a proposal which
was never in fact made (p).
If a contract of insurance is made ultra vires of the company Ultra vires.
the assured can recoverany premiums which the company has in

fact received or which have been applied by the directors for
the company's benefit (q). Where however the agent or officer
of a company receives premiums on an ultra vires policy the
company is not bound to refund such premiums unless they have

been appHed for its benefit (r).
There is some conflict of authority as to whether premiums are Fraud : early
returnable when the insurers prove fraud on the part of the decisions'
assured. In an early case of hfe insurance (s), where at the
suit of the insurers the Court of Chancery ordered the poUcy to
be deUvered up on the ground of fraud with full costs to the
plaintiffs, the reporter states that the moneys received by way of
(i) SeeLoraine-v.ThomUnson(nSl), v. Knickerbocker Life (1879), 77N. Y.

2 Dougl. 585. 483.
(k) Anderson v. Fitzgerald (1853), (re) Mowat v. Provincial Savings
4H. L. C. 484, 507 ; Feise v. Parkin- Life (1900), 27 Ont. A. R. 675.
son(1812), 4Taunt. 640; Chapman v. (o) Henderson v. State Life (1905),
Fraser (1793), 1 Park, 8th Ed. p. 9 Ont. L. R. 540.
456 ; New York Insurance v. {p) Fowler v. Scottish Equitable
Fletcher (1886), 117 U. S. 519. (1858), 4 Jur. N. S. 1169 ; Harnickell
(I) Joel V. Law Union and Crovm, v. New York Life (1888), 111 N. Y.
[1908] 2 K. B. 431, 440 ; London 390 Key v. National Life (1889),
;
Assurancew. Mansel {1879), 11 Ch. D. 107 Iowa, 446.

363, 372. [q) Arthur Average Association, In
(m) Hemming v.Sceptre Life, re (1876), 34 L. T. 942.
[1905] 1 Ch. 365 Pritchards v.
; (r) Phoenix Life, In re (1862),
Merchant Ufe (1858), 3 C. B. N. S. 2 J. & H. 441.
622 ; Stone v. Marine Insurance (s) Whittingham v. Thornburgh
(1876), 1 Ex. Div. 81, 86 ; Prentice (1690), 2 Vern. 206.
788 CLAIMS FOR PKEMIUMS
premium were ordered to be applied in part payment of the costs.

The actual decree, however, in this case is silent as to the premium.
In a marine insurance case (i) Lord Macclesfield set aside the policy
on the ground that the assured had not disclosed the fact that
he had, at the time he proposed the insurance, information which
induced him to have grave doubts as to the safety of his vessel.
The decree was that the policy be delivered up with costs, and that
the premium be paid back and allowed out of the costs. Lord
Macclesfield said in this case that the assured had not dealt fairly
with the insurers, and that " the concealing of the intelligence
"
was a fraud," but it is not clear that he used the word "fraud
here in the moral sense, or that he actually found the assured
guilty of a deliberate intention to deceive. These two Chancery
cases, neither of which as reported is satisfactory, were apparently
accepted in the Court of Chancery as binding authority for the
proposition that where the insurers came to a Court of equity
for cancellation the premium should be returned even if
the policy wepe cancelled on the ground of the fraud of the

assured,
followed at In an early case at common law (u), where a marine policy

law,
^g_g found by a jury to have been obtained by fraud, the under-
writers having been induced to subscribe the policy by the signa-
exceptinoase ture of a " decoy duck," heading the subscriptions. Lord Mans-
o gross rau .
^^j^ ordered a return of premiums, but in a later case (x), where
the assured had insured knowing that his ship was lost, the same
judge held that " the fraud was so gross that the premium should
DeBniterule not be recovered from the underwriter." This was followed by
m marine
g^ decision of the whole Court of King's Bench (y), to the effect
return in that in all cases where there was actual fraud on the part either
fraud. of the assured or of his agent, the assured should not recover
the premiums which he had paid, and this decision appears
to have beeri consistently followed by .Courts of law in marine
cases {z).
No definite Apparently, however, the Court of Chancery did not adopt a

'^^'^Nf^'5„o^7" similar rule, and there has been a considerable variation in the
method of deahng with premiums in cases of fraud.
{t) Da Costa v. Scandret (1723), (?/) Ctejjnian v. ^mse?-(1793), Park,
2 P. Wms. 170. 8th Ed. 456.
(«) Wilson V. Ducket (1762), 3 {^) Feise^ Parkmson (1812). 4
Riirr Taunt. 640; Anderson v. Thornton
r>uii. l^fil
loDi.
(1853), 8 Ex. 425 see Blackburn, J..
;
(x) Tyler v. Home (1786), Park, in Fowkes v. Manchester (1863), 3

8th Ed. 455. B. & S. 917, at p. 929.
RETURN OF PREMIUM 789
Prince ofWales Insurance v. Palmer (1858), 25 Beav. 605
Lord Eomilly, M.R., having set aside a life policy on the ground of fraud Prince of
"'"'^^^ Insur-
and no insurable interest and fraud, in that the assured, in pursuance of a pre-
ance v.
oonoeived scheme, had insured another's life and subsequently murdered him, Palmer.
decreed in a suit against the assured's representatives that the premiums
should be applied in payment and that the balance
of the costs of all parties,
should be brought into Court with liberty to apply. eventually becameWhat
of the balance does not appear from the report, but at any rate the insurers
were apparently not allowed to retain the premiums for their own use.
Britisli Equitable v. Musgrave (1887), 3 T. L. E. 630

This was an action by the company against the assured for cancellation Britisli
policy on the ground of wilful concealment of serious
Equitable v.
and delivery up of a life
Musgrave.
symptoms. The Court found the case proved, ordered the policy to be can-
celled and delivered up, and declared the premiums to be forfeited to the com-
pany. The case is very briefly reported, and the policy may have contained
an express proviso that the premiums should be forfeited in case of fraud.
Duckett V. Williams (1834), 2 C. & M. 348

This was an action in the Court of Exchequer to recover premiums in Duckett V.
respect of a policy of insurance which, in a previous action brought to recover Williams.
the insurance money the Court had cancelled on the ground of breach of
warranty. The Court held that by the express terms of the policy no premiums
could be recovered but Lord Lyndhurst, in his judgment, appears to have
;
assumed that, in the absence of such terms, the assured would be entitled to
a return of premium even where the contract was set aside on the ground of
fraud.
Desborough v. Curlewis (1838), 3 Y. & Coll. 175

This was a claim in equity by the insurers for panoellation of a life policy Desborough
on the ground of illegality. Lord Abinger refused the claim because there was ^- Gurlexois.
no equity to have the contract set aside on that ground, and that at any rate
the insurers seeking relief in equity must offer to repay the premiums received.
Biggar v. Rock Life, [1902] 1 K. B. 516

The local agent of a company wilfully inserted false answers in the proposal Biggar v.
form. Wright, held that in so doing he acted as the agent of the assured. ^°'^^ ^*/^-
J.,
and the claim for the insurance money failed. " If," said Wright, J., " the
anything, I think that the most he could ask for would
plaintiff is entitled to
be that the Court should say that the contract is void on the ground of either
fraud or mistake with the consequence perhaps that he may be entitled to
recover back the premiums he paid."
Probably the principle upon which premiums are returnable General prin-
in the case of fraud is equally applicable to all classes of insur-

from^ above"'
ance, and decisions,
is as follows. If an action is brought at law to recover
the insurance moneys, the insurers may defend on the ground of
790 CLAIMS FOR PEEMIUMS
fraud, and are not bound to tender a return of premiums (d). The
assured cannot bring a separate action or counter-claim for a
return of premiums because in order to do so he would have to allege
Where insurer his own fraud (e). If, however, an insurer seeks relief which is
isguilty of
fraud pre- purely equitable, and which could in former days have been
miums only obtained only in a Court of equity, he must offer to return the
recoverable
when insurer premiums in respect of which he has never been on the risk. The
seeks purely
equitable insurer cannot therefore, even on the ground of fraud, bring an
relief. action for rescission and delivery up of the policy without offering
to return the premiums received (/).
Express Where there is an express proviso that the premiums shall
condition
forfeiting be forfeited to the company the latter may obtain equitable
premiums. relief without offering to return the premiums (g).
Misrepresen- Where misrepresentation or breach of warranty is caused by
tation or
breach of the mistake, or fraud of the company's agent in misleading the
warranty assured or inserting false particulars in the proposal, the company
induced by
act of in- may, under certain circumstances avoid the policy (h), but if they
surer's agent.
do so and the assured himself has been innocent in the matter,
the insurers must, apart from special conditions, return the pre-
mium (i). If the assured has been guilty of fraudulent collusion
with the agent it is clear that he cannot have a return of premiums
unless the insurers are asking for purely equitable relief (k). If
the assured has been merely negligent in the matter he is entitled

to a return of premiums if the insurers cancel the pohcy (i), but
he is not entitled to rescind on his own motion (l). In such a
case the option to avoid the contract lies with the insurers Q).
If, however, the conduct of the assured has been entirely free even
from neghgence, and the fault has been solely that of the company's
agent, the assured may claim rescission (m). Thus, in an American
(d) Joel V. Law Union and Crown, (1911), Bray J., Nov. 7; Vermer v.
[1908] 2 K. B. 431, 440; Hoyt v. Sun Life (1890), 17 Can. S. C. 394.
Oilmam (1811), 8 Mass. 336. (h) Vide supra, p. 3.55.
(e) Fisher v. Metropolitan Life (i) New York Life v. Fletcher {1&S6),
(1894), 160 Mass. 386; Palmer v. 117 U. S. 519 Fisher v. Metropolitan
;
Metropolitan Life (1897), 21 Hun. Life (1894), 160 Mass. 386.

App. 287. {k) Lewis V. Phoenix Mutual {1812),
(/) London Assurance v. Mansel 39 Conn. 100 Palmer v. Metropolitan
;
(1879), 11 D. 363, 372; see

Ch. Life (1897), 21 Hun. App. 287.
Lodge v. National Union, [1907] 1 (I) Mailhoit v. Metropolitan Life
Ch. 301 ; Chapman v. Michaelson, (1895), 87 Me. 374; Wakeman v.
[1908] 2 Ch. 612, 620. Metropolitan Life (1899), 30 Ont. R.
(g) Barker v. Walters (1844), 8 705.
Beav. 96 Anderson v. Fitzgerald
; (m) Rohrschneider v. Knickerbocker
(1853), 4 H. L. C. 484 Thomson v. ; Life (1879), 76 N. Y. 216 Carter v. ;
Weems (1884), 9 A. C. 671, 682 ; Boehm (1766) 3 Burr. 1905, 1909;

Duchett V. Williams (1834), 2 C. & M. Dufell V. Wilson (1808), 1 Camp. 401.
348 ;Sparenborg v. Edinburgh Life
case the agent wilfully inserted erroneous answers in order to

secure the company's acceptance and his own commission. The
Court held that the misrepresentation was entirely the fault of
the agent,and that the assured was not responsible. Under the
circumstances as proved they were of opinion that the company
would be liable on the policy but, on the other hand, the policy
;
on the face of was void, and the insured could not be expected
it
to contiaue paying the premiums, and so leave the legacy of a

law suit to his representatives who would be deprived of the
assured's testimony in the matter (n).
If the assured has been induced to effect an insurance by Contract

reason of fraudulent misrepresentations of fact made by the misrepresin-
insurers or their agent to the assured, the latter can claim rescission t^tion of
.
insurers or
and return of premmms. their agent.
KettleweU v. Refuge, [1907] 2 K. B. 242; [1909] A. C. 243 (o)
The assured was induced, to continue pajdng her premiums on a life policy on KettleweU v.
would become entitled Refuge.

the false representation of the agent that in five years she
to a paid-up policy. After paying the premiums for f ovir years she discovered
the fraud, and sued the insurers for a return of the premiums paid. The Court
of Appeal held that she was entitled to have the premiums returned. Two of
the judges based their decision on the ground that she was entitled to have
the contract rescinded. Buckley, L. J., on the other ha,nd, thought that it was
too late to rescind after the insurers had been on the risk, but he agreed with
the decision on the ground that money obtained by the fraud of the company's
agent could not be retained by the company against the person defrauded.
The House of Lords affirmed the decision of the Court of Appeal without
comment upon the difference of opinion in that Court.
If the opinion expressed by Buckley, L.J., in the above case

is right, that is to say, that there can be no rescission after the com-
pany has been on the then it would seem to follow that an
risk,
assured cannot recover premiums paid upon a policy induced by

the innocent misrepresentation of the insurer or their agent
(jp).
It has already been submitted that the view taken by the majority
of the Court of Appeal is to be preferred, and, if so, a claim for
return of premiums can be made on the ground of the insurer's
misrepresentation, whether innocent or fraudulent, and this view
is supported by other decisions, and particularly by the decision
of the House of Lords in Foster v. Mutual Beserve Life

(q).
{n) Miller v. Union Central (1895), Supreme Court in Canada, Angers v.

86 Hun. 6. Mutual Reserve Life (1904), 35 Can.
(o) Affirmed in the House of Lords S. C. 330.
without opinion. (q) (1904) 20 T. L. R. 715 followed
;
(p) And it has been so held by the in Cross v. Mutual Reserve Life (1905),
792 CLAIMS rOE PREMIUMS
Assured As misrepresentation or concealment does not make a contract

cannot
rescind on the void, but merely voidable at the option of the other party, the
ground of his assured cannot claim rescission and return of premiums where he
own misre-
presentation. himself is at fault but the insurer elects to treat the insurance as
valid and subsisting (r).
Policy Where the insurance is avoided by the insurers on the ground

avoided by
breach of of breach of warranty the premium can be recovered if there was
warranty. abreacha&mii'io,so that the risk never attached (s), as, for instance,
where there is a warranty of temperate habits, and the assured

was in fact intemperate (i). But if the risk attaches and there
is a subsequent breach of warranty, no premiums paid in respect
of that risk can be recovered (u), as, for instance, if it was warranted
that the assured should not go beyond the limits of Europe, and
he did so during the currency of the risk (x). But as the risk is
divisible into periods corresponding to the dates when the pre-
mium is payable, premiums paid after a breach of warranty may
be recovered because no part of the risk for the future periods
was ever run by the insurers (y). On principle it would seem that
the assured cannot of his own motion claim a rescission of the policy
and return of premium on the ground that he has broken his own
warranty and that accordingly the risk has never attached.
Even although the poUcy is declared to be null and void in the
event of a breach the insurer may always waive the breach, and
if he does so he earns the premium. In America, however, it
was held that where the assured had an interest in property as

mortgagee, butwas not sole and unconditional owner as warranted,
he could, after the period of risk had expired without loss, claim a
return of premium on the ground that the insurance was void
ah initio (z).
21 T. L. R. 15 Merino v. Mutual
; {t) Thomson v. Weems (1884), 9
Reserve Life (1905), 21 T. L. R. 167 ; A. C. 671.
Molloy V. Mutual Reserve Life (1905), (m) Annen v. Woodman (1810), 3
22 T. L. R. 59. Taunt. 299 ; Langhorn v. Cologan
(r) Bunyon on Life Insurance, 2nd (1812), 4 Taunt. 330; Hawke v.
Ed. 96 Malhoit v. Metropolitan Life
; Niagara District (1876), 23 Grant,
(1895), 87 Me. 374; Wakeman v. 139 Colby v. Cedar Rapids (1885),
;
Metropolitan Life (1899), 30 Ont. R. 66 Iowa, 577 ; Kentucky Vermillion

705; Pisherv.MetropolitanLife{18Qi), Go. V. Norwich Union Fire (1906),
160 Mass. 386 Palmer v. Metro-
; 146 Fed. Rep. 695.
politan L»/e (1897), 21 Hxin. App. 287. (x) Douglas v. Knickerbocker Life
(«) Macdonald v. Law Union (1874), (1881), 83 N. Y. 492.
L. R. 9 Q. B. 328 Feise v. Parkinson
; (y) Bunyon on Life Insurance, 2nd
(1812), 4 Taunt. 640 Colby v. Hunter; Ed. 96 Imperial Bank v. Royal In-
;
(1827), 3 C. & P. 7 Henkle v. Royal

; surance (1906), 12 Ont. L. R. 519.
Exchange (1749), 1 "Ves. Sen. 317 ; (z) Waller v. Northern Insurance
Waller v. Northern Insurance (1884), (1884), 64 Iowa, 101.
64 Iowa, 101.
—
Where the loss arises from an excepted peril it is clear

that no premium can be recovered if the risk has attached. As
-where the assured on a life poHcy paid the premium for a year
and committed suicide next day (a).
Where a policy is effected by an agent without the authority Agent of
of the person for whose benefit it is made, and the agent pays effecting
insurance
premium, he cannot afterwards recover it back on the ground
the ^
. without
that his principal has refused to ratify the contract (b). authority-
In the case of insurances which are illegal whether by statute (c), Illegal
such as insurances without interest, or by common law (d), such

as insurances on the property of an alien enemy, the general rule
is that the assured can recover neither the policy moneys nor the
premiums which he may have already paid (e). It will not avail Ignorance of
the assured to plead that he was ignorant of the law and thought elaim!^
there was an insurable interest where in fact there was none (/), Even
and even where the mistake in law has been induced by the fndu'ced by -
innocent misrepresentation of the insurer or his agent the assured innocent

, . • / \ misrepresen-
premram
,
cannot recover nis [g). tation of

'"surer,
Under certain circumstances, however, the assured may
recover premiums notwithstanding the illegality of the insurance, mium paid
These may be summarised as follows ?'^ illegal
insurance is
1. Where the insured has been induced to contract by the returnable.
fraud of the insurer or his agent.

2. Where the illegahty arises from the form of the pohcy as
issued by the insurers.
3. Where the assured was ignorant of the facts which made
the insurance illegal.
4. Where the assured claims rescission of the contract lêfore
the risk has attached.
Where the insurer or his agent induces the assured to effect I'raud of
the insurance by a fraudulent misrepresentation as to the law, as
{a) Bermon v. Woodhridge (1781), 2 Dougl. 468; Andree v. Fletcher

2 Dougl. 781, 789 ;Tyrie v. Fletcher (1789), 3 T. R. 266 Allkins v. Jiipe
;
(1777), 2 Cowp. 666, 669. (1877), 2 C. P. D. 375, 388, 390 Oom ;
(6) Routh V. Thompson (1811), 13 v. Bruce (1810), 12 East, 225 Hentig ;
East, 274; Hagedorn v. OKverson v. Staniforth (1816), 5 M. & S. 122;

(1814), 2 M. & S. 485. Mork v. Abel (1802), 3 B. & P. 35 ;
(c) Vide supra, p. 103. Brophy v. North American Life { 1902),
(d) Vide supra, p. 169. 32 Can. S. C. 261.
{e) Harse v. Pearl Life, [1904] 1 (/) iM66ocyt v. Po«« (1806), 7 East,
K. B. 558; Forgan v. Pearl Life 449; Lowry v. Bourdieu (1780), 2
(1907), 51 Sol. Jo. 230 Howard v. ; Dougl. 468!
RefugeFriendly {1886), 54: L.T.6U; (g) Harse v. Pearl Life, [1904] 1
âterson v. Poiuell (1832), 9 Bingh. K. B. 558 Lewis v. Phcenix iViilual
;
iM, 333 Lowry v. Bourdieu
; (1780,), (1872), 39 Conn. 100.
794 CLAIMS FOR PREMIUMS
where they know the insurance is illegal, but say it is not, the pre-
miums paid on the faith of such fraudulent misrepresentation
must be returned (h), and
has been said that although both
it
parties knew that the insurance was illegal if the insurer or his
agent declared that notwithstanding the illegaUty the policy
money would be paid, and the assured on the faith of that declara-
tion paid the premium he would be entitled to a return (i).
Form of In a Canadian case was held that where a hfe pohcy was
it
policy illegal
void by reason of the name of the person for whose benefit it was
made not being inserted in the policy the assured was entitled
to recover the The parties, said the Court,
premiums paid.
were not in pari delicto since there was no improper conduct on
the part of the assured who had fully disclosed the facts, and the
sole fault was on the part of the company in issuing an irregular
pohcy (k).
Assured Where the assured contracted in ignorance of the facts which
ignorant of
facts.
made the insurance illegal he is entitled to a return of premium
if the insurers repudiate the poHcy on the ground of the ille-
gality (l), as for instance if the assured believed he was the

owner of the property insured, whereas in fact he had no title
to it (m). Probably he could recover at any time during the
risk if immediately he discovered the facts he gave notice to the
insurers to rescind the insurance. But after the period of risk
has expired without loss it is not open to the assured to say that
he has just discovered that the policy was illegal for want of
interest, and claim a return of premium on the ground that the

insurers were never on the risk (ra).
Contract The general rule applicable to illegal contracts is that if either

wholly
party desires to cancel the contract while it is still executory,
executory.
that is when nothing has been done to carry out the illegal purpose,
he may do so and claim a return of any consideration paid by him.
The soundness of the rule has been doubted (o), and it is, perhaps
not very logical, but it offers an inducement to the wrongdoer
to repent before it is too late, and a long series of decisions have
(h) British Workman's and General 225 ; Hentig v. Staniforth (1816),

V. Gunlijfe (1902), 18 T. L. R. 502 ; 5 M. & S. 122.
Haree v. Pearl Life, [1904] 1 K. B. (m) Routh V. Thompson (1809), 11
558, 563 ; Beer v. Prvdential Assur- East, 428.
ance (1902), 66 J. P. 729. (n) McGullock v. Eoyal Exchange
(*) British Workman's and General (1813), 3 Camp. 406.
V. Cunliffe (1902), 18 T. L. R. 502. Palyart v. LecHe (1817), 6 M.
(o)
(k) Dowker v. Canada Life (1865), & S. 290 ; Kearley v. Thomson (1890),
24 U. C. Q. B. 591. 24 Q. B. D. 742.
{I) Oom V. Bruce (1810), 12 Bast,
placed the recognition of the rule beyond dispute (p). In the

majority of insurances which are want
illegal for of insurable
interest, the rule has no application, since those insurances are

not only illegal under the insurance statutes, but are void under
the Gaming Acts as wagers, and any claim for the return of money
paid in respect of a wager is by these Acts (q).
expressly disallowed
But in other classes of illegal insurances the rule applies, and it
therefore becomes necessary to consider when the contract of
insurance ceases to be executory, and becomes partly performed

so as to bar the assured's claim to recovery of the premium. In
one sense it might be said that the contract to insure is executed
when the policy is issued (r), and in another sense it might be said
that the contract of insurance is not executed until either an
event insured against happens or the risk has expired (s). There
is no very direct decision upon this point, but it is submitted that
the contract is executory so long as the risk has not begun to run,
but whenever the risk attaches or would have attached but for
4he illegahty the contract is and if the
at least partly performed,
parties are in pari delicto the assured can no longer demand a
return of premium on the ground of illegality (t).

Where the insurance is legal in its inception, but subsequently Lawful
becomes iUegal, as when war breaks out between the states of which subsequently
the insurers and assured are respectively subjects, the insurer becoming
is probably not Hable to return any part of the premium because
he has been on the risk, and according to the general rule has
thereby earned the whole premium (u). In an American case,
however, it was held that where the policy was forfeited owing to
non-payment of premium during the civil war, the parties being
on opposite sides, the assured was, on the restoration of peace,
entitled to a return of the premiums already paid by him less the
actual cost of insurance for the period during which the insurers
were on the risk (a;).
(p) Loiory v. Bourdieu (1780), 2 (r) Paly art w. Leckie (l?,n),%U. &,
Dougl. 468,471 ; Tappenden v. Randall S. 290, 294.
^^«''« V. (a) Lowry v. Bourdieu (1780), 2
JfoZsA (1810), ^r^-^^'^'
'w?V',?o,n;
3 Taunt. 277 ; Taj/Zor Dousl
ougâoo,
468 */i.
471
V. Boto™ (1876), 1 Q. B. D. 291.
15
(?) 8 & 9 Vict. 0. 109 ;
""•
55 Vict. ^ ^% ^-^^"T, Jf^^'^^^Jlf^)'
0. 9. The provisions in the statutes %' ^- ^- ^",' „ Bî^&lKettlewdl v.
against contracts " by way of gaming "^"•^"S'*' [^^^'^ ^ K. B. 242.
or wagering," will not touch insur- (") Furtado v. Rogers (1802), 3 B.
ances made by the assured in the ^ P- 191-
belief, although a mistaken belief, that
(x) Abell v. Perm. Mutual (1881),
he has in fact an interest in the 18W. Va. 400.
subject matter.
;
Application It has been held in Canada that where the company has
by company
for cancella-
insured in the behef that the assured has in fact an interest which
tionon is an insurable interest, and subsequently during the currency
ground of
illegality. of the risk discovers that there is no interest, it may apply to
the Court for cancellation of the contract, and is not bound to

return the premium (t/).
Return of Members of collecting societies and industrial assurance com-
premiums
paid to panies having claims for insurance moneys under the value of £20
collecting may apply to the County Court or to a Court of Summary Juris-
societies.
diction, and such Court may settle the dispute by arbitration («).
This provision does not apply to a claim for return of premium

on the ground of want of insurable interest because such a claim
is based on the allegation that there never was any contract
between the parties (a). A claim of this kind must be enforced
by action in the usual way (a).
Where If while the risk is still current the insurers wrongfully repu-
insurer
wrongfully
diate the validity of the contract the assured may either enforce
repudiates the contract in due course or treat the repudiation as a final
the risk.
breach and sue for a return of premiums as damages for breach of
contract (b).
Equity, however, requires that an assured shall not snatch

unfairly at a chance of being relieved from a contract which has
turned out to his disadvantage, and so when the company's
superintendent said to the assured that the poHcy was void on
the ground of misrepresentation as to health, it was held that
the assured could not treat the policy as repudiated unless he first
explained the whole circumstances and the superintendent never-

theless persisted in his charge of misrepresentation (c).
If the assured intends to treat the repudiation as a final breach
he must give notice within a reasonable time after the act of

repudiation, and where the assured did nothing for eleven months
after the insurers refused to accept a renewal premium it was held
that it was too late for the assured to sue for a return of pre-
miums (d).
(y) Brophy v. North American Life Mutual (181&), 9 W. Va. 237 ; Fischer
(1902), 32 Can. S. C. 261. V. Hope Mutual (1877), 69 N. Y. 161
(z) Coll. Soe. and Ind. Ass. Co. Act, American Life v. M'Aden (1885), 109
1896, 59 & 60 Vict. c. 26, s. 7. Pa. 399 ; Van Werden v. Assurance
London, Edinburgh, and Glasgow
(o) (1896), 99 Iowa, 621.
Assurance v. Partington (1903), 88 (c) Palmer v. Metropolitan Life
L. T. 732. (1897), 21 Hun. App. 287.
(6) Brewster V. National Life (18Q2), (d) Howland v. Continental Life
8 T. L. R. 648 M'Gall v. Phoenix
; (1877), 121 Mass. 499.
EETURN OP PREMIUM 797
The repudiation by the company of collateral agreements Repudiation
may be sufficient to entitle the assured to cancel the pohcy. agrocmenfa.

Where the contract of insurance and the collateral contract form
part of one entire transaction, the company cannot repudiate the
one and insist on the validity of the other. Thus, where the agent
of an insurance money to an intending
company promised to lend
borrower and he insured his hf e with the company as part security
for the loan, it was held that if the company afterwards refused
to advance the money the assured might cancel the policy and
recover the premiums paid (e). And so where an agent promised

that the company would pay the surrender value of old policies
it new one, which the assured did, it was held

the assured took out a
that company repudiated the agent's promise the assured
if the
might rescind the policy (/). But where a collateral agreement
is wholly independent of the insurance, as where the assured was
appointed medical officer of the company the cancellation of his

appointment as such did not entitle him to rescind the insurance
and recover the premiums (g).
Prima facie the person who has paid the premiums, or his re- BeDeficiary
presentative,
'^
has the right
° to recover them when the policy is "° ^^s^^ *°
_
recover pre-
.
set aside in circumstances which make the premiums recover- miums.
able. A mere beneficiary or payee of the insurance moneys who

has not paid any premiums cannot recover the premium in an
action against the insurers which the latter have successfully
defended on the ground of breach of warranty ah initio Qi).
In marine insurance the underwriter is bound to return a Return of
rateable proportion of the premium when by reason of accidental Premiums for
^ -^ ^ ''
sriort interest,
over-valuation, short interest, or double insurance the under- over-valua-
tion, or double
writer has never been on the risk to the full amount insured (i).
insurance.
No such rule, however, seems to have been established in the case
of fire and similar risks. In most cases the express conditions
of the poUcy would preclude any claim for return of premium
on such grounds, but even where there are no such conditions
the rule in marine insurance would not be extended to other
classes of risk in the absence of any custom or practice to return
a proportion of the premium in cases of over insurance. The
(e) Key v. National Life (1899), (h) Sullivan v. Metropolitan Life

107 Iowa, 446. (1899), 174 Mass. 467.
(/) Harnickell v. New York Life
(1888), HI N. Y. 390. (i) Fisk v. Masterman (1841), 8
Ldberge v. Equitable Insurance
{g) M. & W. 165.
(1895), 24 Can. S. C. 595.
798 CLAIMS FOR PEEMIUMS
nearest approach to the application of such a principle in life
cases is the practice of returning an additional premium paid in
respect of a licence to go beyond the Umits of the risk where in

fact the life insured has not availed himself of the licence (fc).
Claim for Claims for the return of premium may be barred by the Limita-
return of
premium
tion Act, 1623, if no action is brought within six years after the
barred by cause of action arose (T). Where the contract is illegal, where there
Statute of
Limitation. is no contract at want of agreement or because there was
all, for
mutual mistake, or where the assured may set aside the contract
on the ground of misrepresentation by the insurers, the cause
of action arises when each premium is paid, and therefore pre-
miums which were paid more than six years before the action is
brought cannot be recovered, except in cases where there has been

fraud on the part of the company or its agents, in which event the
statute does not begin to run until the discovery of the fraud (m).
Where the insurance is voidable by the insurer on the ground of
misrepresentation or breach of warranty by the assured the cause
of action does not arise until the insurer has elected to avoid the
contract {n). If therefore the assured has, in the circumstances,
any right at all to recover his premiums such right is not barred
in whole or in part until six years after the insurer has elected
to avoid.
Acknowledg- Where an action is brought for return of premium the acknow-

ment of ledgment of the receipt of premium in a pohoy properly executed
receipt of
premium. under the seal of the insurers is said to be conclusive evidence
of payment of premium (o).
Where a return of premium has been made the policy is can-
celled and the assured cannot afterwards have the benefit of it.
Error in law does not entitle the assured to have the policy re-
stored (jp) ; but, on the other hand, if the premium was returned
on a mutual mistake of the facts upon which the validity of the
policy depended the assured might, even after loss, claim to have
the policy restored (g).
{k) Bunyon on Life Insurance, 2nd 532 ;Anderson v. Thornton (1853),

Ed. 95. 8 Exch. 425. But see Roberts v.
(I) 21 Jac. 1, c. 16. Security, [1897] 1 Q. B. Ill, 115.
(to) Beer v. Prtidential Assurance ip) May V. Christie (1815), Holt,
(1902), 66 J. P. 729. N. P. 67.
(n) Bunyon on Life Insurance, 2nd (q) Reyner v. Hall (1813), 4 Taunt.
Ed. 97. 725.
(o) Dalzellv. Mair (1S08), 1 Camp.
SALVAGE PREMIUMS 799
Section III. —Salvage Premiums
Frequently where a person beneficially entitled to a life policy Premium paid

is unable or unwilling to continue the payment of the premiums, pgj.go„
some other person steps in and, either for his own benefit or for
the benefit of the person who has failed to pay, pays the premiums
and so keeps the policy on foot. Where the person beneficially
entitled or his representative finally reaps the benefit of a policy
which has been kept ahve in this way the question arises whether What right
he is not under a legal as well as a moral obHgation to repay out ênt^by

of the policy moneys the amount of the premiums to the person the assured,
who paid them to the insurers, and so saved the policy.
Apart from any contractual relationship between the parties it VoluntMy
has been contended that a mere stranger who has saved the poHcy stranger "ives
by paying the premiums is entitled to claim at least repayment him no claim,
out of the policy moneys on the grounds (i) that as a salvor he
is entitled to a Hen for salvage remuneration (r) (ii) that the ;
assured having adopted his acts and taken the fruits of his pay-
ments he is entitled to a hen for his disbursements (s). It has
been held, however, that the doctrine of salvage is peculiar to
maritime law and cannot be extended to cases of this kind (i),
and that the doctrine of adoption is not applicable to the case of

a man enforcing his own contract or using his own property even
although incidentally he thereby reaps the benefit of the uninvited
expenditure or labours of another in respect thereof (m). A stranger,
therefore, who and by paying the premiums
steps in uninvited
keeps on foot a poHcy which but for his intervention would have
lapsed, not only has no direct claim on the policy moneys but has
no right to recover the premiums either personally against the
assured or by way of lien on the policy (x). The mere fact that
he thought he had a beneficial interest in the poUcy does not place
him in any better position (y).
Although the voluntary payment of premiums creates no legal Except
claim against the person who takes the benefit of the poHcy there officer of the
(»•) See Shearman v. British Empire (x) Falcke v. Scottish Imperial

(1872), L. E. 14 Eq. 4 Tharp, In re
; (1886), 34 Ch. D. 234 ; Leslie In re,
(1852), 2 Sm. & Giff. 578 M. (1883), 23 Ch. D. 552; Clack v.
See Busteed v. West of England
(«) Holland (1854), 19 Beav. 262 ; Bur-
(1857), 5 Ir. Ch. R. 553. ridge v. Mow (1842), 1 Y. & C. Ch.
(<) Falcke v. Scottish Imperial 183.
(1886), 34 Ch. D. 234; Leslie, In re (y) Winn, In re (1887), 57 L. T.
(1883), 23 Ch. D. 552. 382; Urquhart v. Butterfield (1887),
(u) Falcke v. Scottish Imperial 37 Ch. D. 357.
(1886), 34 Ch. D. 234.
'
Court such as may be a moral claim, and accordingly when the person taking
a trustee in
bankruptcy. such benefit is an officer of the Court, such as a trustee in bank-
ruptcy, the Court will not permit him to retain money which
morally belongs to some one else {z). Thus, where a trustee in
bankruptcy claims any policy of the bankrupt the Court may
order the repayment of premiums which have even after the date
of the bankruptcy been paid by a third person to keep the policy
on foot [z).
Payment at If a person beneficially entitled to the policy moneys requests

the request of
assured gives
another to pay the premiums on his behalf, he by implication
a right to promises to repay the amount so advanced (a). The transaction
repayment.
is presumed to be a loan and not a gift, and the assured is under
a personal obligation to repay the loan.
Promise to A
promise to repay may sometimes be implied from slight
repay inferred
from know- circumstances (&). Knowledge and acquiescence in the fact that
ledge and
the premiums are being paid by another for the assured's benefit
acquiescence
of assured. is generally sufficient to raise the inference that the assured
accepts the payments as being on his behalf and impliedly
promises to repay them (c). " Wherever," said Bowen, L.J., in
Falcke v. Scottish Imperial, " you find that the owner of the pro-
perty saved knew of the service being performed you will have to
ask yourself, and the question will become one of fact, whether,
under all the circumstances, there was what the law calls an implied
contract for repayment or a contract which would give rise to
a hen " (d).
Whether It has been suggested (e) that a request to pay the premiums
simple
request or not only gives rise to a personal obligation on the part of the
promise to assured, but also creates a charge upon the pohcy moneys so that the
repay creates
a lien on the person who pays the premiums can follow the policy into the hands
policy.
of assignees, and when the policy moneys become due can insist
on the payment of his debt in priority to other creditors or to any
claimants on the fund. It is submitted, however, that a bare
request and express or implied promise to repay the premiums
advanced do not in themselves create a charge on the policy (J),
(z) In re, [1907] 1 K. B.

Tyler, (c) Power's Policies, In re, [1899]
865; Schondler v. Wace (1808), 1 1 Ir. R. 6 ; Walker, In re (1893), 68
Camp. 487 ; and see Gibson v. Over- L. T. 517.
bury (1841), 7 M. & W. 555, 559. (d)34 Ch. D. 234, 248.
(a) Falcke v. Scottish Imperial (e)Falcke v. Scottish Imperial
(1886), 34 Ch. D. 234, Cotton, L..J., (1886), 34 Ch. D. 234, Cotton, L.J.,
at p. 241 Fry, L.J., at p. 252.
; at p. 241.
(6) Falcke v. Scottish Imperial ( / ) Falcke v. Scottish Imperial
(1886), 34 Ch. D. 234, Cotton, L.J., (1886), 34 Ch. D. 234, Fry. L.J., at
at p. 241. p. 252.
SALVAGE I'REMIUMS 801
but that there may be circumstances from which it can be imphed

that the parties intended to create not merely a personal obliga-
tion but a charge. If, moreover, the beneficial owner of a policy
stands by and allows another to pay the premiums in the belief
that he is the owner, and the beneficial owner knows that he pays
in that beUef and knows that he is wrong, equity will not allow
the beneficial owner to profit by the other's mistake which he could
have prevented, and therefore gives that other a charge upon the
poHcy for the repayment of his outlay (g). Payment in belief
of ownership without full knowledge of the circumstances on the
part of the true owner does not give rise to any right to have the
premiums repaid Qi).
It has been sometimes contended that one who has an interest I'^rt owners
in a pohcy as a part owner or reversioner, and who pays the pre- premium,
miums in order to preserve his interest acquires thereby a right

of contribution against all others who are beneficially interested
and a hen on the poHcy for their proportions of the premium (i).
The right of contribution, however, in respect of voluntary Tenants in

-T-, Tj., ,- common have
IS hmited to tenants m common, jomt
,, J. 1. J. 1
outlay tenants, and copar- arii^htto
ceners, and does not extend so as to be applicable as between those contribution,
entitled to successive interests such as life-tenants and remainder-

men (k), and even as between co-owners the right is merely a
personal right, and does not create, as was once supposed, any
charge upon the property which has received the benefit (l). One Reversioners
therefore who has an interest in the nature of a reversion or spes have no right
successionis in a policy of insurance has no right to indemnity on *? eontnhu-
paying the premiums, even although he never receives any benefit

from the policy (m). A joint tenant or tenant in common who ^fo part
pays the premium, has a right of action for a contribution sivXhave

he has no charge *"y °"
^ by contract ° on
against his co-owners, but except ^^^^
"^ the policy.
the policy (n).
In one case cited in the Journal of the Institute of Actuaries
(g) Falcke v. Scottish Imperial (m) Leslie, In re (1883), 23 Ch. D.

(1886), 34 Ch. D. 234, Cotton, L.J., 552.
at p. 243; Leslie, In re (1883), 23 (n) Leslie, In re (1883), 23 Ch. D.
Ch. D. 552, Fry, L.J., at p. 565. 552 ; Teasdale v. Sanderson (1864),
{h) Falcke V. Scottish Imperial ^^'^'
(1886), 34 Ch D 234 (1856),21 Beav. fo7
fh^^^^l. 536; ^V"^°''"**r
Young, Ex
M ^^j,t parte(18l3),2y.&B. 242; Harrison,
W Money
^•^
v.G^bbs ,ioo^v
(1837),
1
1
T^
Dr. |,^ ^^,^, (^'^l^,^ 2 Kose, 76 ; Wood v!
/i\ T
^^^'^'^' Sug. V. & P. 700. Two cases
(ft) Waugh s Trustees, In re (1877), contra {Swan v. Swan (1819), 8 Price
46 L. J. Ch. 629. 518, and Hamilton v. Denny (1809),
(I) Leslie, In re (1883), 23 Ch. D- 1 Ball & B. 199) were disapproved by
552, Fry, L.J., at p. 563. Fry, L.J., in the case of In re Leslie.
I.L. 51
A mortgaged certain leaseholds and a policy on his own life to

an insurance company. He assigned the equity of redemption
of the leaseholds to B, but retained the equity to redeem the
pohcy, and afterwards becamebankrupt. The office informedBthat
if the premiums on the policy were not paid they would call in the
loan. B accordingly paid the premiums and, on the policy being
assigned to A's trustee in bankruptcy, claimed repayment of
the premiums by the trustee. was held by the Court of Appeal
It
that as B had paid the premiums voluntarily as a stranger, he

had no claim (o).
Mortgagee A mortgagee, however, is in a different position from other

has a lien for
premiums part owners. He holds the policy as security for a debt, and
paid to unless he had the power premiums and adding
of paying the
preserve his
security. them to the charge, the security might be of Uttle value. The
mortgagee therefore is entitled to preserve his security by paying
the premiums to keep the pohcy on foot, and if he does so he can
add them to the charge (g). It seems doubtful, however, whether
the premiums can be recovered as a personal debt from the mort-
gagor but if the mortgagor has undertaken to pay the premiums
;
they could be recovered from him as damages for breach of con-

tract. In one case where the mortgage of a poUcy and other
property was set aside it was held that the mortgagee who had
for some years paid the premiums was entitled to a charge on the
policy for the sums actually advanced by and owing to him,
and for the premiums but that he was not entitled to any
;
personal remedy against the mortgagor in respect of the premiums,

and that therefore if the mortgagor elected to abandon
all claim to the pohcy, the mortgagee could not recover the
amount of premiums paid, although considerably in excess of
the value of the policy (r).
A mortgagor who has not covenanted to keep up a mortgaged

pohcy does not by voluntarily paying premiums to preserve his
equity of redemption acquire thereby any right as against the
mortgagee to repayment of such premiums out of the' pohcy
moneys (s). Nor can any assignee of the equity of redemption
(o) Journal of the Institute of (s) Norris v. Caledonian Insur-

Actuaries, vol. 33, p. 392. ance (1869), L. R. 8 Eq. 127 Saunders
;
(q) Gill V. Downing (1874), L. R. V. Dunman (1878), 7 Ch. D. 825;

17 Eq. 316 Aylwin v. WiUy (1861),
; Falcke v. Scottish Imperial (1886),
30 L. J. Ch. 860 ; Drysdale v. Piggott 34 Oh. D. 234 ; see contra Shearman
(1856), 8DeG. M. & G. 546. V. British Empire (1872), L. R. 14
(r) Pennell v. Millar (1856), 23 Eq. 4.
Beav. 172.
SALVAGE PREMIUMS 803
prima, facie claim repayment of premiums against the mortgagee,

and consequently a second mortgagee having paid the premiums
on a policy in order to preserve the security was not entitled to
any charge in respect thereof in priority to the claim of the first
mortgagee (t). An assignee of the equity of redemption may have
a right to be reimbursed in respect of premiums or other costs of
preserving the security such as the costs of an action against the
company, but whether he has or has not this right depends not
on the bare fact that the njortgagee gets the benefit of his
expenditure, but on special circumstances from which the
inference may be drawn that there was an undertaking to
repay (u).
Trustees and other persons who hold the policy in a fiduciary Trustees have
capacity are entitled to preserve the policy for their beneficiaries, premiums
who *°
and to pay the premiums if the person primarily ought to P^"^
pay them fails Trustees ought to pay the premiums
to do so. trust pro-
^®^*^"
from trust funds any are available for that purpose, but if there
if
are none and they pay them out of their own pockets they are
entitled to a first charge on the pohcy to indemnify themselves (x).
Where the trustees had the means of procuring trust funds pro-
perly available for the purpose of paying premiums, it was held
that they did not acquire a charge on the policy by paying it out
of their own pockets (y).
And not only are trustees entitled to a charge in respect of Payments

disbursements for premiums paid out of their own
pockets, but ^êrs It the
they may give a hke charge to others who advance the premiums request of
at their request (z). It if the trustees have
has been said that
trust funds available for the premiums they cannot charge the
poUcy by borrowing from strangers any more than they can by
paying out of their own pockets (a) but, on the other hand, it would
;
seem that if a trustee requests a beneficiary of the trust to pay

the premiums the beneficiary has a charge on the policy even
although there are available funds in the possession of the
trustee (&).
{t)Power's Policies, In re, [1899] L. R. 8Eq. 127 McMroyv. Hancock

;
1 Ir.R. 6. Mut. (1898), 88 Md. 137.

(u) Struttv.Tippett(lS90),e2'L.T. {y) Clack v. Holland (1854), 19
475 ; Myers v. United Guarantee Beav. 262.
(1855), 7 De G. M. & G. 112. (z) Clack v. Holland (1854), 19
(x) Clack Holland (1854), 19
V. Beav. 262.
Beav. 262, Romilly, M.R., at p. 273 ;
(a) Clack v. Holland (1854), 19
Walker, In re (1893), 68 L. T. 517 ; Beav. 262.
Earl of Windhelsea (1888), 39 Ch. D. (6) Toddv. Moorhouse (1874), L. R.
168; Norris v. Caledonian (1869), 19Eq. 69.
Payments There some authority

is for saying that if a beneficiary of a
made by
beneficiaries.
trust pays the premiums in default of the person who ought to
pay them, he is entitled to a charge even although he did not act
on the request of the trustees (c) but there seems to be no reason
;
why a beneficial part owner under a trust should have any greater
right to an indemnity than a part owner at law, and therefore it
would appear that the better opinion is that only in the case of
joint tenancy or tenancy in common has a beneficiary a right to
contribution against the other beneficiaries, and even then he
cannot enforce it by a lien against the policy unless he has acted
by request of the trustees (d).
Where a person has an interest in a policy under an assignment
which is voidable, as in the case of a voluntary assignment which
is voidable by the assignor's trustee in bankruptcy, the premiums
which he has paid before the date when the assignment is avoided
Qonstitute a first charge on the policy moneys (e). Equity makes
such a charge a condition of the right to have the assignment set
aside against an innocent holder (e).
Lien on the Any person can by contract with the beneficial owner of a
policy
created by
policy acquire a right to recover the premiums which he has paid
contract. to keep it on foot, and his contract may give him a charge on
the policy for that purpose (/). Once a lien has been acquired
he can keep the policy on foot for his own benefit, and add the
further premiums to the charge (/), and he may, by requesting
others to advance the premiums, give them a charge upon the
property, since that is the same as if he had borrowed the money
and assigned his security (/).
(c) Burridge v. Row (1842), 1 Y. & Edwards v. Martin (1865), L. R. 1

C. Ch. 183 Tharp, In re {1852), 2 Sm.
; Eq. 121.
& G. 578 n. (/) Aylwin v. Witty (1861), 30
{d) Ante, p. 801. L. J. Ch. 860.
(e) Westv. Reid{18i3),2Haie, 249 ;
CHAPTEE IX
Stamp Duties
A KNOWLEDGE of the provisions of the Stamp Acts is of great im- Gfeneraiiy
portance to those dealing with pohcies of insurance, and particularly

to insurance companies when issuing policies and paying claims.
An insurance company is liable to penalties if it fails to execute a
duly stamped policy within one month after receiving or taking
credit for premiums, or if it -ssues a policy which is not properly
stamped (a), or if it pays a claim upon an assignment of a policy
and the assignment is not properly stamped (&). No indemnity
offeredby a claimant against liability in respect of improper
stamping of any instrument dated after May 16, 1888, would
protect the office, as any such indemnity would be void (c).
But apart from penalties, the company must be satisfied that
every document forming a step in a claimant's title is properly
stamped, because otherwise they might be paying on a title which
owing to defective stamping could not be proved in Court, and if
afterwards some other claim was made against them for the same
moneys, they might not be in a position to disprove it until the
documents of upon which they had paid the first claim had
title
been duly stamped. A table of stamp duties is contained in

Schedule I. of the Stamp Act, 1891, and all instruments must be
stamped in accordance with that schedule, as amended by subse-
quent Stamp or Finance Acts. If there is any doubt as to the
sufficiency of a stamp upon any instrument, the Commissioners
of Inland Eevenue may be required to express their opinion,
and, if it is stamped in accordance with their opinion with an
(a) Stamp Act, 1891, s. 100. ever, must be stamped before execu-
(6) Sec. 118. tion as the Inland Revenue refuse to
(c) See. ]17.Apparently it is stamp such indemnities after exeou-
competent to give an indemnity in tion on the ground that they are not
respect of the insuflBcient stamping bound to do so and are not minded
of an instrument dated prior to the to assist in reference to such
specified date. Such indemnity, how- indemnities.
806 STAMP DUTIES
adjudication stamp, no objection can thereafter be taken to the

sufficiency of the stamp. In a doubtful case, therefore, the office
may properly call upon the claimant to have any document of

title adjudicated before paying the claim.
Section I. —Stamps on Policies

stamps re- The stamp duty chargeable on policies is briefly as follows :
quired on
policies. Life policies are chargeable with an ad valorem duty (which must
be denoted by an impressed stamp (d)) upon the total amount
insured (e), the duty running from one penny where the amount
does not exceed ten pounds, to ten shillings for every thousand
pounds or fractional part thereof where the amount exceeds one
thousand pounds (/). Accident, sickness, fire, burglary, and all
insurances against loss or damage to property (g) (other than marine
insurances) are chargeable with a uniform duty of one penny,
whatever the amount insured Qi). Employers' liability poUcies
where the annual premium does not exceed two pounds, are also
chargeable with a duty of one penny (i). The one penny duty
on policies, other than
or marine,may
life be denotedby anadhesive
stamp (/c). Employer's Hability policies where the premium exceeds
two pounds (?), guarantee policies (m), bond investment policies (n),
and the like, are chargeable with a duty of sixpence as an agreement,
or if under seal with a duty of ten shillings as a deed (o). The
duty of sixpence on an agreement may be denoted by an adhesive
stamp ( p). The duty of ten shilhngs on a deed must be denoted by
an impressed stamp (q).
Insurance by Any notice or advertisement in a newspaper or other publica-
advertise-
ment. tion which purports to insure the payment of money in the case
{d) Stamp Act, 1891, s. 2. (i) Finance Act, 1899, s. 11 ;
That is to say, on the maximum

(e) Finance Act, 1907, s. 8.
sum which may become payable in (fc)Stamp Act, 1891, s. 99.
any event, but excluding bonuses (I)Lancashire Insurance v. Inland
(Alpe's Law of Stamp Duties, 12th Revenue, [1899] 1 Q. B. 353.
Edition, p. 199). (m) Mortgage Insurance v. Inland
(/) Stamp Act, 1891, Sched. I,
Revenue (1888), 57 L. J. Q. B. 174.
(Policy of Life Insurance), ss. 91, 98. (n) Mortgage Insurance v. Inland
Revenue (1888), 21 Q. B. D. 352.
(g) Insurance against loss of cattle (o) In Scotland an agreement is
by death arising from disease or
chargeable as a deed when there is a
accident is an insurance against registration clause. The distinction
loss or damage to property {A.-O v.
between an instrument under seal
Cleohury (1849), 4 Ex. 65). and an instrument under hand only is
(h) Stamp Act, 1891, Sched. I. not known in Scotland.
(Policy of Insurance against Accident, Stamp Act, 1891,
( p) s. 22.
etc.), ss. 91, 98. Stamp Act, 1891, s. 2.
(q)
— . . .
STAMPS ON POLICIES 807
of accident, sickness, fire, burglary, or any damage or injury to

property is a policy within the meaning of the Stamp Acts, and
liable to duty accordingly (r).
To meet the difficulty of stamping such notices and advertise- Composition

ments the Commissioners of Inland Revenue are authorised to gtamps on
enter into an agreement with the insurer for the rendering of policy-
quarterly accounts of unstamped policies, and the payment of a
5 per cent, duty on the aggregate amount of all sums received in
respect of premiums on such policies (s).
stamp Act, 1891 (<), Schedule I., amended by rinance Act, 1899 («), Table of
sec. 11, and Finance Act, 1907 (lu), sec. 8 duties.
Policy of Life iNsmANCE £ s. d.
Where the sum insured does not exceed £10 . . . ..001

Exceeds £10 but does not exceed £25 . . . . ..003
Exceeds £25 but does not exceed £500 :
For every full sum of £50, and also for any fractional part of
£50, of the amount insured .. .. .. .. ..006
Exceeds £500 but does not exceed £1003 :
For every full sum of £100, and also for any fractional part of
£100, of the amount insured .. .. .. .. ..010
Exceeds £1000 :
For every full sum

of £1000, and also for any fractional part
amount insured
of £1000, of the .. .. .. ..0100
And see sections 91, 98, and 100.
Policy of Insurance against Accident and Policy of insurance
for any pajonent agreed to be made during the sickness of any
person, or his incapacity from personal injury, or by way of in-

demnity against loss or damage of or to any property 1 . .
Policy of Insueance against Liability incurred by employers

in consequence of claims made upon them by workmen who
have sustained personal injury when the annual premium on
such policy does not exceed two pounds 1
Stamp Act, 1891, ss. 91, 98, 99, 100, 116
For the purposes of this Act the expression " policy of insurance "
91.
Meaning of
includes every writing whereby any contract of insurance is made or agreed policy of
to be made, or is evidenced, and the expression " insurance" includes assurance, insurance.
98. —
(1) For the purposes of this Act the expression " policy of life in- Meaning of
suranoe " means a policy of insurance upon any life or lives or upon any event pohcy of life
insurance
(r) Stamp Act, 1891, s. 98 Finance Act, 1896, s. 13 Finance

; ;
Finance Act, 1895, s.13 ; Finance Act, 1907, s. 8 (2).

Act, 1899, s. 11 ; Finance Act, 1907, (t) 54 & 55 Vict. c. 39.
s- 8 (1). (u) 62 & 63 Vict. c. 9.
(«) Stamp Act, 1891, s. 116; (t«) 7 Edw. 7, c. 13.
;
808 STAMP DUTIES
and policy of or contingency relating to or depending upon any life or lives except a policy
insuranc.3 of insurance against accident and the expression " policy of insurance
;
against acci-
against accident " means a policy of insurance for any payment agreed to be
dent.
made upon the death of any person only from accident or violence or otherwise
than from a natural cause, or as compensation for personal injury, and in-
cludes any notice or advertisement in a newspaper or other publication which
purports to insure the payment of money upon the death of or injury to the
holder or bearer of the newspaper or publication containing the notice only
from accident or violence or otherwise than from a natural cause.
(2) A policy of insurance against accident is not to be charged with any
further duty than one penny by reason of the same extending to any pajnnent
to be made during sickness or incapacity from personal injury.
Duty on 99. The duty of one penny upon a policy of insurance other than a policy
certain of sea insurance or life insurance may be denoted by an adhesive stamp,
policies may
be denoted which is to be cancelled by the person by whom the policy is first executed.
by adhesive 100. Every person who —
stamp. (1) Receives, or takes credit for, any premium or consideration for any
Penalty for insurance other than a sea insurance, and does not, witiiin one month
not making
out policy,
premium or consideration,
after receiving, or taking credit for, the
or making, make out and execute a duly stamped policy of insurance or ;
&c. any (2) Makes, executes, or delivers out, or pays or allows in account, or agrees
policy
to pay or allow in account, any money upon or in respect of any
not duly
stamped. policy other than a policy of sea insurance which is not duly stamped
shall incur a fine of twenty pounds.
Composition
forstamp
116. — (1) Where any person issuing policies of insurance against accident,
shall, in the opinion of the Commissioners, so carry on the business of such
duty on
policies of
insurance as to renderit impracticable or inexpedient to require that the duty
insurance of one penny be charged and paid upon the policies, the Commissioners may
enter into an agreement with that person for the delivery to them of quarterly
accident.
accounts of all sums received in respect of premiums on policies of insurance
against accident.
(2) The agreement shall be in such form and shall contain such terms and
conditions as the Commissioners may think proper, and the person with whom
the agreement is entered into shall observe the rules in the second part of the
Second Schedule to this Act.
(3) After an agreement has been entered into between the Commissioners
and any person and during the period for which the agreement is in force, no
policy of insurance against accident issued
by that person shall be chargeable
with any duty, but in lieu of and by way of composition for that duty there
shall be charged on the aggregate amount of all sums received in respect of
premiums on policies of insurance against accident a duty at the rate of five
pounds per centum as a stamp duty.
(4) If the duty charged is not paid upon the delivery of the account it
shall be a debt due to Her Majesty from the person by or on whose behalf the
account is delivered.
(5) In the case of wilful neglect to deliver such an account as is hereby
required or to pay the duty in conformity with this section the person shall
be liable to pay to Her Majesty a sum equal to ten pounds per centum upon
theamount of duty payable, and a like penalty for every month after the first
month during which the neglect continues.
—
STAMPS UN POLICIES 809
Stamp Act, 1891, Schedule II.
1. Every account shall be made in such form and shall contain all such Rules as to
particulars as the Commissioners shall require. composition
for stamp
2. Every account shall be a full and true account of all unstamped policies
duties.
of insurance against accident issued during the quarter of a year ending on
the quarterly day next preceding the delivery thereof, and of all sums of money
received for or in respect of such policies so issued during that quarter, and of
allsums of money received and not already accounted for in respect of any
other unstamped policies of insurance against accident issued at any time before
the commencement of that quarter.
3. Accounts shall be delivered to the Commissioners within twenty days
after the fifth day of April, the fifth day of July, the tenth day of October,
and the fifth day of January in each year.
4. The duty shall be paid upon the delivery of the account.
Finance Act, 1895 (cc), sec. 13
13. Whereas section ninety-eight of the Stamp

Act, I89I, provides that Extension of
" a policy of insurance against accident " includes a notice or advertisement in Stamp Act,
1891, s. 98,
a newspaper or other publication which purports to insure the payment of
to policies of
money upon the death of or injury to the holder or bearer of the newspaper or insurance for
pubhcation from accident, and doubts have arisen as to the like notices or sickness.
advertisements in other cases, it is hereby for the removal of doubts declared
that " a policy of insurance for any payment agreed to be made during the
sickness of any person or his incapacity from personal injury " within the
meaning of the Stamp Act, 1891, includes a notice or advertisement in a
newspaper or other publication which purports to insure such payment.
Finance Act, 1896 {y), sec. 13

13. The provisions of section one hundred and sixteen of the Stamp Act, Extension of
1891 (which relates to a composition for stamp duty on policies of insurance Stamp Act,
against accident), shall apply as if the expression " policy of insurance against _ 'ij^:.. J ,
accident " in that section included a policy of insurance for any payment insurance for
agreed to be made during the sickness of any person or during his incapacity sickness,
from personal injury.
Finance Act, 1899 (z), sec. 11

11. The provisions contained in section ninety-eight of the Stamp Act, 1 89 1, Extension of
-in reference to the expression " policy of insurance against accident " shall Stamp Act,
extend to and include policies of insurance or indemnity against liability .
emnioveM'
mourred by employers in consequence of claims them by work-made against liability
men who have sustained personal injury when the annual premium on such insurance,
policies does not exceed one pound.
Finance Act, 1907 (a), sec. 8

8- hereby declared for the removal of doubts that " a policy of Advertise
(1) It is
msurance for any payment agreed to be made by way of indemnity against ment insur-
ance against
{x) 58 Viet. c. 16. (2) 62 & 63 Viot. c.
(V) 59 & 60 Vict. c. 28. (a) 7 Edw. 7, c. 13.
810 STAMP DUTIES
loss or loss or damage of or to any property " within the meaning of the Stamp Act,
damage to
1891, includes any notice or advertisement in a newspaper or other publication
property.
which purports to insure such pajrment.
(2) The provisions of section one hundred and sixteen of the said Act
(which relates to composition for stamp duty on policies of insurance against
accident) shall apply to policies of insurance for any payment agreed to be made
by way of indemnity against loss or damage of or to any property as they
apply to policies of insurance against accident.
Employers' (3) Section eleven of the Finance Act, 1899 (which relates to policies of
liability
insurance in respect of injury tj workmen), shall be read as
if two pounds
insurance.
were substituted for one pound as the amount of annual premium therein
mentioned.
Endowment An endowment policy where the assured is entitled to the sum

policy charge-
able as a life assured on attaining a certain age is a policy of life insurance
IJolicy.
within the meaning of section 98. It is a policy upon a contingency
depending on a life. It is therefore chargeable as a policy only,
and not with any higher duty as a bond or covenant to secure
payment of money under the heading in the schedule, " Mortgage,
Bond, Debenture, Covenant." This principle applies whether the
policy be a pure endowment policy, a double endowment policy
(as in the case cited below),, an endowment policy with returnable
premiums, or an endowment assurance policy under which the
sum assured is payable at a certain age or on earlier death.
Prudential Insurance Co. v. Inland Revenue, [1904] 2 K. B. 658

Prudential In this case the insurance company issued an instrument under seal headed
Insurance Co. " Old Age Endowment with Life Assurance," whereby they agreed that in
V. Inland
Revenue. consideration of a weekly premium of M., to be paid by the assured until ho
should attain the age of 65 or during his life they should make one or other of
thefoUowingpajmients: £95, on attaining the age of 65; £30 on death under that
age. The Commissioners held that the main promise was to pay at the age of
65 and that the instrument was not a policy of life insurance, but a bond to
secure that payment, and assessed duty at is. &d. instead of 1«. as a policy.
it for
On appeal, Channell, J., held that the instrument was a policy, and chargeable
only as such. He said the mere heading of the instrument was of little assist-
ance. He must look at the contract itself and see what it really was. The
only substantial question was whether was a policy of insurance. If it was,
it
there could be no doubt that it was dependent on a life. Policy

related to or
of insurance was defined as including every writing whereby any contract of
insurance was made. Was this a contract of insurance ? Contracts of in-
surance were not confined to contracts of indemnity. The learned judge then
continued " A contract of insurance must be a contract whereby for some
:
consideration, usually, but not necessarily, for periodical payments called

premiums, you secure to yourself some benefit, usually, but not necessarily,
the payment of a sum of money upon the happening of some event. Then the
next thing that is that the event should be one which involves
necessary is
some amount There must be either uncertainty whether the

of uncertainty.
event will ever happen or not, or if the event is one which must happen at
some time, there must be uncertainty as to the time at which it will happen.
The remaining essential is that which was referred to by the Attorney- General
when he said the insurance must be against something. A contract which
would otherwise be a mere wager may become an insurance by reason of the
—
assured having an interest in the subject matter that is to say, the uncertain
event which is necessary to make the contract amount to an insurance must be
an event which prima facie adverse to the interest of the assured. The
is
insurance is payment of a sum of money to meet a loss or

to provide for the
detriment which will or may be suffered upon the happening of the event.
... It seems to me that for the purpose of determining whether this contract
comes within the definition, we must look at it as a whole and not split it up
into two different parts. If it were to be so split up and treated as two separate
contracts, I should incline to the view that even the old-age endowment
portion of it —that is to say, the contract to pay the sum of £95- —would satisfy
the definition. In the first place, the event on which the money is to be paid
is uncertain, for it is uncertain whether the assured will live to the age of 65,
and whether consequently the money will be payable at all. Secondly, it
seems to me that the event, in primd facie ndveise

addition to being uncertain, is
to the interests of the insured. A person whose life was insured at 6d. a week
would presumably be a poor p3rson and one who would have to earn his own
living, and his capacity of so earning his living would probably be materially
diminished by the time he reached the age of 65. And when you take the
. . .
whole contract together there does not seem to be any real difficulty about
the matter. A contract of life insurance is one by which persons entitle their
executors to receive a of money for distribution among their family in
sum
the event of their death. The objection to insurance is that if the assured
lives beyond the average period of life upon which the premiums of insurance
are based he has made a bad bargain, and he would have done better if he had
saved his money and invested it at compound interest. Consequently in

order to attract insurances it is usual for the insurance companies to give
benefits to persons who live beyond the average period of life. Most of them
do this by way of bonuses after the policy has been in existence for a certain
period, and the giving of such a bonus of course does not prevent the contract
from being a contract of insurance. Sometimes it is provided that the sum
insured shall be payable either upon the assured reaching a certain age or upon
death, whichever first happens. It is clear that that also would be a contract
of insurance. That is very like this case, the only difference being that here a
larger sum payable in the former event, and that is a difference which, in
is
my opinion, is immaterial."
The same document may contain more than one contract Where there
of insurance, and may be separately chargeable in respect of one insurance
each(&). The intiiesame
fact that there are several underwriters on the
T 1
pohcy.
same policy does not make the policy separately chargeable in
(6) stamp Act, 1891, s. 3 (2).

812 STAMP DUTIES
respect of each (c). The several underwriters have such a com-

munity of interest in the subject matter that one stamp is suffi-
cient (c). If, however, separate and distinct risks are insured in
the same policy, as if a burglary policy also contains a fidelity
insurance of the assured's employees, then the poKcy is chargeable

as two separate instruments {d). In order to determine whether
different obligations by the insurers contained in the pohcy are
separately chargeable, the test is to see whether each obligation
will stand alone {d). Where the one obligation is merely incidental
to the other, which constitutes the principal obhgation, then the
document is chargeable in respect of the latter obligation only (d).
Accident A policy of insurance against accident or illness does not

policy with
obligation
become chargeable as a life policy as well as an accident poUcy
to return by reason of the fact that the company undertakes to return to
proportion of
premiums. the assured or his representatives a certain proportion of the
premiums if, upon the assured's attaining a certain age or dying
under that age, the pohcy shall continue in force and no claim shall
have been made upon it.
General Accident v. Inland Revenue (1906), 8 F. 477

General The company by their policy promised to pay (A) the sum of four pounds ;
Accident v. per month during disablement througli illness (B) the sum of four pounds per
;
Inland
Revenue.
month during disablement from personal injury caused by accident (C) the ;
sum hundred pounds in the event of (1) death from accident, (2) loss of
of one
one hand and foot or both hands or both feet or permanent destruction of the
sight of both eyes. Then followed this clause " (D) Return of Premium. :
So soon as the assured under this policy shall reach the age of 65 years or in
the event of the previous death of the assured (the policy in either alternative
being in full force and effect) the corporation agrees to return to the assured
or to such assured's executors, administrators, or assigns 50 per cent, of all
premiums which have been paid to the corporation under this policy not
exceeding in the aggregate thesum of £12, provided that no payment has
had to be made under (1) or C (2) of this policy." The policy was stamped
with a penny stamp as an accident policy. The Crown claimed that it was
also chargeable with a duty of threepence as a life policy insuring a sum
exceeding £10 but not exceeding £25. The Court held that the policy was
chargeable as an accident policy only. That was the general character of
the instrviment, and prima facie it was chargeable as an accident policy, and
as that only. No doubt the same document might contain an accident

policy and a life policy ; but the best test for ascertaining whether there were
in fact two such instruments on the same document was to see whether the
alleged life policy could stand alone. It was clear that the provisions for
(c) Goodson v. Forbes (1815), 6 (d) General Accident v. Inland

Taunt. 171 Allen v. Morrison (1828),
; Revenue (1906), 8 F. 477.
8 B. & C. 565.
—
return of premium could not stand alone as a life policy. They were in fact
merely incidental to the accident polioj^ and constituted a scheme for reduction
of premiums in certain events.
A policy granted under section 11 of the Married Women's Stamps on

Property Act, 1882, may, in addition to the ad valorem policy duty, under
attract duty as a declaration of trust or settlementThere ^^^^^.g {dd).
has been considerable difference of opinion on this subject, but Property

compliance with the following rules will probably satisfy the
Inland Eevenue authorities :
(1)' No additional duty

u is required if the policy
i contains no Cases where
^ 1.
^ jjQ additional
declaration of trust. This will be the case where the policy follows duty is
^^^'^^^^
the Act simpliciter, and merely states that it is for the benefit of
the wife or of the wife and children generally. Some doubt

arises where the policy is expressed to be for the benefit of a named
wife of the assured " if living at his death." It has been suggested
that the introduction of a contingency is a departure from the form
of the statutory trust, and therefore attracts additional duty as
a declaration of trust. It is not in fact the practice of the autho-
rities to require any additional stamp on this ground, and probably
they could not insist upon it, as, strictly speaking, the words do
not amount to a declaration of trust. The resulting trust in favour
of the assured and his personal representatives is merely the con-
sequence of the termination of the statutory trust by reason of
the failure of the object thereof. Another doubt arises on the
introduction into these poUcies of the condition that the policy
shall not be surrendered for cash but only for a paid-up policy.
The object of this condition is to create a restraint on anticipa-
tion, and it is therefore said that it creates a trust beyond the
limits of the statutory trust, and should attract duty accordingly
as a declaration of trust. It is submitted that if this condition is
merely part of the contract of insurance between the company
and the assured it does not attract additional duty as a declara-
tion of trust, and that such duty is only payable where it is a special
restramt on the wife's interest only. Thus it would be payable
if the policy declared that it was for the benefit of " the wife of
the assured, if living at his death, absolutely," and that " during
the continuance of this trust the policy may not be surrendered
for cash " ; but it would not be payable where the policy wag
{dd) Such additional duty being not the insurers (Stamp Act, 1891, s.
payable by, and the stamping being 15 (2) (d)).
the duty of, the assured as settlor and
814 STAMP DUTIES
declared to be for the benefit of " the wife of the assured if living
at his death absolutely," and then there was a condition in general
terms, applicable to the assured's interest as well as to the trust
in favour of the wife, that the policy should not be surrendered for
cash.
Cases where (2) If the policy contains any declaration of trust not involving
additional
duty is re-
a trust for successive interests, it will attract an additional duty
quired in of 10s. as a declaration of trust. If the trust created is one other
respect of
declaration than the statutory trust under the section, it is clear that the extra
of trust.
duty must be paid, as in the case where there is a special restraint
upon anticipation of the wife's interest. It is submitted that
where the trust created does not travel beyond the hmits of the
statutory trust the mere expression in the policy that it is subject
to that trust ought not to attract additional duty. The Inland
Revenue authorities, however, appear to take the view that any
expression of the fact that there is a trust is chargeable. Thus if
the pohcy declared that " the amount of assurance payable shall
be held by the persons receiving the same for the benefit of . . .
wife of the assured, if Hving at his death, absolutely," they would

probably charge it as a declaration of trust, and even a bare state-
ment that the policy is made in pursuance of section 11 of the

Married Women's Property Act, 1882, might be sufficient in their
opinion to attract such duty. If it is desired to escape a claim
for additional duty, the words of the policy must leave the creation
of the trust entirely to the section. The following form, for
instance, would not be charged with additional duty " It is :
hereby declared that this policy shall be for the benefit of . . . the
wife of the assured in the event and in the event only of her surviving
him."
Cases where (3) If the policy contains not only a declaration of trust, but
settlement
duty is re-
carves out interests in succession, the policy is liable to additional
quired. duty as a settlement, that is, to an ad valorem duty of 5s. per cent.
on the value of the policy at the time the first premium is paidj
and the poUcy becomes effective. If the policy moneys are

directed to be held for the benefit of the wife during her Ufe and
with remainder to the children absolutely, there is clearly a settle-
ment. If the policy is an annual premium pohcy, it may have
no surrender value during the first year, but as the first premium
has been paid it has some value, and is probably chargeable with
a minimum duty of 5s. If the pohcy is a single premium policy,
then 5s. per cent, duty will be payable on the sum assured.
The interim receipt or cover note issued by insurance companies Stamp ou

to effect temporary insurance in fire, burglary, and similar risks fo/foeô/
is a " policy of insurance " within the
meaning of the Stamp Act, burglary,
and therefore must be stamped with a penny stamp as a policy

even although the premium received is less than £2 (e). One
penny stamp, however, is sufficient, whatever the amount of the
premium or the sum insured may be, because if the receipt is
stamped as a poUcy it is not also liable to duty as a receipt (/).

Sometimes when a policy is lost or destroyed, the company are Stamp on
prepared upon a statutory declaration and indemnity to issue a certified *copy
but the usual course in the case of a lost policy pol'oy.

duplicate policy, is
at most to issue a certified copy with a memorandum stating that it

confers no right on the assured or any other holder. In the case
of a dupUcate policy where the duty on the original was more than
5s. the duplicate will bear a maximum stamp of 5s., and must be
stamped with an impressed stamp denoting that the duty on the
original was paid. If the duty on the original was less than 5s.
the stamp will be the same as the original, and no impressed stamp
denoting payment of the duty on the original is necessary (g). In
the case of a certified copy the duty is Is., or if the duty on the
originalwas less than Is. then the same duty as on the original Qi).
The present practice with regard to the stamping of re-in- Stamp on
, T ., r L r -1 re-insurances. 1
surances where one company relieves another of part ot its risk is as
follows :
In the case of a life policy the re-insurance guarantee is
stamped with sixpence as an agreement, or if under seal with ten

shillmgs as a deed (i) subject to the original policy being duly
s'.amped and so certified to the stamping authorities. If the policy
duty on the amount re-insured would be less than sixpence or ten
shillings, as the case maybe, then the policy duty only is chargeable.
In the case of other policies the re-insurance is stamped with

the same stamp as an original contract.
(e) Bunyon on Fire Insurance, those which are under hand only.
3rd edition, p. 58. As regards stamp duty, the presence
(/) Stamp Act, 1891 (54 & 55 or absence of a registration clause
Vict. c. 39, Sched. I., "Receipt" in a Scottish agreement has the same
Exemption). effect that the presence or absence
(?) Stamp Act, 1891 (Sched. I., of a seal has in an English agreement.
Duplicate), s. 72. Reassurances rarely, if ever, contain
(h) Stamp Act, 1891 (Sched. I., a, registration clause, and therefore
Copy or Extract), s. 63. when executed in Scotland by a
(t) In Scotland there
is no such Scottish company are liable only to
distinction England between
as in the duty of sixpence,
documents which are sealed and
816 STAMP DUTIES
Stamp duty A bond to secure an annuity in consideration of a single

on annuities.
premium is chargeable with stamp duty as a conveyance or
transfer on sale, that is, with an ad valorem duty of, approxi-
mately, 10s. per cent, upon the amount of the premium, and
since April 29, 1910, 20s. per cent, except where the consideration
is less than £500 and the instrument contains a statement that
the transaction is not part of a larger transaction or series of
transactions where the consideration exceeds £500 (fc). A rever-
sionary annuity (that is payable to A on death of B) in con-

sideration of an annual premium is chargeable at 2s. &d. per £5
of the annuity or sum periodically payable. A deferred annuity
that is payable to A on his attaining a specified age) in considera-
tion of an annual premium is chargeable at M. per £5 of the
annuity (Z). In the case of a re-assurance or guarantee of an
annuity the Inland Eevenue authorities were formerly content
in every case with an ad valorem duty as a bond, but they
now demand the same duty as is chargeable upon the contract
guaranteed (m).
Section II. —Stamps on Beceipts

stamp Act, 1891, Schedule I.
Stamp on Receipt given for, or upon the payment of, money amounting to £2 £ s. d,
receipt. or upwards 001
Exemptions.
(11) Receipt indorsed or otherwise written upon or contained in any instru-
ment liable to stamp duty, and duly stamped, acknowledging the
receipt of the consideration money therein expressed, or the receipt
of any principal money, interest, or annuity thereby secured or
therein mentioned.
Stamp Act, 1891, ss. 101, 102, 103
Provisions as 101. — (1) Act the expression " receipt " includes
For the purposes of this
to duty upon any note, memorandum, or writing whereby any money amounting to two
receipts.
pounds or upwards, or any bill of exchange or promissory note for money
(A-) Vide infra, p. 822. an annuity, and more frequently in

(I) Vide infra, p. 841. the case of a guarantee of an annuity
(to) Titles to Life Assurance between offices, the only evidence of
Policies, by A. E. Sprague ; Transac- the transaction is a simple receipt
tions of the Faculty of Actuaries specifying in detail the terms of the
(Scotland), vol. ii. Part XI. p. 370. annuity. It is claimed that such a
Sometimes in the case of a grant of receipt does not attract duty either as
—
STAMPS ON EECEIPTS 817
amounting to two pounds or upwards, is acknowledged or expressed to have

been received or deposited or paid, or whereby any debt or demand, or any
part of a debt or demand, of the amount of two pounds or upwards, is acknow-
ledged to have been settled, satisfied, or discharged, or wliich signifies or
imports any such acknowledgment, and whether the same is or is not signed
with the name any person.
of
(2) The duty upon a receipt may be denoted by an adhesive stamp, which
is to be cancelled by the person by whom the receipt is given before he delivers

it out of his hands.
102. A receipt given without being stamped may be stamped with an Terms uiiou
impressed stamp upon the terms following ; that is to say, which
(1) Within fourteen days after it has been given, on payment of the duty r^
stamned
and a penalty of five pounds ; after execu-
(2) After fourteen days, but within one month, after it has been given, on tion.
payment of the duty and a penalty of ten pounds ;
and shall not in any other case be stamped with an impressed stamp.
103. If any person Penalty for
ofEences in
(1) Gives a receipt liable to duty and not duly stamped or ;
(2) In any case where a receipt would be liable to duty refuses to give a jeceitits
receipt duly stamped or ;
(3) Upon a payment to the amount of two pounds or upwards gives a

receipt for a sum not amounting to two pounds or separates or divides
the amount paid with intent to evade the duty ;
he shall incur a fine of ten pounds.
The exemption from receipt duty of receipts indorsed upon a Receipt for
duly stamped instrument acknowledging the receipt of the money i^ôrsed
thereby secured or therein mentioned applies to a receipt indorsed on policy,
upon a poHcy of insurance for the policy moneys or surrender

value, and therefore when the policy has been duly stamped
no stamp is required upon the receipt which is indorsed
thereon (n).
If the insurers desire not merely a receipt for the policy Where receipt
moneys, but a discharge from all further claims, as they would in discharge,
the case of a compromise where the claimant has accepted less
than his full claim, the receipt with such discharge mu^t be stamped
with a sixpenny stamp as an agreement (o).
A receipt for premium, if also intended to operate as a cover interim

note and to give interim protection, must be stamped as a ^^^^'P*-
policy (p).
If receipt of the same sum of money is acknowledged in two Duplicate
receipt,
a conveyance or a bond, but it is sub- v. Inland Revenue, [1900] 1 Q. B.
mitted that if it is the only record of 166 Firth and Sons, Ltd v. Inland
;
the transaction, it is chargeable as if Revenue, [1904] 2 K. B. 205.

the obligation of the grantor was fully (o) Whitev. South London Tramway
expressed. Co. (1889), The Times, December 13.
(n) London and Westminster Bank {p) Vide supra, p- 815.
i.L. 52
818 STAMP DUTIES
separate documents, both must be stamped as receipts. Thus

where a creditor gave a composite stamped receipt for a single
payment which covered a sum due for rent and goods supplied,
and also an unstamped document purporting to be a receipt for
the rent, it was held that the latter document ought to have been
stamped (g).
Section III. —Stamps on Assignments

Obligation on The proper stamping of assignments of life policies is secured
^^^"^ by penalising the office which pays a claim upon an unstamped or
claim
insufficiently stamped assignment. The following is the section
of the Stamp Act dealing with the matter.
Stamp Act, 1891, sec. 118 (r)
Assignment
of policy of
118. — (1) No assignment of a policy of life insurance shall confer on the
assignee therein named, his executors, administrators, or assigns, any right
to be stamped *° ^^® ^°^ ^^^moneys assured or secured thereby, or to give a valid discharge
before pay- for the same, orany part thereof, unless the assignment is duly stamped, and
ment of no payment shall be made to any person claiming under any such assignment
unless the same is duly stamped.
assur^
(2) If any payment is made in contravention of this section, the stamp
duty not paid upon the assignment, together with the penalty payable on
stamping the same, shall be a debt due to Her Majesty from the person by
whom the payment is made.
Absence of The object of the above section is to ensure payment of duty,
not invalidate ^T^^ tbis is done by throwing upon the insurance companies the
assignment,
obligation to See that duty has been paid in respect of every
assignment upon which a claim is based. The penalty for
failure to fulfil this obligation is twofold; (1) the office cannot

obtain a valid discharge from any claimant whose title is based
upon an unstamped or insufficiently stamped assignment ; (2)
the stamp duty and penalty may be recovered from the office.
Ithas been suggested that the effect of the section is to prevent

any assignment being valid at law or in equity unless and until
properly stamped, so that if A assigned to B, and then assigned
to C, and the second assignment was stamped tirst, it would
obtain priority. It seems reasonably clear that this is not so.
The section does not purport to affect the assignee's equitable
[1909] 2 I. R. 246.
(q) ^.-(?. v.i?o«», s. 19, where these provisions were
Be-enacting Customs and Inland
{r) first enacted.
Revenue Act, 1888 {51 Vict. o. 8),
STAMPS ON ASSIGNMENTS 81'
title, or the validity of the assignment, but is aimed solely at his

right to sue, or to give a discharge to, the insurers {qq). A title,
therefore, which is only defective

by reason of insufficient stamping,
can be made good at any time by having the documents stamped,
and no priority will have been lost by reason of the delay.
The Stamp Act does not impose any peculiar stamp duties Assignment
upon assignments of poUcies as distinguished from assignments °g
chanêaS
of other property. An assignment of a poHcy must be stamped ^^ an assign-
as a conveyance, mortgage, or settlement, as the case may be. property.
It was held in one case by Lord Tenterden that the assignment of

a marine pohcy (upon which no loss had occurred) by way of
security was not a conveyance of property within the meaning
of the Stamp Acts then in force (r), but this decision was doubted
by the Court of Exchequer in Caldwell v. Dawson where it (s),
was held that an assignment in security of a hfe policy was charge-

able with stamp duty as a mortgage of property. It seems reason-
ably clear under the present Stamp Act that every assignment of
a poUcy is chargeable with duty as a conveyance, mortgage, or
settlement of property.
Where several different items of property are transferred by Assignments
the same instrument between the same parties, that constitutes policies or
?eparate
one transfer only The instrument must be rproperly
(/). r J stamped
r
•' ^ '
_
interests m
so as to cover the aggregate of the items, and thus if a poHcy is the same
^°^'
assigned together with other property the assignment will not be ^°
admissible as evidence of the assignment of the pohcy unless the
stamp is sufficient to cover the assignment of the whole property
conveyed. Each item in such an assignment is not chargeable
separately. Thus if there were three poUcies in three different
companies assigned between the same parties, the same duty
would be chargeable on the assignment as if there was an assign-
ment of a single policy of the aggregate value of the three. But
where the same document contains assignments between different
parties of different interests, then there is an instrument relating
matters within the meaning of section 4 of the
to several distinct
Stamp Act, 1891, and each transaction is separately chargeable.

Thus where separate policies or separate interests in the same
policy are assigned to different parties by the same instrument,
(gg) The legal chose in action under (r) Blandy v. Herbert (1829), 9
the Policies of Assurance Act, 1867, B. & C. 396.
does not pass unless and until the (s) Exch. 1.
(l550), 5
assignment is properly stamped (30 («) Freeman
v. Inland Revenue
& 31 Vict. c. 144, s. 5). (1871), L, R. 6 Ex. 101.
820 STAMP DUTIES
there are as many assignments as there are parties taking a separate

interest, and each assignment is chargeable with stamp duty as
though it stood alone. Where a document containing an assign-
ment also fulfils some other function not merely incidental to the
assignment, then there are separate instruments written upon
the same material within the meaning of section 3 of the Stamp
Act, 1891, and each must be separately and distinctly stamped so
that each stamp can only be used for or appKed to the instrument
for which it is intended. Apparently if one such instrument was
properly stamped and the other was not, the document would be
admissible as evidence of the properly stamped instrument,
although iaadmissible as to the other.
Where an Every document forming a step in the assignee's title must
^® properly stamped. According to a strict interpretation of the
fsôancdledor
superseded, Act, it is Submitted that an insurance company ought to insist
discharged. on the Stamping document which has at any time trans-

of every
ferred the legal or equitable right to the poHcy moneys from one
person to another (a;). Thus where an assignment has been
executed but not stamped within the time Umited, and another
assignment is afterwards executed to the same effect in order to
evade the penalty which would be payable on stamping the first
assignment, the first assignment ought to be stamped and the

penalty paid (y). It has been said that the second assignment
ought also to be stamped, but as the first assignment is the operative
instrument, and the second, if it only purports to do what the first
has done already, is inoperative, it is submitted that the second

assignment need not be stamped. If, however, it has been
stamped, no allowance will be" made from the stamp duty and
penalties payable on the first assignment. Again, if an assign-
ment is cancelled there is in effect an assignment and re-assign-
ment, and each forms a step in the title of the assignor to whose
hands the right to the policy moneys has returned. The assignment
must be stamped, and if there is a written re-assignment it also
must be stamped. Thus in the case of a mortgage which has been
paid off the mortgagor ought to produce the mortgage and written
discharge, if any, both properly stamped.
But although a strict interpretation of the Stamp Act requires
(a;) Aitiole by Mr. A. R Barrand, brought to the notice of the Inland

Journal of the Institute of Actuaries, Revenue authorities they have stated
vol. xxxiii. p. 209. that no claim for duty or penalty
(y) In several cases, however, would be raised in respect of the first
where the ciroumstances have been assignment.
STAMPS ON ASSIGNMEN'l'S 821
every instrument which has once been operative as an assignment

to be stamped, the Inland Eevenue authorities do not at present
claim duty in every case. Thus where a mortgage has been
discharged and the policy has been mortgaged again, payment
may be made to the later mortgagee if his mortgage is properly
stamped, and the authorities will not insist on the earlier mortgage
and the discharge being stamped. Also in the case of a second
assignment being executed when the first assignment is unstamped
and liable to penalties the authorities do not always insist on the
stamping of the first assignment. No company, however, should
rely ia any of the above cases on the presumed consistency of the
authorities at Somerset House, but should obtain a letter from
them either dealing with the particular case or generally stating
that duty will not be claimed from the insurance company in
respect of certain documents being unstamped.
Where an assignment of a poUcycompanyis notified to a Question
the assignee may send the deed with a request that the company jg any obiiga-
shall register it. It has been suggested that if the company t'onupona
"° ' company -^
.
did register assignments they would bring themselves within the receiving and
provision of section 17, and thereby take on themselves the burden notice "of
of seeing that each assignment registered was properly stamped, assignment
It is very doubtful whether section 17 applies to the case of com- the assign-
panies recording assignments in their private books.

™operiy
The com-
parison of section 17 with section 16 suggests that the provisions stamped,
of the latter only apply to a public officer who registers or enters
the instrument in performance of some public or statutory duty.
If so, it would seem that neither section 16 nor 17 has any applica-
tion to entries of assignment or notices of assignment made in the
company's books.
stamp Act, 1891, ss, 16, 17
16. Every public officer having in his custody any rolls, books, records,
papers, documents, or proceedings, the inspection whereof may tend to secure
any duty, or to prove or lead to the discovery of any fraud or omission in re-
lation to any duty, shall at all reasonable times permit any person thereto
authorised by the Commissioners to inspect the rolls, books, records, papers,

documents, and proceedings, and to take such notes and extracts as he may
deem necessary, without fee or reward, and in case of refusal shall for every
offence incur a fine of ten pounds.
17. If any person whose office it is to enrol, register, or enter in or upon
— : . —
822 STAMP DUTIES
any rolls, books, or records any instrument chargeable with duty, enrols,
registers, or enters any such instrument not being duly stamped, he shall
incur a fine of ten pounds.
It is not in fact the practice of the life offices to record assign-

ments, but only to record the fact that they have received notice
of an assignment. The office may, as a matter of courtesy, point
out to an assignee who intimates an assignment any defect therein
or any obvious insufficiency of stamp, but in doing so it should
expressly disclaim any responsibihty in the matter. If in any
special case an office does record an assignment as distinguished
from a notice of assignment it first satisfies itself that the stamp
. thereon is sufficient.
Assignments Assignments by way of sale or gift are governed by the
conveyance following provisions of the Stamp and Finance Acts :
on sale or
gift.
Stamp Act, 1891, Schedule I.
Conveyance or Tkanspee on sale or otherwise-

(1) Of any stock of the Bank of England
(2) Of any stock of the Government of Canada inscribed in books
kept in the United Kingdon or of any Colonial stock to
which the Colonial Stock Act, 1877, applies
For every £100 and also for every fractional part of £100 of
the nominal amount of stock transferred .
Conveyance or Transeee on sale (z),
Of any property {except such stock as aforesaid),

Where the amount or value of the consideration for the sale does
not exceed £5
Exceeds £5, and does not exceed £10
£10
.
STAMPS ON ASSIGNMENTS 823
£
Exceeds £200, and does not exceed £225
„ £225 „ £250
„ £250 „ £275
„ £275 „ £300
„ £300
For every £50, and also for any fractional part of £50, of such
amount or value .
824 STAMP DUTIES
How con- 57. Where any property is conveyed to any person in consideration,
veyance in wholly or in part, of any debt due to him, or subject either certainly or con-
consideration
of a debt,
tingently to the payment or transfer of any money or stock, whether being
&o., to be or constituting a charge or incumbrance upon the property or not, the debt,
chaiged. money, or stock is to be deemed the whole or part, as the case may be, of the
consideration in respect whereof the conveyance is chargeable with ad valorem
duty.
Direction as
to duty in
58. — Where property contracted to be sold for one consideration for
(1)
the whole conveyed to the purchaser in separate parts or parcels by different
is
certain cases.
instruments, the consideration is to be apportioned in such manner as the
parties think fit, so that a distinct consideration for each separate part or
parcel is set forth in the conveyance relating thereto, and such conveyance is
to be charged with ad valorem duty in respect of such distinct consideration.
(2) Where property contracted to be purchased for one consideration for
the whole by two or more persons jointly, or by any person for himself and
others, or wholly for others, is conveyed in parts or parcels by separate in-
struments to the persons by or for whom the same was purchased for distinct
parts of the consideration, the conveyance of each separate part or parcel is
to be charged with ad valorem duty in respect of the distinct part of the

consideration therein specified.
(3) Where there are several instruments of conveyance for completing the
purchaser's title to property sold, the principal instrument of conveyance
only is to be charged vidth ad valorem duty, and the other instruments are to
be respectively charged with such other duty as they may be liable to, but
the last-mentioned duty shall not exceed the ad valorem duty payable in respect
of the principal instrument.
(4) Where a person having contracted for the purchase of any property,
but not having obtained a conveyance thereof, contracts to sell the same to
any other person, and the property is in consequence conveyed immediately
to the sub-purchaser, the conveyance is to be charged with ad valorem duty
in respect of the consideration moving from the sub-purchaser.
(5) Where a person having contracted for the purchase of any property
but not having obtained a conveyance contracts to sell the whole, or any
pait or parts thereof, to any other person or persons, and the property is in
consequence conveyed by the original seller to different persons in parts or
parcels, the conveyance of each part or parcel is to be charged with ad valorem
duty in respect only of the consideration moving from the sub-purchaser
thereof, without regard to the amount or value of the original consideration.
(6) Where a sub-purchaser takes an actual conveyance of the interest of
the person immediately selling to him, which is chargeable with ad valorem
duty in respect of the considerationmoving from him, and is duly stamped
accordingly, any conveyance to be afterwards made to him of the same pro-
perty by the original seller shall be chargeable only with such other duty as
it may be liable to, but the last-mentioned duty shall not exceed the ad valorem
duty.
Certain
contracts to
59. —
(1) Any contract or agreement made in England or Ireland under seal,
or under hand only, or made in Scotland, with or without any clause of registra-
be chargeable
as convey- tion [a], for the sale of any equitable estate or interest in any property what-
ances on sale. soever, or for the sale of any estate or interest in any property except lands.
(a) These words repealed Revenue Act, 1909 {9 Edw. 7, c. 43, s. 7).
tenements, hereditaments, or heritages, or property locally situate out of the

United Kingdom, or goods, wares or merchandise, or stock, or marketable
securities, or any ship or vessel, or part interest, share, or property of or in
any ship or vessel, shall be charged with the same ad valorem duty, to be paid
by the purchaser, as if it were an actual conveyance on sale of the estate,
interest, or property contracted or agreed to be sold.
(2) Where the purchaser has paid the said ad valorem duty and before
having obtained a conveyance or transfer of the property, enters into a con-
tract or agreement for the sale of the same, the contract or agreement shall
be charged, if the consideration for that sale is in excess of the consideration
for the original sale, with the ad valorem duty payable in respect of such excess
consideration, and in any other case with the fixed duty of ten shillings or of
sixpence, as the case may require.
(3) Where duty has been duly paid
in conformity with the foregoing pro-
visions, theconveyance or transfer made to the purchaser or sub-purchaser,
or any other person on his behalf or by his direction, shall not be chargeable
with any duty, and the Commissioners, upon application, either shall denote
the payment ad valorem duty upon the conveyance or transfer, or shall
of the
transfer the ad valorem duty thereto upon production of the contract or
agreement, or contracts or agreements, duly stamped.
(4) Provided that where any such contract or agreement is stamped with
the fixed duty of ten shillings or of sixpence, as the case may require, the
contract or agreement be regarded as duly stamped for the mere purpose
shall
of proceedings to enforce specific performance or recover damages for the
breach thereof.
(5) Provided also that where any such contract or agreement is stamped
with the said fixed duty, and a conveyance or transfer made in conformity with
the contract or agreement is presented to the Commissioners for stamping
with the ad valorem duty chargeable thereon within the period of six months
after the first execution of the contract or agreement, or within such longer
period as the Commissioners may think reasonable in the circumstances of
the case, the conveyance or transfer shall be stamped accordingly, and the
same, and the said contract or agreement, shall be deemed to be duly stamped.
Nothing in this proviso shall alter or affect the provisions as to the stamping
of a conveyance or transfer after the execution thereof.
(6) Provided also, that the ad valorem duty paid upon any such contract
oragreement shall be returned by the Commissioners in case the contract or
agreement be afterwards rescinded or annulled, or for any other reason be not
performed or carried into
substantially effect, so as to operate as or be followed
by a conveyance or transfer.
Where upon the sale of any annuity or other right not before in existence As to sale of
60.
such annuity or other right is not created by actual grant or conveyance, but
an annuity or
right not
is only secured by bond, warrant of attorney, covenant, contract, or otherwise,
before in
the bond or other instrument, or some one of such instruments, if there be existence.
more than one, is to be charged with the same duty as an actual grant or
conveyance, and is for the purposes of this Act to be deemed an instrument
of conveyance on sale.
61. — (1) In the cases herein-after specified the principal instrument is to Principal
instrument,
be ascertained in the following manner :
how to be
(a) Where any copyhold or customary estate is conveyed by a deed, no ascertained.
— : :
826 STAMP DUTIES
surrender being necessary, the deed is to be deemed the principal

instrument
(6) In other oases of copyhold or customary estates, the surrender or grant,
if made out of court, or the memorandum thereof, and the copy of
court roll of the surrender or grant, if made in court, is to be deemed

the principal instrument
(c) Where a disposition or assignation executed by the
in Scotland there is
seller, is executed for completing the title,
and any other instrument
the disposition or assignation is to be deemed the principal instru-
ment.
(2) In any other case the parties may determine for themselves which of
several instruments is to be deemed the principal instrument, and may pay the
ad valorem duty thereon accordingly.
What ia 62. Every instrument and every decree or order of any Court or of any
deemed to Commissioners, whereby any property on any occasion, except a sale or mort-
be a con- gage, is transferred to or vested in any person is to be charged with duty as a
veyance on
any occasion conveyance or transfer of property.
not being a Provided that a conveyance or transfer made for effectuating the appoint-
sale or mort- ment of a new trustee is not to be charged with any higher duty than ten
sliillings.
Pinance Act, 1898 {a), see. 6
Removal of 6. For the removal of doubts with reference to the effect of sections fifty-
doubt as to four and fifty-seven of the Stamp Act, 1891, it is hereby declared that the
application of
definition of "conveyance on sale" in the said section fifty-four includes a
Stamp Act,
1891, as. !i4 decree or order for or having the effect of an order for foreclosure.
and 57. Provided that
(a) the ad valorem stamp duty upon any such decree or order shall not
exceed the duty on a sum equal to the value of the property to wliich
the decree or order relates, and where the decree or order states that
value that statement shall be conclusive for the purpose of deter-
mining the amount of the duty ;
(6) where ad valorem stamp duty is paid upon such decree or order any
conveyance following upon such decree or order shall be exempt
from the ad valorem stamp duty.
rinance Act, 1910 (6), ss. 73, 74

Stamp duty The stamp
73. duties chargeable under the heading "Conyeyanck or
on convey- Teansfbr on Sale of any Property " in the First Schedule to the Stamp Act,
ances or
transfers on
1891 (in this Part of this Act referred to as the principal Act), shall be double
sale. those specified in that Schedule Provided that this section shall not apply
:
to the conveyance or transfer of any stock or marketable security as defined

by section one hundredand twenty-two of that Act, or to a conveyance or
transfer where the amount or value of the consideration for the sale does not
exceed five hundred pounds and the instrument contains a statement certif3dng
that the transaction thereby effected does not form part of a larger transaction
or of a series of transactions in respect of which the amount or value, or the
aggregate amount or value, of the consideration exceeds five hundred pounds,
(a) 61 & 62 Vict. c. 10. (6) 10 Edw. 7, 0. 8.

74. — (1) Any conveyance

or transfer operating as a voluntary disposition Stamp duty
inter vivos shall be chargeable with the like stamp duty as if it were a conveyance on gifts inter
or transfer on sale, with the substitution in each case of the value of the property
conveyed or transferred for the amount or value of the consideration for the
sale:
Provided that this section shall not apply to a conveyance or transfer Exclusion of
operating as a voluntary disposition of property to a body of persons incor- gift to non-
profit sharing
porated by a special Act, if that body is by its Act precluded from dividing body.
any profit among its members and the property conveyed is to be held for the
purposes of an open space or for the purposes of its preservation for the benefit
of the nation,
(2) Notwithstanding anything in section twelve of the principal Act, Commis-

sioners may
the Commissioners may be required to express their opinion under that section
on any conveyance or transfer operating as a voluntary disposition inter vivos, opmion on
and no such conveyance or transfer shall be deemed to be duly stamped unless conveyance.
the Commissioners have expressed their opinion thereon in accordance with
that section.
(3) Subsection (2) of section fifteen of the principal Act, which enables Stamping
after execu-
certain instruments to be stamped after execution,-shall apply to conveyances or
tion.
transfers operating as voluntary dispositions inter vivos as if those conveyances
or transfers first column of the table in paragraph (d) of
were specified in the
that subsection, and the grantor or transferor were specified in the second
column of that table.
(4) Wliere any instrument is chargeable with duty both as a conveyance Settlement.
or transfer under this section and as a settlement under the heading "Settle-
ment " in the First Schedule to the principal Act, the instrument shall be
charged with duty as a conveyance or transfer under this section, but not as a
settlement under the principal Act.
(5) Any conveyance or transfer (not being a disposition made in favour Conveyance
for indequate
of a purchaser or incumbrancer or other person in good faith and for valuable
considera-
consideration) shall, for the purposes of this section, be deemed to be a con- tion.
veyance or transfer operating as a voluntary disposition inter vivos, and
(except where marriage is the consideration) the consideration for any con-
veyance or transfer shall not for this purpose be deemed to be valuable con-
siderationwhere the Commissioners are of opinion that by reason of the
inadequacy of the sum paid as consideration or other circumstances the
conveyance or transfer confers a substantial benefit on the person to whom
the property is conveyed or transferred.
(6) A conveyance or transfer made for nominal consideration for the Conveyance
for appoint-
purpose of securing the repayment of an advance or loan or made for effectuating trustee.
ing the appointment of a new trustee or the retirement of a trustee, whether
the trust is expressed or implied, or under which no beneficial interest passes
in the property conveyed or transferred, or made to a beneficiary by a trustee

or other person in a fiduciary capacity under any trust, whether expressed or
implied, or a disentailing assurance not limiting any new estate other than
an estate in fee simple in the person disentailing the property, shall not be
charged with duty under this section, and this subsection shall have efiect
notwithstanding that the circumstances exempting the conveyance or transfer
from charge under this section are not set forth in the conveyance or
transfer.
.
828 STAMP DUTIES
When assign- An assignment is chargeable with duty as a conveyance on
^MgeaMe as
^^^^ when it is made for a consideration in money, or money's
conveyance worth such as the discharge of a debt, or in stocks or shares (c).
on sale. to
If
i
the assignment
. .
is contained
i
m
•
a marriage or other family

.i .. -i
settlement made in consideration of natural love and affec-
tion, it will be charge.able as a settlement, and not as a con-

veyance on sale, even although part of the consideration may be
money or stocks or shares {d) ; but, on the other hand, where a
transaction is primarily a sale it will be chargeable as such, even
although it may form part of what is called a family arrangement (e)
Upon what Duty is chargeable on the actual consideration passing, not
duty^charge- necessarily on the consideration recited in the instrument. The

able. consideration includes the total money obligation falUng upon the
purchaser directly or indirectly as the price of the property trans-
ferred to him (/).
Assignment The provisions of Section 57 require some comment. Where
'^ ^ property is conveyed by a debtor to his creditor in full or part
debt.
payment of a debt, duty as on a conveyance on sale is chargeable
to the amount of the debt discharged, even although owing to the
insolvency of the debtor the debt might be regarded as a bad
debt ig).
Foreclosure of Where a mortgagor is foreclosed and the equity of redemption

raor gage.
passes to the mortgagee either under the order of the Court or by
a conveyance made in pursuance of the order, the order or the
conveyance is chargeable to the amount of the value of the property
but not to the full value of the debt, even altho^gh the effect of
the foreclosure order is to debar the mortgagee from suing for the
balance of the debt without opening up the foreclosure (h). Where
a debtor executed a trust deed for creditors and a mortgagee
valued his security and proved for the balance and the trustee
conveyed to him the equity of redemption, the conveyance was
chargeable with ad valorem duty to the amount of the valuation (i).
Sale subject Where property which is subject to a mortgage or charge is pur-

to debt.
chased the purchaser, in addition to the purchase price, must pay
off the debt before he is entitled to the free and unincumbered
(c) Coats V. Inland Revenue, [1897] {g) Inland Revenue v. North British
2 Q. B. 423. Railway Co. (1901), 4 F. 27.
(d) Massy v. Nanney (1837), 3 {h) Huntington v. Inland Revenue,
Bing. N. C. 478. [1896] 1 Q. B. 422 Finance Act,
;
(e) Bristol {Marquess) v. Inland 1898, s. 6 Lovell and Collard's

;
Revenue, [1901] 2 K. B. 336. Contract, In re, [1907] 1 Ch. 249.

(/) Inland Revenue V. Glasgow and (i) Scottish Equitable v. Inland
S.-W. Ry. (1887), 12 A. C. 315. .
Revenue (1894), 22 R. 85.
corpus of the subject matter of the sale, and therefore the whole
sum, principal, and interest, which at the date of the sale would
be required to redeem the property, must be added to the price
for the purposes of duty, and this is so even although the purchaser
has not given the vendor any indemnity or promised to pay the
debt (fc).
Where a policy of insurance is subject to a mortgage or charge Where policy
in favour of the company which

it and the policy is assigned
issued clargeîn
Eevenue authorities do not fajouro£
subject to that charge, the Inland
in practice insist upon payment of more than the actual considera-
tion passing between assignor and assignee (1). They consider

that the case of an advance by the office which insured the pohcy
is totally different from the case of an advance by an independent
office or person : but it may well be doubted whether there is
any such difference in law to permit of the present official opinion

being relied on as a general and permanent ruUng.
A disposition of property inter vivos made without valuable Voluntary
consideration or for an inadequate consideration after April 29, and dTsposi-
1910, is chargeable upon the same scale of duty as a conveyance tionsforan
or transfer on sale, but the duty is assessed upon the actual value considera-
*'°°'
of the property transferred instead of the amount of the considera-
tion, and the instrument is not deemed to be duly stamped unless
it has been adjudicated by the Commissioners (m). A voluntary
assignment of a policy executed after the above date is not there-
fore duly stamped unless it bears the Inland Eevenue adjudication
stamp ; and if there is any reason to suppose that a transfer for
valuable consideration may have been made for an inadequate
consideration, the transfer cannot safely be acted upon unless there
has been an adjudication.
A voluntary disposition executed before April 29, 1910, and Voluntary
not being a settlement, was chargeable with a ten shilling stamp before' i9io.
only, as a conveyance or transfer not otherwise specified. Ap-
parently the fact that the poHcy was subject to a charge in favour
of a third person did not make the disposition chargeable as a
Mortimore v. Inland Eevenue

{k) of Qd. for every £100 or fraction
(1864), 2H. & C. 838. If the mort- thereof of such debt,
gagee is a party to the assignment [1) Article by Mr. A. R. Barrand,
and the purchaser covenants with in the Journal of the Institute of
him to pay the mortgage debt, the Actuaries, vol. xxxiii. p. 227 High- ;
document will also be chargeable more on Stamp Laws, 2nd edition,

under the head of " Mortgage Bond p. 136.
Debenture Covenant, (2) Collateral (m) Finance Act, 1910, s. 74,
Security,' with a duty at the rate
—
830 STAMP DUTIES
conveyance on sale unless the donee bound himself to pay the debt
charged on the policy.
Assignments by way of mortgage are chargeable under the

by way of
heading of Mortgage in the schedule to the Stamp Act, 1891.
mortgage.
Mortgage, Bond, Debbnttjbb, Covenant (except a marketable

security otherwise specially charged with duty), and Wabkant
or Attorney to confess and enter up judgment.
(1) Being the only or principal or primary security (other than

an equitable mortgage) for the payment or repayment
of money £ s. d.
Not exceeding £10

exceeding £10 and not exceeding £25
£25 „ £50
£50 £100
£100 £150
£150 £200
£200 £250
£250 £300
£300
; —

£ s. d.
(5) Reconveyance, Release, Discharge, Subbendeb,
Resubbendek, Waeeant to Vacate, or RENtrNCiATioN
of any such security as aforesaid, or of the benefit thereof,
or of the money thereby secured :
For every £100, and also for any fractional part of £100,
of the total amount or value of the money at any time
secured . . . . . . . . . . . . ..000
Revenue Act, 1903 (a), see. 7
7. The whole amount of duty payable under or by reference to paragraph (2) Ten shillings
heading "Mortgage, Bonp, Debenture, Covenant, and Warrant of

maximum
of the
"
Attorney in the First Schedule to the Stamp Act, 1891, on any instrument goUateral
being a collateral or auxiliary or substituted security or by wây of further security,
assurance shall not exceed ten shillings.
Stamp Act, 1891, ss. 86, 87, 88, 89, and 23

86. — For the purposes of this Act the expression " mortgage " means Meaning of
(1)
mortgage,
a seciwity by way of mortgage for the payment of any definite and certain "
sum of money advanced or lent at the time, or previously due and owing, or
forborne to be paid, being payable, or for the repayment of money to be there-
after lent, advanced, or paid, or which may become due upon an account
current, together with any sum already advanced or due, or without, as the
casemay be
And includes
(a) Conditional surrender by way of mortgage, further charge, wadset, and
heritable bond, disposition, assignation, or tack in security, and eik
to a reversion of or affecting any lands, estate, or property, real or
personal, heritable or moveable, whatsoever and
:
(6) Any deed containing an obligation to infeft any person in an annual

rent, or in lands or other heritable subjects in Scotland, under a
clause of reversion, but without any personal bond or obligation
therein contained for pajrment of the money or stock intended to be
secured : and
(c) Any conveyance of any lands, estate, or property whatsoever in trust
to be sold or otherwise converted into money, intended only as a
security, and redeemable before the sale or other disposal thereof,
either by express stipulation or otherwise, except where the convey-
ance is made for the benefit of creditors generally, or for the benefit
of creditors specified who accept the provision made for payment of
their debts, in full satisfaction thereof, or who exceed five in number :
and
{d) Any defeazance, letter of reversion, back bond, declaration, or other
deed or writing for defeating or making redeemable or explaining or
qualifying any conveyance, transfer, disposition, assignation, or
tack of any lands, estate, or property whatsoever, apparently absolute,
but intended only as a security and :
(e) Any agreement an agreement chargeable with duty as an

(other than
equitable mortgage), contract, or bond accompanied with a deposit
of title deeds for making a mortgage, wadset, or any other security
or conveyance as aforesaid of any lands, estate, or property comprised
(a) 3 Edw. 7, e. 46.

832 STAMP DUTIES
in the title deeds, or for pledging or charging the samo as a security :
and
(/) Any deed whereby a real burden is declared or created on lan'ds or
and
heritable subjects in Scotland :
{g) Any deed operating as a mortgage of any stock or marketable security.

"
(2) For the purpose of this Act the expression " equitable mortgage
means an agreement or memorandum, under hand only, relating to the deposit
of any title deeds or instruments constituting or being evidence of the title
to any property whatever (other than stock or marketable security), or creating
a charge on such property.
Direction as
to duty in
87. — (
1 ) A security for the transfer or retransf er of any stock is to be charged
with the same duty as a similar security for asum of money equal in amount to
certain cases.
the value of the stock and a transfer, assignment, disposition, or assignation
;
of any such security, and a reconveyance, release, discharge, sxirrender, re-

surrender, warrant to vacate, or renunciation of any such security, is to be
charged with the same duty as an instrument of the same description relating
to a sum of money equal in amount to the value of the stock.
(2) A security for the payment of any rentcharge, annuity, or periodical
payments, by way of repayment, or in satisfaction or discharge of any loan,
advance, or payment intended to be so repaid, satisfied, or discharged, is to
be charged with the same duty as a similar security for the pajrment of the
sum of money so lent, advanced, or paid.
(3) A transfer of a duly stamped security, and a security by way of further
charge for money or stock, added to money or stock previously secured by a
duly stamped instrument, is not to be charged with any duty by reason of
its containing any further or additional security for the money or stock trans-
ferred or previously secured, or the interest or dividends thereof, or any new
covenant, proviso, power, stipulation, or agreement in relation thereto, or
any further assurance of the property comprised in the transferred or previous
security.
(4) Where any copyhold or customary lands or hereditaments are mort-

gaged alone by means of a conditional surrender or grant, the ad valorem duty
is to be charged on the surrender or grant, if made out of court, or the memo-
randum thereof, and on the copy of court roll of the surrender or grant, if
made in court.
(5) Where any copyhold or customary lands or hereditaments are mort-
gaged, together with other property, for securing the same money or the same
stock, thead valorem duty is to be charged on the instrument relating to the
other property, and the surrender or grant, or the memorandum thereof, or
the copy of court roll of the surrender or grant, as the case may be, is not to
be charged with any higher duty than ten shillings.
(6) An instrument chargeable with ad valorem duty as a mortgage is not
to be charged with any further duty by reason of the equity of redemption
in the mortgaged property being thereby conveyed or limited in any other
manner than to a purchaser, or in trust for, or according to the direction of,
a purchaser.
Security 88. — (1) A security for the money to be lent,
payment or repajTnent of
for future advanced, or paid, or which may become
due upon an account current, either
advances,
with or without money previously due, is to be charged, where the total
how to be
charged. amount secured or to be ultimately recoverable is in any way limited, with
the same duty as a security for the amount so limited.
(2) amount is unlimited, the security is to be available

Wliere such total
for amount only as the ad valorem duty impressed thereon extends to
such an
cover, but where any advance or loan is made in excess of the amount covered
by that duty the security shall for the purpose of stamp duty be deemed to be
a new and separate instrument, bearing date on the day on which the advance
or loan is made.
(3) Provided that no money to be advanced for the insurance of any pro-
perty comprised in the security against damage by fire, or for keeping up any
policy of life insurance comprised in the security, or for effecting in lieu thereof
any new poMcy, or for the renewal of any grant or lease of any property com-
prised in the security upon the dropping of any life whereon the property is
held, shall be reckoned as forming part of the amount in respect whereof the
security is chargeable with ad valorem duty.
The exemption from stamp duty conferred by the Act of the Session Exemption
89.
held in the sixth and seventh years of King William the Fourth, chapter f''°™ stamp
thirty-two, for the regulation of benefit building societies, shall not extend ?"
'"
^ f
to any mortgage made after the thirty-first day of July one thousand eight benefit build-
hundred and sixty-eight, except a mortgage by a member of a benefit building ing societies
"^sstricted.
society for securing the repayment to the society of money not exceeding
five hundred pounds.
23. —
^(1) Every instrument under hand only (not being a promissory note Certain
or bill of exchange) given upon the occasion of the deposit of any share warrant mortgages of
^*°'^'^
or stock certificate to bearer, or foreign or colonial share certificate, or any w
security for money transferable by delivery, by way of security for any loan, as agree-
shall be deemed to be an agreement, and shall be charged with duty accordingly, ments.
(2) Every instrument under hand only (not being a promissory note or bill
of exchange) making redeemable or qualifying a duly stamped transfer, in-
tended as a security, of any registered stock or marketable security, shall

be deemed to be an agreement, and shall be charged with duty accordingly.
(3) A release or discharge of any such instrument shall not be chargeable
with any ad valorem duty.
A policy of insurance is not a security for money transferable Memorandum

'^p°^'*-
by deKvery, and therefore a memorandum of deposit is chargeable °
ad valorem under the schedule, and not as an agreement under

section 23. Where a memorandum of deposit relates to marketable
securities and poUcies, it will be chargeable with a sixpenny agree-
ment stamp in respect of the marketable securities and ad valorem
in respect of the policies.
As an equitable mortgage chargeable at a lower rate than Equitable
is
important to determine when a mortgage ^°^

^^^^'
other mortgages, it is
of a poUcy is an equitable mortgage. It might be said that an

equitable mortgage is a mortgage created by an instrument under
hand only as compared with a mortgage created by a deed, or
it might be said that there is an equitable mortgage where the
instrument is not sufficient to transfer to the mortgagee the title
to sue in his own name. The Inland Eevenue authorities, however,

i.L. 53
834 STAMP DUTIES
have adopted neither of these possible tests, but have applied a

test of their own which, although reasonable, does not seem to have
any legal justification. Their practice is to pass as an equitable
mortgage a simple memorandum of deposit containing no powers of
sale or similar conditions, but to charge the higher duty on (1) all
instruments under seal and (2) all instruments under hand, includ-
ing memoranda of deposit which contain express powers of sale
or other conditions which are under the Conveyancing Act implied
in a mortgage by deed or which contain an agreement to execute
a legal mortgage when called upon (n). As long as this practice
is continued companies are practically safe in following it without
inquiring whether it is legally accurate.
Primary or The duty chargeable on a simple memorandum of deposit is
collateral
security.
the same rate, that is the rate of an equitable mortgage, whether
it is a primary or collateral security, and it cannot be deducted
from the higher duty payable on a complete mortgage if such is

afterwards executed (6). The question has been raised whether a
mortgage of a policy to secure a debt for which the debtor has
already given his promissory note is a primary or collateral
security. It is submitted that the mortgage of the policy, although
not the first in point of time, must be deemed the principal security,
and is chargeable as such and not merely as a collateral security.
Mortgage In the case of a mortgage to secure a current account on future
to secure
balance ot advances without limit, the document is available only as a
account. amount covered by the stamp, and if any advance
security for the
is made in excess of the amount so covered the document is
deemed to be a new and separate instrument bearing date on the

day on which the advance is made (y). Each time, therefore, that
the balance of the account exceeds the amount covered by the
stamp impressed upon the document at that time, the document
ought to receive an additional stamp to cover the excess (p). If
it is not so stamped the document is not available in the hands
of the mortgagee as security for the excess, although it remains

a valid and properly stamped security for the amount covered
by the stamp. Strictly speaking, when an office is called upon
to pay upon a policy mortgaged to secure a current account, it
(n) Alpe's Law of Stamp Duties, (p) Stamp Act, 1891, s. 88;
12th Edition, p. 187 ; article by Mr. articleby Mr. A. R. Barrand in the
A. R. Barrand in Journal of Institute Journal of the Institute of Actuaries,
of Actuaries.
vol. xli.
(o) Alpe's Law of Stamp Duties.
12th Edition, p. 182.
.
ought to be satisfied that the mortgage was stamped to cover

the maximum balance charged at any time upon the poUcy.
This follows from the principle that every document which has
at any time transferred the legal or equitable right to the policy
moneys from one person to another ought to be properly stamped (q)
If the balance of the current account at any time exceeded the
amount covered by the stamp on the mortgage, then an equitable

right to the policy moneys was transferred to the mortgagee by
a document not properly stamped. If, however, the practice is
followed of not insisting upon the stamping of a mortgage where

the title has returned to the mortgagor, then it will not be necessary
to insist on the mortgage to secure a current account beiag stamped
so as to cover anything beyond the balance existing at the time
payment on the poUcy is made {q). When payment is made on a
surrender, the surrender value may be less than the balance
charged on the policy. The stamp in such case ought to be
sufficient to cover the balance, but the Inland Eevenue does not
more in any case than a stamp
require sufficient to cover the
payment actually made by the company.

Sometimes a mortgage is effected by deed of conveyance pur- Conveyance
o ex Jfacie to be
portiug
r an absolute sale,
'
and the fact that it is a ^^M^^
_ absolute but
mortgage only appears aliunde. The mtention to treat the in fact
'^°^ ^^^^'
transaction as a mortgage usually appears in some contemporary
document, such as a letter addressed by the assignee to the assignor,
known in Scotland as a " back letter." If the object of putting
the transaction in this form is to enable the assignee to exercise
the powers of an absolute owner against third parties without
disclosing the assignor's equity of redemption, then the conveyance
must be stamped as a conveyance on sale. If, however, it is not
desired to use the conveyance otherwise than as a mortgage, and
the conveyance and " back letter " are produced together for
adjudication, the Commissioners will usually accept a duty of 10s.
on the conveyance and mortgage duty on the " back letter."
The fifth paragraph under the heading Mortgage in the schedule Reoonvey-
imposes an ad ?;atorem duty upon a reconveyance, release, discharge,
^jgase
etc., of any security. This only appUes to such discharges as Discharge,
have the effect of wholly freeing the subjects of the security from
that security. Where a discharge merely discharges the security
in part and leaves a balance still charged on the subject matter,
that instrument is liable to an ordinary deed or agreement stamp.
(2) Vide supra, p. 820,
836 STAMP DUTIES
Where after such partial discharge the subjects of the security

are finally discharged from the balance, such final discharge is
Uable to the ad valorem duty under the fifth paragraph calculated

upon the total amount at any time secured (r).
Transfer of Where instead of a simple assignment of a debt and a transfer
charge
of the security by the mortgagee to the assignee of the debt the
efEected by
release and transaction takes the form of a lease by the mortgagee in favour
new charge
in favour of of the mortgagor, and a fresh conveyance by the mortgagor to
transferee.
the assignee of the subject of the security with a proviso for re-
demption on payment of the debt to the assignee, the instrument
is not chargeable as a release and fresh mortgage, but merely as a
transfer (s).,
Receipt for A bare on the mortgage deed or memorandum

receipt indorsed
moneys due
on mortgage. of deposit acknowledging the repayment of the money thereby
secured is not chargeable with duty if the mortgage or memo-
randum itself was duly stamped (t) ; but if the indorsement
contains anything else but a bare receipt for the money, it may be
chargeable as a reconveyance, release or discharge of the security.
Deed of Where the title to a policy passes under a deed of arrangement
airangement.
made by, for, or in respect of the affairs of a debtor for the benefit
of his creditors generally otherwise than in pursuance of the
bankruptcy laws, such deed must, in addition to the duty charge-

able thereon as a conveyance or mortgage, as the case may be,
be stamped with an ad valorem duty of one shilhng for every

hundred pounds or fraction of a hundred pounds of the sworn
value of the property passing (u).
Assignments An assignment may be chargeable as a settlement under that

constituting
settlements.
heading in the schedule to the Stamp Act, 1891.
Settlement. Any instrument, whether voluntary or upon any

good or valuable consideration, other than a bonel, fide pecuniary
consideration, whereby any definite and certain principal sum of
money (whether charged or chargeable on lands or other heredita-
ments or heritable subjects, or not, or to be laid out in the purchase
of lands or other hereditaments or heritable subjects or not), or
(r) McKimmie's Trustees v. Inland Receipt Exemption (II. ) ; Firih &

Revenue (1895), 23 B. 232. Son V. Inland Revenue, [1904] 2
(s) Wale V. Inland Revenue (1879), K. B. 205.
4 Ex. D. 270 Humphreys v. Inland
; (m) Deeds of Arrangement Act,
Revenue (1899), 81 L. T. 199. 1887 (50 & 51 Vict. c. 57, ss. 4 (2),
(t) Stamp Act, 1891, First Schedule, 6(2).
:

£ s. d.
any definite andamount of stock, or any security, is

certain
settled or agreed to be settled in any manner whatsoever :
Tor every £100, and also for any fractional part of £100, of the
amount or value of the property settled or agreed to be
settled 5
Exemption.
Instrument of appointment relating to any property in favour
of persons specially named or described as the objects of a
power of appointment, where duty has been duly paid in
respect of the same property upon the settlement creating
the power or the grant of representation of any will or testa-
mentary instrument creating the power.
Stamp Act, 1891, ss. 104, 105, 108
104. — (1) Where any money which may become due or payable upon any As to settle,
ment of
policy of life insurance, or upon any security not being a marketable security,
policy or
is settled or agreed to be settled, the instrument whereby the settlement is
security.
made or agreed to be made is to be charged with ad valorem duty in respect of
that money.
(2) Provided as follows :
(o) Where, in the case of a policy, no provision is made for keeping up the
poUoy, the ad valorem duty is to be charged only on the value of the
policy at the date of the instrument
(6) If in any such case the instrument contains a statement of the said
value, and is stamped in accordance with the statement, it is, so far
as regards the policy, to be deemed duly stamped, unless or until
it is shown that the statement is untrue, and that the instrument is
in fact insufficiently stamped.
105. An instrument chargeable with ad valorem duty as a settlement in Settlements
respect of any money, stock, or security is not to be charged with any further when not to
be charged
duty by reason of containing provision for the payment or transfer of the as securities.
money, stock, or security, or by reason of containing, where the money, stock,
or security is in reversion or is not paid or transferred upon the execu-
tion of the instrument, provision for the payment, by the person entitled in
possession to the interest or dividends of the money, stock, or security, during
the continuance of such possession, of any annuity or yearly sum not exceeding
interest at the rate of four pounds per centum per annum upon the amount
or value of the money, stock, or security.
106. — (1) Where several instruments are executed for effecting the settle- Where
ment of the same property, and the ad valorem duty chargeable in respect of several
the settlement of the property exceeds ten shillings, instruments
one only of the instruments
one only
is to be charged with the ad valorem duty. to be
(2) Where a settlement is made in pursuance of a previous agreement charged with
upon which ad valorem settlement duty exceeding ten shillings has been paid ad valorem
duty.
m respect of any property, the settlement is not to be charged with ad valorem
duty in respect of the same property.
(3) In each of the aforesaid cases the instruments not chargeable with
ad valorem duty are to be charged with the duty of ten shillings.
838 STAMP DUTIES
How value Duty is chargeable on the net value of the policy at the
of policy
ascertained. time of the settlement, unless there is a covenant by the settlor
to pay the premiums when the duty is chargeable on the total

sum assured and any bonus declared at the time of settlement.
Before the Stamp Act, 1864, the Inland Eevenue authorities did
not upon duty beyond the value of the policy at the time
insist
of the settlement unless there was a fund provided for payment

of the premiums, and therefore settlements made before 1864 will
be sufficiently stamped if stamped in accordance with that
practice [x). Where there is a discretionary power or direction
given to trustees to pay the premium out of the income from other
settled property, the settlement ought to pay duty to the full
amount of the sum assured (y).
Where If a settlement of a life policy transfers any property other than
property
other than
money, stock, policies, or securities for money, it must be stamped
policies in respect of such other property as a conveyance or transfer, and
money or
securities not as a settlement. Additional stamp duty will be chargeable
for money
is settled.
in respect of any covenants not relating to the property specifically
settled.
Policy con- Where a settlement has been made whereby the settlor
veyed to
trustees as
covenants to make certain payments to the trustees, and it is
security for agreed that a life policy or other property shall be conveyed to
settlors
covenants. the trustees to secure such payments, the conveyance is chargeable
as a mortgage, and not as a settlement (z).
Voluntary Settlements which involve a transfer of the property to trustees

settlements
made since
and are made otherwise than for valuable and adequate con-
April 29,1910. sideration, are, since April 29, 1910, chargeable not as settlements,
but as voluntary dispositions inter vivos with the same ad valorem
duty as a conveyance on sale, and are not to be deemed duly
stamped unless they bear the Inland Eevenue adjudication

stamp (a). Settlements made in consideration of marriage, that
is ante-nuptial settlements, cannot be treated for this purpose as
made for inadequate consideration, and therefore are chargeable
with settlement duty only. All other settlements must in practice
be submitted to the Inland Eevenue for adjudication, because, if
voluntary or if the Commissioners are of opinion that the considera-
tion is inadequate, duty as a conveyance on sale is chargeable.
{x) Mr. A. R. Barrand, Journal of (z) Inland Revenue v. Oliver, [1909]

the Institute of Actuaries, vol. xxxiii. A. C. 427.
p. 241.
{y) Mr. A. R. Barrand, i6id. p. 242. (a) Finance Act, 1910, h. 74.
1
STAMPS ON OTHER DOCUMENTS 839
Section IV. —Stamps on Other Documents

The following is a selection from the schedule to the Stamp Act, stamp Act
1891, in so far as it relates to instruments which may form part ggimdule I
of the title to a policy of insurance or may be required by an

insurance company as evidence in support of a claim.
stamp Act, 1891, Seliedule I. and ss. 22, 24, 63, 64, and 72
£ s. d.
Affidavit and Stattjtoey Deolakatiow (6) . . . . '..026
Exemptions.
(1) Affidavit made for the immediate purpose of being filed,

read, or used in any court, or before any judge, master,
or officer of any court.
(2) Affidavit or declaration made upon a requisition of the

Commissioners of any pubUo board of revenue, or any of
the officers acting under them, or required by \&vf, and
made before a justice of the peace (c).
Ageeement or any Mbmoeandttm of an Ageeement, made in

England or Ireland under hand only, or made in Scotland without
any clause of registration, and not othervrise specifically charged
with any duty, whether the same be only evidence of a contract,
or obligatory upon the parties from its being a written instrument 6
Exemptions.
(1) Agreement or memorandum the matter whereof is not of
the value of £5.
22. The duty of sixpence upon an agreement may be denoted by an adhesive Duty may
stamp, which is to be cancelled by the person by whom the agreement is first ^^ denoted
executed. ^Z .Â''^''''^
stamp.
Appointment of a new trustee (d),and Appointment in execution
of a power of any property, or of any use, share, or interest in any
property, by any instrument not being a will 10
(5) Where an affidavit or statutory the instrument is apparently charge-

declaration issworn to as to the whole able not only as an appointment, but
of it by one deponent and as to part as a conveyance or transfer with an
of it only by another, the instrument additional 10s. stamp. An appoint-
constitutes only one affidavit or ment by a policy holder of a, trustee
declaration, and is not chargeable of a policy taken out under section 1
with double duty as an instrument oftheMarried Women'sPropertyAct,
relating to several distinct matters is clearly chargeable under this
1882,
{Reversionary Interest Society v. In- head unless the appointment is con-
land Revenue (IQOG), 22 T. I.. 'R.I'tO). tained in the policy or made con-
(c) Words in italics repealed temporaneously therewith. If the
Finance Act, 1907 (7 Edw. 7, c. 13, appointment is contained in a separate
^- ^)- document made after the execution
(d) Where the deed of appointment of the policy, it is chargeable as the
contains a declaration under sec- appointment of a " new trustee,"
tion 12 of the Trustee Act, 1893, to because, until such appointment, the
the effect that the trust property policy holder himself was the trustee,
shall vest in the new trustee or trustees,
.
840 STAMP DUTIES

s. d.
Appbaisement or Valuation of any property, or of any interest

therein, or of the annual value thereof, or of any dilapidations,
or of any repairs wanted, or of the materials and labour used or
to be used in any building, or of any artificers' work whatsoever.
Where the amount of the appraisement or valuation does not
exceed £5 .
Exceeds £5 and does not exceed £10

£10 „ £20
„ £20
. . ..
Bond in relation to any annuity upon the original creation and sale
thereof
See Conveyance on Sale and section 60 (/).
Bond, Covbkant, or Instrument of any kind whatsoever.

(1) Being the only or principal or primary security for any annuity
{except upon the original creation thereof by way of sale or
security, and except a superannuation annuity), or for any
sum or sums money at stated periods, not being interest
of
for any principal sum secured by a duly stamped instrument,
nor rent reserved by a lease or tack. ^The same
ad valorem
duty as a
For a definite and certain period, so that the total amount bond or
covenant
to be ultimately payable can be ascertained. for such
total
âmount.
For the term of life or any other indefinite period (g).
For every £5, and also for any fractional part of £5, of
the annuity or sum periodically payable . . . 2 6
(2) Being a collateral or auxiliary or additional or substituted
security for any of the above-mentioned purposes where the
principal or primary instrument is duly stamped.
,The same
'ad valorem
duty as a
bond or
Where the total amount to be ultimately payable can be covenant
ascertained .
of the
same kind
for such
total
âmount.
In any other case :
For every £5, and also for any fractional part of £5, of
the annuity or sum periodically payable . ..006
(3) Being a grant or contract for pajonent of a superannuation
annuity, that is to say a deferred life annuity granted or
secured to any person in consideration of annual premiums
payable until he attains a specified age and so as to commence
on his attaining that age.
For every £5, and also for any fractional part of £5, of the
annuity .. .. .. .. .. .. ..006
Bond of any kind whatsoever not specifically charged with any
duty:
{"the same
ad valorem
Where the amount limited to be recoverable does not exceed duty as a
£300 bond for
the
amount
Uimited;
In any other case . 10
Commission 01- Lunacy 5
(/) Vide sicpra, Tp. 822. made during any one year {Clifford v.
(?) Where there is a covenant to Inland Revenue, [1896] 2 Q. B. 187 ;
make a weekly payment for life or Jackson v. Inland Revenue (1902),
any indefinite period, the duty 50 W. R. 666) but where there is
;
chargeable is an ad valorem duty on a covenant to make an annual pay-
the weekly sum, fnd not
on the ment by quarterly or other periodical
total of the weekly
payments to be instalments, the duty chargeable is
— — . ; ; ; ;
842 STAMP DUTIES

£ s. d.
Copy or ExTBACT (attested or in any manner authenticated) of or
from
(1) An instrument chargeable with any duty.
(2) An original will, testament, or codicil.
(3) The probate or probate copy of a will or codicil.
(4) Any letters of administration or any confirmation of a
testament.
(5) Any public register (except any register of births, baptisms,
marriages, deaths, or burials).
(6) The books, rolls, or records of any court.
( The same
In the case of an instrument chargeable with duty not. duty as
such in-
amounting to one shilling . . . . . . . . i strumeut.
In any other case . 1
Bxem,ptions.
(1) Copy or extract of or from any law proceeding.

(2) Copy or extract in Scotland of or from the commission of
any person as a delegate or representative to the con-
vention of royal burghs or the general assembly or any
presbytery or church court.
And see section 63.
Copy or Extbact (certif,ed) of or from any register of births, baptisms,

marriages, deaths, or burials 1
Exemptions.
(1) Copy or extract furnished by any cIerg3Tnan, registrar, or

other official person pursuant to and for the purposes of
any Act, or furnished to any general or superintending
registrar under any general regulation.
(2) Copy or extract for which the person giving the same is
not entitled to any fee or reward.
Stamping of 63. An attested or otherwise authenticated copy or extract of or
certain from
copies and
extracts after (1) An instrument chargeable with any duty
attestation. (2) An original will, testament, or codicil
(3) The probate or probate copy of a will or codicil
(4) Letters of administration or a confirmation of a testament

may be stamped at any time within fourteen days after the date of the attesta-
tion or authentication on pajnnent of the duty only.
Duty may 64. The duty upon a certified copy or extract of or from any register of
be denoted births, baptisms, marriages, deaths, or burials is to be paid by the person
by adhesive requiring the copy or extract, and may be denoted by an adhesive stamp,
stamp.
which is to be cancelled by the person by whom the copy or extract is signed
before he delivers the same out of his hands, custody, or power.
Covenant. Any separate deed of covenant (not being an instru-

ment chargeable with ad valorem duty as a conveyance on sale or
an ad valorem duty on the annual [1898] 2 Q. B. 290).

payment (Lewis v. Inland Revenue,
. . .

£ s. d.
mortgage) made on the mortgage of any property, and

sale or
relating solely to the conveyanoe or enjoyment of, or the title to,

the property sold or mortgaged, or to the production of the muni-
ments of title relating thereto, or to all or any of the matters
aforesaid.
A duty
equal
to the
Where the ad valorem duty in respect of the consideration or^ amount
of such
mortgage money does not exceed 10s. .
ad valorem
duty;
In any other case .

10
Deolaratiok of any use or trust of or concerning any property by

any writing, not being a will, or an instrument chargeable with
ad valorem duty as a settlement 10
Deed of any kind whatsoever, not described in this schedule 10
Duplicate or Cotjntbkpart of any instrument chargeable with any

/the same
duty. duty as
J the
Where such duty does not amount to 5s. original
I
instru-
Vment.
In any other case .. .. .. .. .. .. ..050
72. The duplicate or counterpart of an instrument chargeable- with duty Provision as
(except the counterpart of an instrument chargeable as a lease, such counter- to duplicates
°
part not being executed by or on behalf of any lessor or grantor) is not to bo ^" (.„
deemed duly stamped unless it is stamped as an original instrument or unless
it appears by some stamp impressed thereon that the full and proper duty has
been paid upon the original instrument of which it is the duplicate or counter-
part.
Letter oe Powee of Attoeney, and Commission, Faotoey,

Mandate, or other instrument in the nature thereof :
(1) For the sole purpose of appointing or authorising a proxy

to vote atany one meeting at which votes may be given
by proxy, whether the number of persons named in such
instrument be one or more . 1
(2) By any petty officer, seaman, marine, or soldier serving as

a marine, or his representatives, for receiving prize money
or wages 1
(3) For the receipt of the dividends or interest of any stock :
Where made for the receipt of one payment only

In any other case
(4) For the receipt of any sum of money, or any bill of ex-
change or promissory note for any sum of money, not
exceeding £20, or any periodical payments not exceeding
the annual sum of £10 {not being herein-hefore charged) 5
(5) For the sale, transfer, or acceptance of any of the Govern-
ment or Parliamentary stocks or funds :
Where the value of the stocks or funds does not exceed

£20 6
In any other case 10
(6) Of any kind whatsoever not herein-before described 10
—
844 STAMP DUTIES
Exemptions.
(1) Letter or power of attorney for the receipt of dividends of

any definite and certain share of the Government or Parlia-
mentary stocks or funds producing a yearly dividend less
than £3,
(2) Letter or power of attorney or proxy filed in the Probate
Division of the High Court of Justice in England or Ireland,
or in any ecclesiastical court.
(3) Order, request, or direction under hand only from the
proprietor of any stock to any company or to any officer
of any company or to any banker to pay the dividends or
interest arising from the stock to any person therein named.
Section V. —General Exemptions from Stamp Duty
Certain general exemptions from stamp duty are contained in

the Stamp Act and in other Acts not dealing primarily with stamp
duties. The following are the more important exemptions
affecting insurance business :
1. Testaments, testamentary instruments, and dispositions

mortis causa in Scotland (h).
2. Draft or order or receipt given by or to a registered friendly

society or branch in respect of money payable by virtue
of its rules or of the Friendly Societies Act, 1896 (i).
3. Letter or power of attorney granted by any person as trustee

for the transfer of any money of a registered friendly
society or branch invested in his name in the pubUc funds.
4. Bond given to or on account of a registered society or branch
or by the treasurer or other of&cer thereof.
5. Policy of assurance or appointment or revocation of
appointment of agent or other document required or

authorised by the Friendly Societies Act or by the rules
of a registered friendly society or branch (fe).
6. Instruments granted by or to a building society and being

of a similar nature to the above-mentioned instruments
granted by or to a friendly society (l).
(h) Stamp Act, 1891, Sched. I., (1870), L. R. 5 Ex. 78; Carter v.
General Exemptions from all stamp Bond (1803), 4 Esp. 252).
duties. (I) Building Societies Act, 1874
(i) Friendly Societies Act, 1896 (37 &38 Vict. o. 42, s. 41 ; A.-O. v.
(E9 &60 Vict. c. 25). Phillips (1871), 24 L. T. 832 ; Old
(k) Does not exempt from stamp Batiersea Society v. Inland Revenue,
duty securities in which the funds [1898] 2 Q. B. 291; A.-O. v. Gilpin
of a friendly society are invested (1871), L. R. 6 Ex. 193.
{Royal Liver Friendly Society, In re
—
845
GENERAL REGULATIONS FOR STAMPING INSTRUMENTS
7. Eeceipt given in Scotland by any industrial and provident

society for all moneys secured to the society on the security
of any of the society's property when such receipt is
registered in conformity with the provisions of section 44
of the Industrial and Provident Societies Act, 1893 (m).
8. Copy register of births, etc., certificates, or declarations,
receipts, or other instruments relating to the purchase or
payment of annuities or sums payable at death under the

Government Annuity Acts (n).
9. Every deed, conveyance, assignment, surrender or other

admission relating solely to freehold, leasehold, copyhold,
or customary property or to any mortgage charge or other
incumbrance on or any estate, right, or interest in any
real or personal property which is part of the estate of
any bankrupt and which after the execution of the deed,
conveyance, assignment, surrender, admission or other
assurance either at law or in equity is or remains the estate
of the bankrupt or of the trustee under the bankruptcy

and every power of attorney, proxy paper, writ, order,
certificate, affidavit, bond, or other instrument or writing
relating solely to the property of any bankrupt or to any

proceeding under any bankruptcy (o).
Section VI. —General Begulations for Stamfing Instruments

Stamp Act, 1891, ss. 2, 3, 4, 5, 6
2. stamp duties for the time being chargeable by law upon any instru- AU duties to
All
ments are to be paid and denoted according to the regulations in this Act be paid
contained,
,j.j, .,.
and except where express provision
be denoted by impressed stamps only.
to the contrary are to
,
is made ^'^<'°™™g *"
regulations of
^gj;
— Every instrument written upon stamped material to be written
3. (1) is How instru-
in and every instrument partly or wholly written before being ments are to
such manner,
stamped, is to be so stamped that the stamp may appear on the face of the be written
instrument, and cannot be used for or applied to any other instrument written
upon the same piece of material.
(2) If more than one instrument be written upon the same piece of material,
every one of the instruments is to be separately and distinctly stamped with
the duty with which it is chargeable.
Except where express provision to the contrary
4. is made by this or any Instruments
other Act to be
separately
(ra) 56 & 57 Vict. c. 39, s. 44 (5). (o) Bankruptcy Act, 1883 (46 & 47
n) 16 & 17 Vict. c. 45, s. 29. Vict. c. 52, s. 144).
— ; ;
846 STAMP DUTIES
charged with (a) An instrument containing or relating to several distinct matters is to

duty ia
be separately and distinctly charged, as if it were a separate instru-
certain cases.
ment, with duty in respect of each of the matters ;
(6) An instrument made for any consideration in respect whereof it is
chargeable with ad valorem duty, and also for any further or other
valuable consideration or considerations, is to be separately and
distinctly charged, as if it were a separate instrument, with duty

in respect of each of the considerations,
Facts and 5. and circumstances affecting the liability of any instrument
All the facts
circumstances
to duty, or theamount of the duty with which any instrument is chargeable,
afEecting duty
to be set are to be fully and truly set forth in the instrument ; and every person who,
forth in with intent to defraud Her Majesty,
instruments. (a) executes any instrument in which all the said facts and circumstances
are not fully and truly set forth ; or

(6) being employed or concerned in or about the preparaton of any instru-
ment, neglects or omits fully and truly to set forth therein all the
said facts and circumstances ;
shall incur a fine of ten pounds.

Mode of
calculating
6.
— (1) Where an instrument is chargeable with ad valorem duty in re-
spect of
ad valorem
any money in any foreign or colonial currency, or
(a)
duty in
certain cases. any stock or marketable security,
(6)
the duty shall be calculated on the value, on the day of the date of the instru-
ment, of the money in British currency according to the current rate of ex-
change, or of the stock or security according to the average price thereof.
(2) Where an instrument contains a statement of current rate of exchange,
or average price, as the case may require, and is stamped in accordance with
that statement, it is, so far as regards the subject matter of the statement, to
be deemed duly stamped, unless or until it is shown that the statement is
untrue, and that the instrument is in fact insufficiently stamped.
Cases where The general rule is that stamp duty must be denoted by an im-
adhesive
stamp is
pressed stamp. By express provision in the Stamp Act the follow-
permitted. ing stamp duties may be denoted by an ordinary " Postage and
Eevenue " adhesive stamp, provided that such stamp is cancelled
by the person issuing or executing the instrument, writing, on or
across the stamp his name or initials, together with the true date
of his so writing, or otherwise effectively rendering the stamp in-
capable of use for any other purpose or that it is otherwise proved
that the stamp was affixed at the proper time.
Duty of one penny upon a pohcy of insurance other than a
policy of sea insurance ;
Duty of one penny upon a receipt

Duty of sixpence upon an agreement
Duty of one penny upon a certified copy or extract of or from
any register of births, baptisms, marriages, deaths, or burials.
: ; :
847
GENERAL BEGULATIONS FOR STAMPING INSTRUMENTS
to cancel an adhesive stamp and

Any person required by law
refusing or neglecting to do so incurs a fine of ten pounds.
person fraudulently removing or using for any

other
Any
purpose an adhesive stamp removed from an instrument with
which it has been stamped incurs a fine of fifty pounds.
1891, as. 10, 11, 12, and 13

stamp Act,
10—(1) A stamp which by any word or words on the face of it is appro- Appropriated
stamps,
priated to any particular description of
instrument is not to be used, or,
if used, is not to be
available, for an instrument of any other description.
(2) An instrument
falling under the particular description to which any
is so appropriated as aforesaid is not

to be deemed duly stamped,
sUmp
stamped with the stamp so appropriated.
unless it is
II. Where the duty with which an instrument is chargeable depends in Denoting
stamps,
any manner upon the duty paid upon another instrument, the payment of the
last-mentioned duty shall, upon application to the Commissioners and pro-
duction of both the instruments, be denoted upon the first-mentioned instru-

ment in such manner as the Commissioners think fit.
12.— (1) Subject to such regulations as the Commissioners may think fit Assessment
to make, the Commissioners may be required by any person to express their of
duty by
Commis-
opinion with reference to any executed instrument upon the following
questions
Whether it is chargeable with any duty
(a)
With what amount of duty it is chargeable.

(6)
(2) The Commissioners may require to be furnished with

an abstract of
the instrument, and also with such evidence as they may deem necessary,
in order to show to their satisfaction whether all the facts and circumstances
affecting the liability of the instrument to duty, or the amount of the duty
chargeable thereon, are fully and truly set forth therein.

(3) If the Commissioners are of opinion that the instrument is not charge-
able with any duty, it may be stamped with a particular stamp denoting that
it is not chargeable with any duty.
(4) If the Commissioners are of opinion that the instrument is chargeable
with duty, they shall assess the duty with which it is in their opinion charge-
able, and when the instrument is stamped in accordance with the assessment
itmay be stamped with a particular stamp denoting that it is duly stamped (/p).
(5) Every instrument stamped with the particular stamp denoting either
that it is not chargeable with any duty, or is duly stamped, shall be admissible
in evidence, and available for all purposes notwithstanding any objection
relating to duty.
(6) Provided as follows :
(a) An instrument upon which the duty has been assessed by the Com-
missioners shall not, if it is unstamped or insufficiently stamped,
be stamped otherwise than in accordance with the assessment
(V) Nothing in this section shall extend to any instrument chargeable
with ad valorem duty, and made as a security for money or stock
Voluntary dispositions are not

(p) pressed their opinion thereon (Finance
to be deemed to be duly stamped Act, 1910, s. 74 (2)).
unless the Commissioners have ex-
— :
848 STAMP DUTIES
without limit ; or shall authorise the stamping after the execution

thereof of any instrument which by law cannot be stamped after
execution
(c) A statutory declaration made for the purpose of this section shall not
be used against any person making the same in any proceeding
whatever, except in an inquiry as to the duty with which the instru-
ment to which it relates is chargeable and every person by whom
;
any such declaration is made shall, on payment of the duty charge-

able upon the instrument to which it relates, be relieved from any
fine or disability to which he may be liable by reason of the omission
to state truly in the instrument any fact or circumstance required
by this Act to be stated therein.
Persons 13. — (1) Any person who is dissatisfied with the assessment of the Com-
dissatisfied missioners may, within twenty-one days after the date of the assessment,
may appeal.
and on payment of duty in conformity therewith, appeal against the assessment
to the High Court of the part of the United Kingdom in which the case has
arisen, and may for that purpose require the Conimissioners to state and sign
a case, setting forth the question upon which their opinion was required, and
the assessment made by them.
(2) The Commissioners shall thereupon state and sign a case and deliver
the same to the person by whom it is required, and the case may, within seven
days thereafter, be set down by him for hearing.
(3) Upon the hearing of the case the court shall determine the question
submitted, and, if the instrument in question is in the opinion of the court
chargeable with any duty, shall assess the duty with which it is chargeable.
(4) If it is decided by the court that the assessment of the Commissioners
is erroneous, any excess of duty which may have been paid in conformity with
the erroneous assessment, together with any fine or penalty which may have
been paid in consequence thereof, shall be ordered by the court to be repaid
to the appellant, with or without costs as the court may determine.
(5) If the assessment of the Commissioners is confirmed the court may
make an order for pa3Tnent to the Commissioners of the costs incurred by them
in relation to the appeal.
Instrument When an instrument comes within each of two categories

chargeable
under two chargeable with duty under the Stamp Act, the Crown is entitled
heads. to only one of the duties, but it may choose the higher (q).
Stamp Act, 1891, ss. 14 and 15

Terms upon 14. (1) Upon the production of an instrument chargeable with any duty
which instru- as evidence in any court of civil judicature in any part of the United Kingdom,
ments not
before any arbitrator or referee, notice shall be taken by the judge, arbi-
duly stamped or
may be trator, or referee of any omission or insufficiency of the stamp thereon, and
received in it the instrument is one which may legally be stamped after the execution
evidence.
thereof, it may, on payment to the officer of the court whose duty it is to read
the instrument, or to the arbitrator or referee, of the amount of the unpaid
duty, and the penalty payable on stamping the same, and of a further sum
(q) Speyer Bros, and Inland Revenue, [1908] A. C. 92.

: — : :
GENERAL REGULATIONS FOR STAMPING INSTRUMENTS 849
of one pound, be received in evidence, saving all just exceptions on other

grounds.
(2) The officer, or arbitrator, or referee receiving the duty and penalty
shall give a receipt for the same, and make an entry in a book kept for that
purpose of the pa3Tnent and of the amount thereof, and shall communicate
to the Commissioners the name or title of the proceeding in which, and of the
party fromwhom, he received the duty and penalty, and the date and descrip-
and shall pay over to such person as the Commissioners
tion of the instrument,
may appoint the money received by him for the duty and penalty.
(3) On production to the Commissioners of any instrument in respect of
which any duty or penalty has been paid, together with the receipt, the
payment of the duty and penalty shall be denoted on the instrument.
(4) Save as aforesaid, an instrument executed in any part of the United
Kingdom, or relating, wheresoever executed, to any property situate, or to
any matter or thing done or to be done, in any part of the United Kingdom,
shall not, except in criminal proceedings, be given in evidence, or be available
for any purpose whatever, unless it is duly stamped in accordance with the
law in force at the time when it was first executed.
15. —(1) Save where other express provision is in this Act made, any Penalty upon
unstamped or insufficiently stamped instrument may be stamped after the stamping
execution thereof, on payment of the unpaid duty and a penalty of ten pounds, instruments
and also by way of further penalty, where the unpaid duty exceeds ten pounds, ij
of interest on such duty, at the rate of five pounds per centum per annum,
from the day upon which the instrument was first executed up to the time
when the amount of interest is equal to the unpaid duty.
(2) In the case of such instruments here-inafter mentioned as are
chargeable with ad valorem duty, the following provisions shall have effect
(o) The instrument, unless it is written upon duly stamped material, shall
be duly stamped with the proper ad valorem duty before the expira-
tion of thirty days after it is first executed, or after it has been first
received in the United Kingdom in case it is first executed at any

place out of the United Kingdom, unless the opinion of the Commis-
sioners with respect to the amount of duty with which the instrument
is chargeable, has, before such expiration, been required under the
provisions of this Act
(6) If the opinion of the Commissioners with respect to any such instru-
ment has been required, the instrument shall be stamped in accord-
ance with the assessment of the Commissioners within fourteen days
after notice of the assessment
(c) If any such instrument executed after the sixteenth day of May one
thousand eight hundred and eighty-eight has not been or is not duly
stamped in conformity with the foregoing provisions of this sub-
section, the person in that behalf herein-after specified shall incur a
fine of ten pounds, and in addition to the penalty payable on stamping
the instrument there shall be paid a further penalty equivalent to
the stamp duty thereon, unless a reasonable excuse for the delay in
stamping, or the omission to stamp, or the insufficiency of stamp,
be afforded to the satisfaction of the Commissioners, or of the court,
judge, arbitrator, or referee before whom it is produced :
(d) The instruments and persons to which the provisions of this sub-section
are to apply are as follows :
l.L. 54
: —
850 STAMP DUTIES
Title o£ Instrument as described in tlie

Person liable to Penalty.
First Sciiedule to tliis Act.
Bond, covenant, or instrument of any The obligee, covenantee, or other

kind whatsoever - - - - person taking the security.
Conveyance on sale _ _ _ The vendee or transferee.
Voluntary disposition inter vivos (r) - The grantor or transferor (r).
Lease or tack _ _ _ _ The lessee.
Mortgage, bond, debenture, covenant, The mortgagee or obligee in the case ;
and warrant of attorney to confess of a transfer or reconveyance, the

and enter up judgment. transferee, assignee, or disponee,
or the person redeeming the
security.
Settlement _ _ _ _ _ The settlor.
(3) Provided that save where other express provision is made by this Act
in relation to any particular instrument
(a) Any unstamped or insufficiently stamped instrument which has been
first executed at any place out of the United Kingdom, mayl)e
stamped, at any time within thirty days after it has been first received
in theUnited Kingdom, on payment of the unpaid duty only and :
(b) The Commissioners may, if they think fit, at any time within three
months after the first execution of any instrument, mitigate or remit
any penalty payable on stamping.
(4) The payment of any penalty payable on stamping is to be denoted on
the instrument by a particular stamp.
What policies The result of section 14 (4) is that the following policies and
and assign-
assignments of policies are chargeable with duty, and unless
be stamped, stamped in accordance with the Stamp Act in force at the time
of execution cannot be used in this country :
(a) policy of assurance issued in the United Kingdom ;
(&) policy of assurance payable in the United Kingdom ;
(c) assignment of any poHcy faUing under (a) or (b), wherever

such assignment may have been executed ;
(d) assignment of any poHcy if the assignment was executed

in the United Kingdom.
(r) Finance Act, 1910, s. 74 (3).

.
851
CHAPTER X
Clauses and Conditions
Section I. — General Rides of Construction

Where a contract of insurance is made between persons domi- Where there
is conflict of
ciled or resident in different countries, as where a policy is issued
law lex con-
by an English of&ce to a domiciled Scotsman, there may be a
tractus pre-
conflict of law as to the proper interpretation or legal incidents vails.
of the contract. When such conflict of law arises the lex con-
tractus, or law of the contract, must be' applied in each case {a)
The law of the contract is the law which the contract itself
imports is to be the law governing the contract, or in other
words, the law which the parties contemplated as being the law
governing the contract (b). The intention of the parties must be
ascertained from the terms of the contract and the circumstances
attending its formation (b). Parol evidence as to their actual
intention would not be admissible (6). In the absence of any Primd facie
definite indication in the terms of the policy itself there is a place of the
contract is
presumption that the parties intend the contract to be governed the law of
by the lex loci contractus, or the law when the contract was made, the contract.
that is to say, where the offer was accepted (c). Thus where an
EngUsh marine insurance company had an agent in Glasgow
with full authority to make binding contracts on behalf of the
company, such contracts made by him in Glasgow were held to
be governed by Scots law {cl). But where the foreign agent has
not full authority to contract the case is different. An English
life assurance company had an agent in Edinburgh. The agent
had no authority to make binding contracts but only to forward
proposals to the head office in London. The board in London
considered and " accepted " a proposal. The policy was executed
in London and was sent to the Edinburgh agent, who delivered it
to the assured on payment of the premium. It was held that
the contract was an English contract and that the obligation of
the parties fell to be determined by English law (e).
(a) Dicey, Conflict of Laws, 2nd edition, p. 556.

(6)Missouri Steamship Co., In re (1889), 42 Oh. 321, 336.
(c) Cowan V. O'Connor (1888), 20 Q. B. D. 640; Mutual Life v. Cohen
(1900), 79 U. S. 262; Mutual Life v. Phinneij (1899), 178 U. S. 327 Equit-

;
able Life V. Clements (1890), 140 U. S. 226 Knights of Pythias v. Meijer

;
(1904), 189 U. S. 508; Globe Fire v. Moffat (1907), 164 Fed. Eep. 18;
Carollton Furniture Co. v. American Credit Co. (1903), 124 Fed. Eep. 25.
(cl) Albion Fire Soo. v. Mills (1828), 3 W. & S. 218.
(e) Parken v. Boyal Exchange Insurance (1846), 8 D. 365.

852 CLAUSES AND CONDITIONS
Terms of The prima facie rule that a contract is to be construed accord-

contract may
ing to the law of the place where it was made may be ousted
indicate a
contrary when the terms of the contract contain a distinct indication of the
intention. actual intention of the parties. Thus an arbitration clause in
English form is strong evidence that the parties intended the
whole contract to be governed by English law (/).
Spurrier v. La Cloche, [1902] A. C. 446
Spurrier v. A policy of the Sun Fire
Office in their ordinary form in the English
La Cloche. language contained an arbitration clause specified to be subject to the pro-
visions of the Arbitration Act, 1889. The policy was executed in Jersey by
the agents of the company, these purporting to insure a collection of foreign
stamps in the possession of the assured, who was resident in Jersey. The
Court held that, although the contract was made and was to be fulfilled in
Jersey, yet the clear intention of the parties was that it should be governed
by English law, and that English law therefore must prevail.
Foreign law The intention of the parties to a contract may be that as to
incorporated
part it should be governed by one law and as to another part by
for limited
purpose. another, and where this is the intention it will receive effect
accordingly (f/). A policy which is an English contract and
intended to be construed according to English law, may import
the provisions of a foreign law for some one specific purpose, but
for that. purpose only (h).

Dever, Ex A policy was issued by an American office through a branch office in
parte. London. It was issued upon the application of a wife upon her husband's
life, and was expressed to be " for her sole use if living in conformity with
the statute." The husband and wife were resident and domiciled in London.
The statute referred to was a New York statute of 1870, which provided that
where a policy was issued for the benefit of a married woman on her husband's
life, it should not be subject to the claims of the husband's creditors except
in so far as the premium paid by the husband exceeded |500 in any one
year. The Court held that it was not the intention of the parties that the
contract should be governed by American law, and that such law was only
introduced for the purpose of indicating that the money was to be paid to
the wife for her sole use. English law applied, and the husband's creditors
were excluded altogether.
Same rules of Policies of insurance are to be construed like other written

construction instruments (i). There are no peculiar rules of construction
as in other
written applicable to the clauses and conditions in a policy which are
contracts. not equally applicable to the terms of other contracts (k). The
conditions are to be construed fairly between the parties, and the
Court will endeavour to ascertain their meaning by adopting
the ordinary rules of construction (l).
(/) HamVyn d Co. v. TaUsker Distillery, [1894] A. C. 202.
(g) Chamberlain v. Napier (1880), 15 Ch. D. 614.
Dever, Ex
(h) parte (1887), 18 Q. B. D. 660 Crosland v. Wrigley (1895),
;
43 W.
B. 673.
(i) Smith, B., Abbott v. Howard (1832), Hayes, 381, 401.
.
{k) Lord Ellenborough, C.J., Robertson v. French (1803), 130, 135.

(0 Parke, B., Glen v. Lewis (1863), 8 Ex. 607, 617 Ha/rt v. Standa/rd
;
(1889), 22 Q. B. D. 499, 501 Smith v. Accident (1870), L. B. 5 Ex. 302, 307

;
;
Hargreave v. Smee (1829), 6 Bing. 244, 248.

;
GENERAL EULES OF CONSTRUCTION 853
there is any ambiguity in the language used in a policy, it Contra

If
is to be construed more strongly against the party who prepared proferentem.
it, that is in the majority of cases against the company (m). A
poHcy ought to be so framed that he who runs can read (m) A .
party who profers an instrument cannot be permitted to use

ambiguous words in the hope that the other side will understand
them in a particular sense, and that the Court which has to
construe them will give them a different sense, and therefore
where the words are ambiguous they ought to be construed in
that sense in which a prudent and reasonable man on the other
side would understand them (n).
The language used in a policy, more particularly in the Where
written part of it, may be the language of the assured, as, for language is
tliat of
instance, where the description of the property or the limits of assured.
the risk are taken verbatim from the proposal form. In such
cases the rule that the instrument is to be construed against
the party who has prepared it may operate in favour of the
company (o).
But whichever party is responsible for the language there Tendency to
should be a tendency in all cases to hold for the assured rather favour protec-
tion as against
than for the company Qj) It is for the benefit of trade that forfeiture.
.
policies should be construed in favour of protection and against

forfeiture (q).
The above rules, however, are not to be used to create In absence
of ambiguity
ambiguity where none exists (r), and if the meaning of the words
obvious
is reasonably clear it must have full effect even although it
meaning
operates harshly as against the assured (s). It would not be in must be
the interest of trade or of the public generally to disregard the accepted.
obvious meaning of the words and try to wring from them a

hidden meaning in favour of the assured. Such a policy would
operate against the public by tending to raise insurance rates (0-
Words and phrases are to be construed primarily in their Words to be
construed in
ordinary and
Lord St. Leonards, Anderson v. Fitzgerald (1853), 4 H. L. C. 484,
(to) popular
507 ;Life Association v. Foster (1873), 11 M. 351, 358, 364, 371 Notman ;
V. Anchor Insurance (1858), 4 C. B. (n.s.) 476, 481 Hargreave v. Smee (1829),

;
6 Bing. 244, 248 Hunt v. Springfield Fire (1904), 196 U. S. 47 Thompson

; ;
V. Phenix Insurance (1890), 136 tl. S. 287, 297 Grace v. American Central
;
(1883), 109 U. S. 278, 282; Travellers' Insurance v. M'Conlcey (1888), 127

U. S. 661, 666 National BanJc v. Insurance Co. (1877), 95 U. S. 673, 678
;
Kranenstein v. Western Assurance (1889), 116 N. Y. 54.

(n) Blackburn, J., FowJces v. Manchester, etc., Life (1863), 3 B. & S.
917, 929.
(o) Birrell v. Dryer
(1884), 9 A. 0. 345, 352.
(p) Fitton V.Accidental Death (1864), 17 C. B. N. S. 122, 135 Smith ;
V. Accident Insurance (1870), L. K. 5 Ex. 302, 309.
(q) Felly v. Royal Exchange Insurance (1757), 1 Burr. 341, 349; Trew
V. Bailway Passengers' Assurance (1861), 6 H. & N. 839, 844 Phoenix Life
;
V. Sheridan (1868), El. B. & E. 156, 166.

(r) Cole V. Accident Insura/nce (1889), 5 T. L. E. 736.
(s) Smith V. Accident Insv/ramce (1870), L. R. 5 Ex. 302, 307 Birrell v.
;
Dryer (1884), 9 A. C. 345, 350; Imperial Fire v. Coos County (1893), 151
U. S. 452, 463 Sulphite Pulp Co. v. Faber (1895), 11 T. L. E. 547.
;
(i) Carpenter v. Providence Washington (1842), 16 Pet. 495, 510.

;
ordinary and popular sense (u). Some regard must be had to

the personahty of the contracting parties, and if the assured is a
person in humble life and acting without legal advice there is the
more reason for rejecting any strictly technical meaning, whether
legal or scientific (x).
with reason- The words must not be construed with extreme literalism (y),
able latitude,
but with reasonable latitude, keeping always in view the principal
object of the contract of insurance (z) and yet as far as possible
to give sensible effect to every condition and stipulation in the
policy (a).
Certain words Words must sometimes be construed otherwise than in their
may have a popular sense, because the context compels a different con-
(1)
conventional
or technical struction (b), or (2) because they are words of common form
meaning. which from long usage and frequent decisions of the Court have
received a fixed and more or less conventional meaning (c), or
(3) because by the universal custom of some trade or business an
artificial meaning peculiar to that trade has been attached to the
words in question (d).
Construction When the question is one of construing words of common
of words of form the absence of authority is often as valuable as the existence
common
form.
of decisions. Thus when a novel defence is set up and where the
materials for such a defence must have existed in countless
instances, and yet there is no trace of it ever having been raised
in the reported cases the total absence of authority may be
sufficient reason for refusing to sanction an argument which
would alter the generally accepted construction of the words in
question (e).
Written If the written clauses in a policy cannot be reconciled with
clauses over-
the printed conditions the former override the latter inasmuch as
ride printed
conditions. the written words are the immediate language and terms selected
by the parties themselves for the expression of their meaning
with relation to the particular risk and the printed words are a
general formula adapted equally to all insurances in the same
class of risk (/).
Where The printed form of policy used is sometimes inapplicable to
printed form
the particular risk as when a policy adapted for marine risk is
isinapplic-
able to class
of risk for
Lord Ellenborough, G.J., Bohertson v. French (1803), 4 East, 130,
(u)
which it is
135 ;Stanley v. Western Insurance (1868), L. E. 8 Ex. 71 Hart v. Standard
;
used.
(1889), 22 Q. B. D. 499, 500; McOowan v. Baine, [1891] A. C. 401, 411;
Standard Life, etc. v. McNulty (1907), 157 Fed. Eep. 224.
(x) Life Association v. Foster (1873), 11 M. 351, 371.
(y) McGowan v. Baine, [1891] A. 0. 401, 403.
(z) Pearson v. Commercial Union (1876), 1 A. 0. 498, 507, 510.
(a) Wallace v. Insurance Co. (1832), 4 La. 289.
(&) Bohertson v. French (1808), 4 East, 130, 136 ; McCowan v. Baine,
[1891] A. 0. 401, 408.
(c) Pelly V. Boyal Exchange Insurance (1757), 1 Burr. 841, 847.
(d) Bohertson v. French (1808), 4 East, 180, 185.
(e) Trinder Anderson v. Thames, etc.. Insurance, [1898] 2 Q. B. 114, 124
Dudgeon v. PembroJce (1877), 2 A. 0. 284, 296.
(/) Bohertson v. French (1808), 4 East, 130, 186; Wallace v. Insurance
Co. (1882), 4 La. 289 Phosnix v. Flemming (1898), 65 Ark. 54.
;
GENERAL RULES OF CONSTRUCTION 855
used to cover risks on land (c/) or vice versa (h), or where a policy-
adapted for original insurance is used to express a contract of re-
insurance (?') or where the conditions in some other company's
policy are incorporated by reference (k). In such cases the con-
ditions will be enforced in so far as they are not inconsistent with
the contract to which they are applied (k). A condition not in
terms applicable to the risk may be applied mutatis mutandis.
Thus where a vessel was insured against fire and the contract of
insurance was embodied in a policy ordinarily used for insuring
buildings, it was held that the clause which prohibited the storing
of gunpowder "on the premises" was applicable, and that for
"premises" must be read "ship" (Q. On the other hand the
conditions or some of them may be totally inapplicable and may
be disregarded. In one case of a re-insurance contract, expressed
in the form of a printed slip pasted on to the form of a policy
applicable to an original insurance, the whole of the conditions
were totally inapplicable to a re-insurance contract except the
condition providing that the right to bring an action on the
policy should be limited to twelve months after the date of
the loss. This condition, apart from its context, could have
been applied, but on the other hand it was an unreasonable
condition inasmuch as the re-insurer could not sue until the
original loss was settled, and the settlement of that loss might be
delayed without any fault on his part. The Court, therefore,
declined to read the condition into the contract and held that the
conditions as a whole were inapplicable (;«). In a preliminary
contract of insurance the contract is made subject to the terms
contained in the company's ordinary form of policy but certain ;
of these conditions will not be applied if they are of such a

nature that it would be unreasonable to expect the insured to
comply with them before he had a copy of the policy to refer
to (n). A condition requiring notice of loss to be given within a
specified period is a condition which is not applicable until the
policy is delivered to the assured (o). In applying printed con-
ditions to a risk for which they were not originally designed the
nature of the risk must be taken into consideration in the con-
struction of the conditions and they may thus receive a different
construction from that which they would have received if applied
to the class of risk for which they were originally designed (p).
On the other hand their original meaning must not be entirely
lost sight of (q).
(g) Baring Bros. v. Marine Insurance (1894), 10 T. L. E. 276.

(h) Beacon Life v. Gihh (1862), 1 Moore, P. 0. N. S. 73.
{i) Home Insurance v. Victoria Montreal Fire, [1907] A. C. 59 ;Foster
V. Mentor Ufe (1854), 3 El. & BL 48.
(h) Sulphite Pulp v. Faber (1895), 11 T. L. E. 547-
(l) Beacon Life v. Gihh (1862), 1 Moore, P. 0. N. S. 73.
(w) Home Insu/rance v. Victoria Montreal Fire, [1907] A. 0. 59.

(n) Mitchell v. Citij of London Assurance (1888), 15 Ont. A. R. 262.
(o) Coleman's Depositories v. Life and Health, [1907] 2 K. B. 798.
(p) Foster v. Mentor Life (1854), 3 EL & BL 48.
{q) Ba/ring Bros. v. Marine Insurance, (1894), 10 L. T. 276.
Ejusdem There is a well-known canon of construction that where a

generis.
particular enumeration is followed hy general words such as "or
other," the general words ought to be limited to matters ejusdem
generis with those specifically enumerated (r) The rule is confined,
.
however, to cases where the general words are accompanied by a

context containing a category of specific words which can be
grouped under a genus. Where the context contains the
description of a complete genus, and there are no alia similia to
which the general words could apply, the rule has no applica-
tion (s). Further, the rule is like every other rule of construction,
a mere guide to the intention of the parties and therefore the
rule cannot prevail if the parties have used words which
clearly indicate that the ejusdem generis rule was not intended
to apply to that particular case (t). Thus where a charter
party contained an exemption from liability arising from " frosts
floods strikes . . and any other unavoidable accidents or
.
hindrances of what kind soever beyond their control," it was

held that the rule did not apply because the use of the words
" of what kind soever " were intended to exclude the application
of the rule (k).
Clauses of Clauses of specific application may contradict clauses of general
specific appli-
application which if they stood alone would control the specific
cation control
those of subject matter. Where this is so the clause of specific application
general prevails (x).
application.
Where two clauses equally specific or equally general are
Repugnant
provisions.
repugnant the general rule is that the first shall stand and the
last be rejected (y).
Proposal may The proposal form and the statements and declarations
be incorpo- therein contained may be, and usually are, incorporated with the
rated as part
of the policy by reference, and being so incorporated must be read with
contract. the policy as part of the written contract {a). Even where the
policy is under seal the policy may by reference incorporate as
part of the deed a proposal form under hand only (&). A mere
reference to the proposal as having been made is not an in-
corporation of it into the contract (c). There must be something
to show that it is referred to not merely as a matter of recital
but as a part of the contract (c). If the proposal or the
declaration in the proposal is declared to be the basis of
(r) S.S. Knutsford {Ltd.) v. Tillmcmns, [1908] A. C. 406; Thames and

Mersey Insurance v. Hamilton (1887), 12 A. 0. 484, 490, 501 Sun Office v.
;
Hart (1889), 14 A. G. 98, 104 Lee v. Alexander (1883), 8 A. 0. 853; Lam-

;
bourn v. MoLellan, [1903] 2 Oh. 268; Mair v. Eadhvay Passengers (1877),

37 L. T. N. S. 356; Thorman v. Dowgate (1909), 15 Com. Cas. 67.
(s) Sun Office v. Ha/rt (1889), 14 A. C. 98, 104.
[t) Thormam v. Dowgate (1909), 15 Com. Cas. 67.
(u) Larsen v. Sylvester, [1908] A. C. 295.
(x) WilUamsonv. Commercial Union (1876), 26 U. C. C. P. 591, 595.
iy) Employers' Liability v. Morrow (1906), 143 Fed. Eep. 750.
(a) Worsley v. Wood (1796), 6 T. E. 710 Newcastle Fire v. Macmorran
;
(1815), 3 Dow, 255.

(b) Boutledge v. Bii/i-rell (1789), 1 Black. H. 255.
(c) Wheelton v. Hardisty (1857), 8 El. & Bl. 232.
the insurance, or the basis and condition of the contract that is
sufficient {d).
Other extraneous documents may be incorporated as part of a Incorporation

policy, but they must be so incorporated either by express of other
documents.
reference, or by being physically attached to the policy (e). If
not so incorporated a document although delivered with the
poUcy is not a part of the written contract of insurance (/).
It is very common to import into the policy by reference the Subsequent
company's articles of association, deed of settlement or by-laws. alteration of
articles or by-
As the company may during the currency of the policy alter its laws referred
articles or by-laws, the question arises whether the contract is to in the
one made on the basis that any alteration will not affect the policy.
contractual rights of the assured (</), or whether it is one made
subject to the right of the company to affect the contractual
rights of the assured by such alteration (h) The answer .
depends on the intention of the parties as expressed in the

policy, hut pr mid facie, the assured must be taken as contracting
subject to the power of the company to alter its rules.
British Equitable v. Bailey, [1906J A. C. 35
In this case the question was whether the company could alter their British
rules as to the division of profits and maintenance fund so as to Equitable
of a reserve v.
diminish the share of profits of a participating policy holder who had effected Bailey.
his insurance at a time when the rules provided that all profits should be
divided without any deduction for a reserve fund. The company's deed of
settlement provided that " the provisions of the deed of settlement and any
by-law of the company may be altered, repealed or suspended by a by-law
or by-laws, but not othervidse." When the assured effected his insurance in
1886, the by-laws then in force provided that the entire profits made by the
company in the mutual department, after deducting the expenses, should be
divided among the policy holders and no provision was made for any
deduction for a reserve fund. The company issued a prospectus pointing
out the benefits of this system to participating policy holders. This pro-
spectus and the system of distribution advertised therein attracted the
assured to the company. In his proposal he agreed to conform to and
abide by the deed of settlement and by-laws, rules, and regulations of the
company in all respects. The policy promised payment of the sum assured
aaid " all such other sums if any as the company by their directors may have
ordered to be added to such amount by way of bonus or otherwise . . .
according to their practice for the time being." In 1903 the company
proposed to make a change in their method of distribution by taking out of
the profits provision for a reserve fund, and to alter their by-laws accord-
ingly. The policy holder brought this action for an injunction to restrain
(d) Thomson v. Weems (1884), 9 A. C. 671 ; Sceales v. Scanlan (1843), 6

Ir. L. E. 367.
(e) Heath v. Dwrant (1844), 12 M. & W. 438.
(/) Paivson V. Barnevelt (1779), 1 Dougl. 12 (n.).; Bine v. Fletcher

(1779), 1 Dougl. 12 (n.).
ig) Yelland v. Yelland (1898), 25 Ont. A. E. 91 Knights Templar v.
;
Jwrman (1900), 104 Fed. Eep. 638; Lloyd v. Supreme Lodge (1899), 98
Fed. Eep. 66 Sieverts v. National Benevolent (1895), 95 Iowa, 710.
;
(h) British Equitable v. Bailey, [1906] A. C. 35.

the company from distributing their profits otherwise than as stated in the
prospectus. Kekewich, J., held that the prospectus contained a collateral
contract under which the company were bound to maintain the distribution
of profits as advertised therein. The Court of Appeal held that the pro-
spectus could be read as part of the contract. The House of Lords reversed
the decision of the Courts below, and held that the prospectus was not part
of the contract, but was only a description. of the system de facto existing at
the time. The company in no way bound themselves to perpetuate that
system. On the contrary, the assured bound himself to abide by the deed
of settlement and by-laws which gave the company power to alter the
system.
Alteration of Where a policy provided that " the provisions contained in

articles not the articles of association shall be deemed and considered part of
validly eon-
this policy," and the company had five years previously resolved
firmed.
to alter the articles and had registered a copy of the altered
articles, and the altered articles were printed on the policy, the
Court held that the assured was bound by the articles as altered,
notwithstanding that the alteration was invalid under the
Companies Act by reason of the fact that it had not been con-
firmed by a special resolution (i).
Statements Statements made by a company in its prospectus, or other
in company's advertisements are frequently urged by the assured as matter
prospectus
or advertise-
which should be taken into consideration as part of the contract
ments between the parties. It will seldom happen that such advertise-
ments are referred to in the policy in such a way as to be
imported into it as part of the written contract. They must
therefore, if at all, be given effect to in some other way. It is
clear that if they are merely to be regarded as representations
inducing the contract they may afford ground for rescission or
return of premiums, but cannot be read as part of the bargain
between the parties. Statements made in an advertisement
may, however, operate as terms of the contract in one or other
of the following ways (1) they may form part of the preliminary
:
contract, and, if the policy does not correspond with the advertise-
ment, it may be reformed in order to represent the true contract
between the parties {k) (2) they may constitute a collateral
;
agreement not varying the terms of the policy, but representing

a supplementary part of the bargain.
may consti- Before a prospectus or advertisement can be read into the
tute part of preliminary contract between the parties, it must be proved that
the prelimin-
ary contract. the assured applied upon the faith of the statements made
therein (Z). Further, it must be shown that the statements
relied on were made not merely as representations intended to
attract applicants, but as statements indicating the basis upon
which the company invited applications {m). Statements as to the
benefits to be derived from insurance with the company are
frequently nothing more than expressions of expectation or belief
(i) Muirheadv. Forth, Sc, Insurance, [1894] A. C. 72.

(h) Anstey v. British Natural Premium Life (1908), 24 T. L. E. 871.
(I) Wheelton v. Hardisty (1857), 8 El. & Bl. 232.
(to) British EgvAtable v. Bailey, [1906] A. 0. 35.
. ;
or representations of existing facts. Such statements are not to

be construed as promises forming part of the contract (??).
When an advertisement purports to state what the legal effect May be
merely ex-
of the company's policy is, that may be construed either as a
pressions of
promise to issue a policy which will have the legal effect stated or opinion as
as an expression of opinion that the particular form of policy to tiie legal
effect of the
which the company offers has the legal effect stated. In the first company's
case the policy ought, if necessary, to be rectified so as to conform policy.
to the promise (o), but in the second case there would be no
ground for rectification, the parties having clearly intended that
the form of the policy as it stood should express the contract
between them {p) In some cases it has been said that a repre-
.
sentation by the company as to the legal effect of their policy

estgps the company in equity from setting up a defence incon-
sistent with their representation (g). Probably, however, this
rule carries the assured no further than the equitable right to
rectification, so that where there is no ground for rectification
there is no ground for estoppel (?•).
Where a preHminary contract is concluded and a policy is Eectification

afterwards issued which is not in accordance with the contract of policy so as
to correspond
made, the assured may claim to have the policy rectified so as to
with contract
represent the true agreement (s). Where there is no preliminary actually
contract, and the execution and delivery of the policy concludes made.
the first binding contract, the assured is bound by the terms of
the pohcy which he accepts (t), provided, however, that he is
entitled to assume that the policy is in accordance with the
application which he made, and if not so he may have it
rectified («-)
A strongcase is required to support a claim for rectification Strong pre-

on the ground that the policy does not represent the actual consumption
that policy
does repre-
(n) British Equitable v. Bailey, [1906] A. 0. 85 ; Angers v. Mutual sent the
Beserve (1904), 35 Can. S. 0. 330.
actual
(o) Salvin v. James (1805), 6 East, 571.
contract.
(p) Wheelton v. HarMsty (1857), 8 El. & BL 232 ; Buse v. Mutual Life
(1861), 23N. Y. 516; 2iN. Y. 653.
(2) Wood V. Dwarris (1856), 11 Exch. 493 Lord Campbell, O.J., in
;
Wheelton v. Ha^tMsty (185T, 8 El. & Bl. 232, 278 Fowler v. Metropolitan :
Life (1886), 41 Hun.

357.
(r) Beisv. Scottish Eqwitable
(1857), 2 H. & N. 19.
(s) Macdonald v. Law Union
(1874), L. E. 9 Eq. 330 Foster v. Mentor ;
Life (1854), 3 El. & Bl. 48 Collett v. Morrison (1851), 9 Hare, 162 Motteux
; ;
V. London Assurance (1739), 1 Atk.

545 London, Liverpool, amd Globe v.
;
Wyld (1877), 1 Can. S. 0. 604 Aetna Life v. BrodAe (1879), 5 Can. S. C. 1

;
AetTM Ufe V. Frierson (1902), 114 Fed. Rep. 56 Abraham v. North Oermam,
;
Insurance (1889), 40 Fed. Eep. 717 ; Farwell v. Home Insurance (1905),

136 Fed. Eep. 93 Thompson v. Phcenix Insurance (1889), 136 U. S. 287.
;
{t) MacMaster v. New YorJc

Life (1899), 99 Fed. Eep. 856.
{u) Mowat V. Provident Savings
Life (1900), 27 Ont. A. E. 675 M'Elroy ;
V. British American Assurance

(1899), 94 Fed. Eep. 990 Hough v. Guardian ;
F%re and Ufe (1902), 18 T. L. E. 273 Wyld v. Liverpool, etc., Insurance

;
(1876), 23 Grant, 442. But see Accident Insurance v. Crandal (1887), 120
U. S. 527.
— . ;
tract (x). There is a strong presumption that the policy which

the assured accepts does in fact contain the actual contract
made (y). If the contrary is asserted it must be clearly proved,
and it must be shown that the parties were in fact ad idem {z).
It is not too late to claim rectification even after loss, but the
longer the policy is retained without objection the stronger the
case required to displace the presumption that the policy embodies
the real contract (a).
Misrepresentation by an officer or agent of the company as to
tation of
agent as to
the legal effect of the company's policy may be good ground for
terms of rescission or return of premiums {h). It is not good ground for
policy. rectification unless the officer or agent had authority to bind the
company. An officer or agent of a company, without general
authority to contract, has no authority to bind the company by
construing the policy and stating to an applicant what he believes
to be its legal effect (c)
Insurers may The right to claim rectification of the policy is not confined
claim rectifi- to the assured. In a proper case it may be claimed by the com-
cation.
pany to relieve it against its own mistake in issuing a policy not
in accordance with the contract made {d).
Parol Where there is an obvious omission in a policy, as where
evidence to
there is a blank, it may be filled up upon parol evidence as to the
fill blanks.
intention of the parties (e).
Parol The general rule of construction is that when a contract is
evidence is expressed in writing parol evidence is inadmissible to explain or
inadmissible
to vary vary the terms of the written instrument (/). Although a con-
written contract is always to be construed according to the intention of the
tract.
parties, that intention can only be ascertained from the instru-
ment itself, and all other evidence of intention is excluded.
When parol Although parol evidence is inadmissible for the purpose of

evidence is is admissible for the following
varying a written contract, it
admissible.
purposes :
(1) To show that there was a mutual mistake and that the
(x) Allom V. Property Insuramoe (1911), The Times, Feb. 9.

(y) Armstrong v. Provident Savings Life (1901), 2 Ont. L. E. 771
Provident Sewings Life v. Mowat (1902), 32 Can. S. C. 147.
(z) Fowler v. Scottish Equitable (1859), 28 L. J. Ch. 225.
{a) HenUe v. Boyal Exchange Aasv/rance (1749), 1 Ves. Sen. 317.
(6) Kettlewell v. RefugeÂssuramce, [1908] 1 K. B. 545.
(c) Oomerford v. Britannia Assurance (1908), 24 T. L. R. 593.
(d) Ball v. Storie (1823), 1 Sim. & Stu. 210.
\e) Fazahe^ v. McKnight (1856), 6 E. & B. 759 Sears v. Agricultural
;
Inswramce (1882), 32 U. C. C. P. 585.

(/) Barnes v. National Fire and Marine, [1891] A. C. 485
Hare v. ;
Barstow (1843), 8 Jur. 928; Abbott v. Howa/rd (1832), Hayes, 381, 401;
Anglo -Galifornian v. London, etc., Insurance (1904), 10 Com. Cas. 1 Horn- ;
castle V. Equitable (1906), 22 T. L. E. 375 Insurance Co. v. Mowry (1877),

;
96 D. S. 544 Thompson v. Knickerbocker Life Lisurance (1881), 104 U. S.

;
252 Northern Assurance v. Grand View (1901), 183 U. S. 308; Hough v.

;
Peoples Fire (1872), 36 Md. 398; Robertson v. Marjoribamks (1819), 2 Stark.

573, 576.
LIFE rOLICIES 861
written contract did not in fact express what was clearly agreed
between the parties (g).
(2) To show the existence of a collateral agreement not varying
the terms of the written contract, but containing a separate
agreement (</).
To show the conditions under which the parties were

(3)
contracting, that is the surrounding facts and circumstances
which must necessarily be known to the Court before it can con-
strue the precise meaning of the language used (/i).
(4) To show the intention of the parties where there is a latent
ambiguity, that is to say, an ambiguity which does not appear on
the face of the document, but which is only disclosed by evidence
of thesurrounding circumstances (i).
To prove a custom, that is to say, to show some actual
(5)
usage in a particular trade or business known to both parties
and in contemplation of which they must be deemed to have
contracted (k).
To prove that certain words or phrases have a technical
(5)
trade meaning other than their natural meaning (/).
(6) To prove a subsequent agreement written or oral by
which the parties are alleged to have varied the original
contract (ro).
Section II. —Life Policies

1. Clauses relating to Suicide
It is_ contrary to public policy to insure a man against self Suicide an

destruction or death at the hands of justice and therefore even illegal risk.
without the suicide or felony clause no recovery could be had by
the representatives of an assured who deliberately and while of
sane_ mind
committed suicide or who suffered death as a
criminal at the hands of justice (p).
It_ is usual however to insert an express provision limiting
Express
the risk, so as not to include death by suicide, except where a exception
party other than the life insured has a beneficial interest in the
f^TrtJd.
policy. The provision may be contained either in the proposal,
ig) Be Lassalle v. Guildford, [1901] 2 K. B. 215 Edward Lloyd, Ltd.

;
V.Sturgeon Falls, etc., Ltd. (1901), 85 L. T. 162; Ha/rnickell v. New York

Life (1888), 111 N. Y. 390.
{h) Bamden v. London, etc., Assurance, [1892] 2 Q. B. 534 May v. ;
Buckeye Mutual (1870), 25 Wis. 291 Birrell v. Bryer (1884), 9 A. C.

;
345,353.
{i) Hordern
v. Commercial Union (1887), 56 L. J. P. C. 78.
Blachett v. Boyal Exchange (1832), 2 Cr. & J. 244, 249; Levy v.
(k)
Merchants' Assurance (1885), 52 L. T. 263 Syers v. Bridge (1780), 2 Dongl.
;
527, 530 Crofts v. Marshall (1836), 7 Car. & P. 597 Foster v. Mentor Life
; ;
(1854), 3 El. & Bl. 48.

(I) Bower v. Shamd (1877), 2 A. C. 456, 468 ; Birrell
v. Brijer (1884), 9
A. C. 345, 353 ; Danish v. Hudson Biver Fire (1853), 66 Mass. 416.
(m) Stuart v. Freeman, [1903] 1 K. B. 47.
(p) Ante, p. 172.
in the form of a warranty, or in the policy, either in the form of

a warranty or as an exception to the general liability to pay on
death.
Meaning of " Suicide " or " death by his own hand " and similar phrases
implies a wilful and intentional act on the part of the self
destroyer (g). According to the English and some of the
American authorities there is "suicide " if the individual under-
stands the physical nature of the act even although he is so
insane that he cannot distinguish between right and wrong (r).
But the majority of the American Courts have held on the
contrary that there is no " suicide " unless the individual can
distinguish right and wrong (s), or if he is impelled to self
destruction by a blind and uncontrollable impulse (t).
°^
proof
The onus is on the insurers to prove suicide within the
exception (u), but if they prove self destruction the onus shifts
and the claimant must prove absence of intention to destroy
life (x). In America where the facts proved pointed to one of
two alternatives, suicide or murder, and the evidence was equally
consistent with either view the Court held that as there was a
strong presumption against murder death by suicide was the
proper finding (2/). A coroner's verdict to that effect is prima
facie proof of suicide (z). The statement by a claimant in his
(2) Stormont v. Waterloo Life (1858), 1 F. & F. 22 Wcdnwright v. ;
Bland (1835), 1 M. & R. 481 EastdbroQh v. Union Mutual Life (1866), 54

;
Me. 224.
(r) Borradaile v. Hunter (1843), 5 Scott, N. E. 418 White v. British ;
Empire Mutual Life (1868), L. R. 7 Eq. 894 Clift v. Schwabe (1846), 3 ;
C. B. 437 Dufaur v. Professional Life (1858), 25 Beav. 599; Oayy. Union

;
Mutual Life (1871), 9 Blatohf. 142 Van Zamdt v. Mutual Benefit Life ;
(1873), 55 N. Y. 169 ; Pierce v. Travellers' Life Insurance Co. (1874), 34

Wis. 389.
(s) Manhattan Life v. Broughton (1883), 109 U. S. 121 Life Assurance ;
V. Terr^J (1872), 15 WaU. 580 Phadenhauer v. Germania Life (1872), 19

:
Am. E. 623 Schultz v. Insurance Co. (1883), 40 Ohio St. 217; 48 Am. E.
;
676 Breasted v. Farmers (1853), 8 N. Y. 299 Mutual Life Insurance Co.

; ; -
V. Leuhric (1896), 71 Fed. Rep. 848.

{t) Manhattan Life v. Broughton (1888), 109 U. S. 121 Life Assurance :
V. Terry (1872), 15 Wall. 580 Vam Zandt v. Mutual Benefit Life (1873),
;
55 N. Y. 169 Knickerbocker Life v. Peters (1875), 42 Md. 414.

;
(u) Home Benefit v. Sargent (1891), 142 U. S. 691; Continental v.

Delpeuch (1876), 82 Pa. 225; Ingersoll v. Knights of Golden Bute (1891),
47 Fed. Eep. 272 Walcott v. Metropolitan Life (1891), 64 Ver. 221 88
; ;
Am. S. E. 928 German v. Brooklyn Life (1883), 80 Hun. 585 National

; ;
Union v. Fitzpatrick (1904), 133 Fed. Eep. 694 Kerr v. Modern Woodmen ;
(1902), 117 Fed. Eep. 598 Fidelity cmd Casualty v. Freeman (1901), 109
;
Fed. Eep. 847 Union Mutual Life v. Payne (1900), 105 Fed. Eep. 172.
;
(x) Gay V. Union Mutual Life (1871), 9 Blatchf. 142; Knickerbocker

Life V. Peters (1875), 42 Md. 414 Weed v. Mutual Benefit (1877), 70 N. Y.
;
561 ; Supreme Tent v. King (1906), 142 Fed. Eep. 678 Harsencamp v. ;
Mutual Benefit Life Insurance Co. (1902), 120 Fed. Eep. 477 Contra ;
Schultz V. Insurance Co. (1888), 40 Ohio St. 217 48 Am. B. 676. ;
(y) Fidelity and Casualty v. Egbert (1897), 84 Fed. Eep. 410.

(z) Prince of Wales Assurance v. Palmer (1858), 25 Beav. 605; contra
Goldschmidt v. Mutual Life (1886), 102 N. Y. 486 Sharland v. Washing- ;
ton Life (1900), 101 Fed. Eep. 206 Walcott v. Metropolitan Life (1891), 64
;
Ver. 221 ; 88 Am. S. E. 923.

LIFE POLICIES 863
formal proof that death was caused by suicide is pnmd facie proof
against him, but he may show he made a mistake (a).
In order to get rid of the narrow construction put by the Meaning of
American Courts on the word " suicide," many of the American suicide " sane
policies extend the meaning by the addition of such words as etc™^^'^^'
" sane or insane " or " voluntary or involuntary." " Suicide sane
or insane " will include all self destruction where the individual
recognises the physical nature of the act, and there is an in-
tention to take life (6). "Death by his own hand whether
voluntary or involuntary" has much the same meaning as
"suicide sane or insane," and does not exclude from recovery
cases where the assured has been the accidental instrument
of his own death, as where he has accidentally discharged a
pistol and shot himself (c).
If there is a warranty against suicide, or if suicide of the How far
assured is expressly excepted from the risk, the policy in the
aw'Tn^hands
case of suicide would be equally valueless in the hands of a of assignee.
payee or assignee as in the hands of the assured representatives
unless the interest of third persons in the policy were expressly
saved from the exception ((Z). A proviso in favour of assignees
and incumbrancers for value is not illegal, and will operate in
favour of a wife or other beneficiaries under a marriage settle-
ment (e), but not in favour of a trustee in bankruptcy (/).
Where a policy is assigned to secure a debt existing at the date
of the assignment the assignment is not based on valuable con-
sideration ((/) but where a policy is deposited in security for
:
past and future advances it is an assignment for valuable con-

sideration (Ji). The proviso although intended to save the
interest of third persons only may operate in favour of the assured's
estate. Thus where the insurers hold the policy in security for
a loan it is the extent of the loan, notwithstanding
valid to
suicide of the assured while temporarily insane, and they must
satisfy their debt from the policy moneys (i), and if the policy is
mortgaged by assignment or deposit in security to a third party
such third party may sue for the policy moneys and satisfy his
debt therefrom and the insurers have no claim to the other
securities in his hands (k) nor can they require the incumbrancer
to resort to the other securities first or eYen pari passu (l) A .
(a) Keels v. Mutual Reserve (1886), 29 Fed. Eep. 198.

(5) Bigelow v. Berhshire Life (1876), 93 U. S. 284; ClarJce v. Equitable
Life Assurance Co., (1902), 118 Fed. Bep. 374; Union Mutual Life Insur-
ance Co. V. Payne (1900), 105 Fed. Bep. 172.
(c) Home Benefit and Sargent (1891), 142 U. S. 691 Keels v. Mutual
;
Reserve (1886), 29 Fed. Eep. 198.

(d) Ellmger v. Mutual Life, [1905] 1 K. B. 31.
(e) Moore v. Woolsey (1854), 4 El. & Bl. 243.
(/) JacJcson v. Forster (1859), 1 E. & E. 463.

ig) Wigan v. English and Scottish Law Life, [1909] 1 Ch. 291.
(7i) Jones v. Consolidated Investment
(1858), 26 Beav. 256.
(i) White V. British Empire Mutual Life (1868), L. E. 7 Eq. 894.
[h) Solicitors and General Life v. Lamb (1864), 1 Hem. & M. 716.
[I) City Bank v. Sovereign
Life (1884), 50 L. T. N. S. 565.
proviso that the suicide of the assured shall not invalidate the
policy if it has been " assigned " or " legally assigned," operates
in favour of a creditor with an equitable lien of which no notice
has been given to the company (m).
No return of A company taking the defence of suicide is not bound to
premium.
return the premium or premiums paid (n).
Clauses which have been judicially construed.
Warranty I also warrant and agree that I will not eommit suicide whether sane or insane
against during the period of one year from the date of the contract,
suicide. ElUnger v. Mutual Life New York, [1905] 1 K. B. 31 Mutual Life In- ;
surance Co. V. Kelly (1902), 114 Fed. Bep. 268.

Provided also that if the assured shall commit suicide within thirteen months
from the date of this policy . this policy shall he void and all moneys paid on
. .
account of this insurance shall be forfeited.

Dufaur v.Professional Life (1858), 25 Beav. 599; Stormont v. Waterloo Life
& F. 22 Clift v. Schwabe (1846), 3 C. B. 437 ; National Union
(1858), 1 F. ;
V. MUpatrick (1904), 133 Fed. Bep. 694; Harsencamp v. Mutual Ben. Life
Insurance Co. (1902), 120 Fed. Bep. 477.
In case he shall die by suicide.
Manhattan Life v. Broughton (1883), 109 U. S. 121 ; Gay v. Union Mutual
Life (1871), 9 Blatchf. 142.
Suicide sane If the assured should die by suicide sane or insane.
or insane. Bigelow v. Berkshire Life (1876), 93 U. S. 284 Supreme Tent v. King (1906),
;
142 Fed. Bep. 678; Kerry. Modern Woodman (1902), 117 Fed. Bep. 593;
Union Mutual Life Insurance Co. v. Payne (1900), 105 Fed. Eep. 172.
In case the assured shall die by suicide felonious or otherwise sane or insane.
Pierce v. Travellers' Life Insurance Co. (1874), 34 Wis. 389.
Self destruction sane or insane.

Clarke v. Equitable Life Assurance Go. (1902), 118 Fed Bep. 374 ; Sharland v.
Washmgton Life (1900), 101 Fed. Bep. 206.
Death by his Shall die from injuries self inflicted.

own hands. Fidelity and Casualty v. Freeman (1901), 109 Fed. Bep. 847.
In case the assured shall die by his own hands.

Borradaile v. Hunter (1842), 5 Scott, N. E. 418; White v. British Empire
Mutual Life (1868), L. B. 7 Eq. 394 Wainwright v. Bland (1835), 1 M. & B.
;
481; Life Insurance v. Terry ?1872), 15 Wall 580 Mutual Life Insurance ;
Co. v. Leubric (1896), 71 Fed. Bep. 843; Weed v. Mutual Benefit (1877), 70 N.
Y. 561 Breasted v. The Farmers (1853), 8 N. Y. 299; Van Zandty. Mutual
;
Benefit ii/e (1873), 55 N. Y. 169; Knickerbocker Life v. Peters (1875),

42 Md. 414 Eastabrook v. Union Mutual Life (1866), 54 Me. 224.
;
If the assured shall under any circumstances die by his own hands.
SchuUz y. Insurance (1883), 40 Ohio, St. 217; 48 Am. E. 676.
In case of death by his own hand or act voluntary or involuntary sane or
insane.
Home Benefit v. Sargent (1891), 142 U. S. 691; Keels v. Mutual Reserve
(1886), 29 Fed. Eep. 198.
Self destruc- Exceptions . . . suicide, the self destruction of the assured in any form except
tion in any upon proof that the same is the direct result of disease or of accident occurring
form. without the voluntary act of the assured.
Connecticut Mutual Life v. Akens (1893), 150 U. S. 468.
In case he shall die by suicide or by his own hands.
PhadenhoMer v. Germ,ania Life (1872), 19 Am. E. 623.
(m) Cook V. Black (1842), 1 Hare, 390; Dufamr v. Professional Life

(1858), 25 Beav. 599.
(n) Mutual Life Assurance Co. v. Kelly (1902), 114 Fed. Kep, 268.
LIFE POLICIES 865
But should such a policy have been assigned ito other parties for valuable Conditions in
consideration six calendar months before the death of the assured it remains in favour of
force to the extent of the beneficial interest therein of the parties to whom they assignee,
shall have been so assigned.
Jones V. Consolidated Investment (1858), 26 Beav. 256.
If the person assured commit suicide and the policy shall have been
assigned to any person or persons having a bond fide interest in his life to the
extent of the sum assured the full amount will be paid to the party or parties
so- interested if the interest be less than the sum assured the party or parties
:
mil be indemnified to the full extent of such interest.

Cook V. Black (1842), 1 Hare 390.
The policy shall become void except in so far as a third party may have
acquired a bond fide interest by assigninent or by legal or equitable lien for a
valuable consideration or as a security for money.
Jacksoî V. Foster (1859), 1 B. & E. 463.
Except the policy shall have been legally assigned.

Dufaur v. Professional Life (1858), 25 Beav. 599.
But without prejudice to the hmid fide interests of third parties based on a
valuable consideration.
Wigan v. English and Scottish Law Life, [1909] 1 Oh. 291.
Except to the extent of any interest acquired therein by actual assigmnent by
deed for valuable consideration or as security or indemnity or by virtue of any
legal or equitable lien as security for money.
Solicitors and General Life v. Lamb (1864), 1 Hem. & M. 716 ; Moore v.
Woolsey (1854), 4 El. & Bl. 243.
Except to the extent of any bond fide interest therein which at the time of
such death shaJl be vested in any other person or persons for his her or their
own benefit for a sufficient pecuniary or other consideration.
White V. British Empire Mutual League (1868), L. R. 7 Eq. 394.
But in case the beneficial interest in the policy has been vested in any other
person either originally or by such person having taken a legal or equitable
assignment thereof . . the policy shall remain valid to the extent of the
.
interest of such other party . provided notice in writing is given thirty days
. .
before death.
City Bank v. Sovereign Life (1884), 50 L. T. N. S. 565.
2. Clauses excluding Death resulting from Violation of

the Law
Death resulting from any violation of the law is commonly
excluded in American life policies. A
" violation of the law " has
been held to include only such unlawful acts as would from their
natural and probable consequences increase the risk (o), but
the increase of risk need not be present to the mind of the
assured (p). Suicide has been held not to be a violation of the
criminal law {q). A
" known violation " of the law means that
the assured must know of the law which he is alleged to have
violated ()) : but as he is presumed to know the law, a known
violation is practically the same as merely a violation (s). The
(o) Bloom FrcmJcUn 'Life (1884), 97 Md. 478 49 Am. E. 469.
V. ;
(p) Mutual Benefit Life (1866), 95 Mass. 308; (1868), 99 Mass.

Chuff v.
317; Bradley v. Mutual Benefit Life (1871), 45 N. Y. 422 6 Am. R. 115. ;
(?) Kerr v. Minnesota Mutual Benefit (1888), 39 Minn. 174; Barrow v.

Family Ftmd (1886), 45 Hun. 245 Patrick v. Excelsior Life (1875), 4
;
Hun. 263.
(r) Bhom v. Franklin Ufe (1884), 97 Md. 478 49 Am. R. 469 Cluff v.
; ;
Mutual Benefit Life (1866), 95 Mass. 308 (1868), 99 Mass. 317.

;
(s) Cluff V. Mutual Benefit Life (1866), 95 Mass. 398; (1868), 99

Mass. 317.
;
fact that the assured was drunk when he did the act alleged does
not make it any the less a known violation of the law (t). To
die "in the violation of the law" does not necessarily mean
death during the violation, but merely as the natural and
probable consequence of the violation (u), as where a man
assaulting his brother's wife was struck by his brother so that he
subsequently died (x), or a woman having submitted to an illegal
operation to procure abortion died from the result (y).

In the known This policy shall he void if the assured shall die in the known violation of
violation of any law of these States or the United States.
any law. Cluff V. Mutual Benefit Life (1866) 95 Mass. 398 (1868), 99 Mass. 317
;
Bradley v. Mutual Benefit Life (1871), 45 N. Y. 422 6 Am. R. 115 Bloom

; ;
V. FramkUn Life (1884), 97 Md. 478 49 Am. R. 469 Patrick v. Excelsior

; ;
Life (1875), 4 Hun. 263.

Shall die in the violation or the attempt to violate any criminal law.
Darrow v. Family Fund (1886), 45 Hun. 245.
In or in con- In or in consequence of the violation of the laws of any nation.
sequence of Hatch V. Mutual Life (1876), 120 Mass. 550 ; 21 Am. R. 541.
the violation
of any law. In or in consequence of the violation of any criminal law of any country state
or territory in which the assured may be.
Kerr v. Miriesota Mutual Benefit (1888), 39 Minn. 174.
Death caused by breach of the law on the part of the assured or ^by his
wilfully exposing himself to any unnecessary danger or peril.
Insurance Co. v. Seaver (1873), 19 Wall. 531.
3. Clauses containing other Exceptions from the Risk

Bisk limited The condition going outside Europe or other
against
to specified
area.
specified territorial limits may
be waived by leave or licence (a),
or by acceptance of premium with knowledge that the assured is
residing beyond the specified limits (a). Where the condition
merely prohibits residence outside the permitted area going
beyond the limits for a temporary purpose only may not
constitute a breach (b).
Conditions
In case the person upon whose life the assurance is effected shall go beyond the
limits of Europe or shall die on the seas except in passing from one part of the
against going
United Kingdom to another or in passing in times of peace in decked vessels
abroad.
from any European port to any other European port this policy shall
. . .
be void.
Beis v. Scottish Equitable (1857), 2 H. & N. 19; Noiman-v. Anchor (1858), 4
C. B. (N. s.) 476 Wing v. Ha/rvey (1854), 5 De G.
; M
&. G. 265.
(i) Bloom FramkUn Life (1884), 97 Md. 478; 49 Am. R. 469.

V.
(w) Mutual Benefit Life (1866), 95 Mass. 308 (1868), 99 Mass.
Cluff v. ;
317 Bradley v. Mutual Benefit Life (1871), 45 N. Y. 422 6 Am. R. 115

; ;
;
Kerr v. Minnesota Mutual Benefit (1888), 39 Minn. 174.

(x) Bloom v. FrankUn Life (1884), 97 Md. 478 49 Am. R. 469.
;
{y) Hatch v. Mutual Life (1876), 120 Mass. 550; 21 Am. R. 541.
{z) Beis V. Scottish Equitable (1857), 2 H. & N. 19.
(a) Wing v. Harvey (1854), 5 De G. M. & G. 265.
(6) Converse v. Knights Templars (1898), 93 Fed. Rep. 148.
;;
LIFE POLICIES 867
The assured shall not reside outside [certain speciflediloealities] but isauthoriaed
to pass as a passenger by the usual routes of public conveyance to or from any port
or place within the foregoing limits but if he should : pass beyond or be
. . .
without the foregoing limits the policy shall be void.

Converse v. Knights Templars (1898), 93 Fed. Eep. 148.
If the assured shall become so far intemperate as to impair his health or Warranty
induce delirium tremens or if his death shall result from injuries received while against future
under influence of alcoholic liquor. intemper-
Aetna Life v. Davey (1887), 123 U. S. 739; Boyce v. Phcenix Mutual (1887), 14 ance.
Can. S. C 723.
The applicant is not, and will not become habitually intemperate.

North Western Insurance v. Muskegon Bank (1887), 122 U. S. 501.
Does not nor will he practice pernicious habit tending to shorten life.
Knecht v. Mutual Life (1879), 90 Pa. 119.
4. Conditions relating to Payment of Premium

See Chapter IV., pp. 228-267.
Conditions which have been judicially construed.
No insurance will be held in force until the premium shall have been actually No Insurance
paid to the company. in force until
Busteed v. West of Englcmd (1857), 5 Ir. Oh. R. 553. premium
paid.
Until the actual payment and acceptance of the first premium due thereon by
an authorised agent of the company and the delivery to the insured of the neces-
sary receipt signed by the general manager.
Tieman v. Peoples Life (1896), 23 Out. A. R. 342.
The first premium to be actually paid in cash on or before the delivery Policy not to
hereof .
. this contract shall not take effect until this policy is delivered to
.
take effect
the insured in person and the first premium is paid in cash hereon during his until first
lifetime. premium paid
Mutual Reserve Life v. Heidel (1908), 161 Fed. Rep. 535 Mutual Life Assur-
; in cash.
ance Co. of Canada v. Qiguire (1902), 32 Can. S. C. 348.
This policy shall take effect only upon actual payment of the first premium During the
thereon and delivery of this policy to the assured during the lifetime and sound lifetime and
health of the assured in exchange for the company's receipt for said payment sound health
signed by the president secretary asistant secretary or actuary. of assured.
MacMahmi v. United States Life Insurance Co. (1904), 128 Fed. Rep. 389
Smith Provident Law Life Assurance (1895), 65 Fed. Eep. 765
V. ; Paine v.
Pacific Mutual Life Insurance Co. (1892), 51 Fed. Rep. 689.
In case any premium should not be paid when due according to the terms of Renewal
this contract at the office of the company or to agents when they produce receipt premiums.
signed by the president or secretary then and in every such case this policy shall
cease and determine except as otherwise herein expressly provided.
Prince of Wales Life and Educational v. Harding (1858), El. Bl. & El. 183
Pritchard v. Mutual Life (1858), 3 C. B. (n. s.) 622; Stuart v. Freeman,
[1903] 1 K. B. 47 Wheeler v. Connecticut Mutual Life (1880), 82 N. Y.
;
543 ; State Life Insurance v. Murray (1908), 159 Fed. Rep. 408 ; Mutual
Life Assurance v. Tuchfield, 159 Fed. Rep. 833 ; Krebs v. Security Trust
Life Insurance Co. (1907), 156 Fed. Rep. 294.
On the first May August and November (or at such other Mortuary
days of February
periods as the may determine) an assessment shall be made assessments.
board of directors
upon the entire membership. ... A member failing to receive a notice of assess-
ment on or before the first days of February May August and November for his
share of the losses occurring during the- time specified it shall be his duty to
notify the home office in writing of such fact. A failure to pay the assessment
within 30 days from the first days of February May August and November (or at
such period as may be named by the directors) shall work a forfeiture of mem-
bership in this association with all rights thereunder.
Mutual Life v. Eamlin (1890), 139 U, S. 297 ; Both v. Mutual Reserve Life
(1908), 162 Fed. Rep. 292.
;
All mortuary assessments payable at the office of the association 30 days from
the date of each notice. A notice addressed to a member at his post office address
as appearing in the books of the association according to its usual course of busi-
ness shall be deemed a sufficient notice and proof of mailing the same according
to the usual course of business of said association shall be deemed sufficient proof
of compliance herewith on the part of said association.
Ferrenbach v. Mutual Beserve (1903), 121 Fed. Kep. 945.
Days of Thirty days are allowed for the payment of each renewal premium after the
grace. same becomes due and the policy becomes void if the premium is not paid before
the expiring of the 30 days but in case the assured dies upon the day on which
:
any renewal premium falls due or within the said space of 30 days and before the
premium is paid the policy subject to the deduction of the premium is valid.
Nor will any policy be valid beyond 15 days after the expiration of any year
under the premium for its renewal shall have been actually paid to the company.
Busteed v. West of England (1858), 5 Ir. Oh. B. 553; Acey v. Fernie (1840),
7 M. & W. 151 Canning v. Farguhar (1886), 16 Q. B. D. 727 Fitt v. Berk-
; ;
shire Life (1868), 100 Mass. 500 ; Baker Union Mutual (1871), 43 N. Y. 283.
A grace of thirty days will be allowed in payment of the premium hereafter

due on this policy provided always that whenever advantage is taken of this grace
interest at the rate of 5 per cent, per annum shall be paid to the society for the
time deferred.
Provident Savings Life v. Taylm- (1906), 142 Fed. Eep. 709.
A grace one month will be allowed in payment of premium at the expira-
of
tion of which time if said premium remain unpaid the policy shall thereupon
become void.
MoMufacturers Life v. Gordon (1893), 20 Ont. A. B. 309.
Premium H a Jiote first or renewal premium or any
or other obligation he taken for the
notes. pSirtthereof and such note be not paid when due the policy or assurance becomes
null and void at and from default.
London and Lancashire Life v. Fleming, [1897] A. G. 499 ; Baker v. Union
Mutual (1871), 43 N. Y. 283 Sodsmi v. Guardian Life (1867), 97 Mass^ 147
; ;
Thompson v. Tnstirance Co. (1881), 104 U.S. 252 Bonald v. Mutual Beserve ;
Fund Life (1892), 132 N. Y. 378; Htitchings v. National Life Assurance

Co. (1905), 37 Can. S. C. 124 ; Iowa Life v. Lewis (1902), 157 U. S. 335
Knickerbocker Life v. Pendleton (1884), 112 U. S. 696 ; M'Geachie v. North
American Life Insurance Co. (1893), 23 Can. S. E. 148 Frank v. Sun ;
Life Insurance Co. (1893), 26 Ont. A. R. 564.

In ease the note is not paid at maturity the full amount of the premium shall
be considered earned as premium during its currency and the note payable with-
out reviving the policy or any of its provisions.
Duncan v. Missouri State Life Insurance (1908), 160 Fed. Eep. 646.
Revival of Insurance however may be revived within any period not exceeding three
policy on months on proof satisfactory to the directors being given of the unimpaired state
proof of good of the health of the person whose life is assured and payment of a fine of ten
health. shillings per cent, on the sum assured.
Busteed v. West of Englamd (1857), 5 Ir. Ch. N. 553 Campbell v. National ;
(1874), 24 U.iC. C. P. 133; Metropolitan Life v. M'Tague (1887), 49 N. J.

Law, 587 Knight Templars v. Mason's Life Indemnity (1897), 80 Fed. Eep.
;
202 Bonald v. Mutual Beserve Fund Life (1892), 132 N. Y. 378.

;
Surrender for If the policy is surrendered at the end of any policy year after renewal the
paid-up assured shall be entitled to a paid-up non-participating policy either (1) for a
policy. fractional amount of insurance for the whole life of the insured as per table of
paid-up insurance values below or (2) for the full amount of insurance hereunder
but for a limited term as per the table of periods of extended insurance herein.
Schumaker Security Life (1907), 153 Fed. Eep. 332.
Paid-up If after the payment of two or more annual premiums on the policy the same
policy in lieu shall cease and determine by default in the payment of any subsequent premium
of forfeiture, when due then this company will grant a paid-up policy payable as above for such
amount as the then present value of this policy will purchase as a single premium.
Provided that this policy shall be transmitted to and received by this company
and application made for such paid-up policy [during the lifetime of the assured]
and within one year after default in the payment of premium hereon.
Wheeler v. Connecticut Life (1880), 82 N. Y. 543 ; Miles v. Connecticut Life
(1892), 147 U. S. 178.
;
ltS-e policies 869

If after the payment of three full years premium the policy should lapse for
Automatic
the non-payment of any premium the insurers will upon application the payment non-for-
of all indebtedness and the surrender of the policy and the last renewed receipt
feiture.
within three months after such lapse issue a non-participating paid-up policy for
as many twentieth parts of its principal amounts as complete annual premiums
shall have been paid or apply the same towards the purchase of intended insur-
ance in accordance with the schedule endorsed hereon.
Pense v. Nortfiern Life (1907), 15 Ont. L. B. 131.
the payment of the first three annual premiums a default should be
If after
made in the payment of the annual premiums thereafter to become due such
default shall not work a forfeiture but the amount insured shall be then com-
muted or reduced to the sum of the annual premiums paid.
LovcU V. St. Louis Mutual Life (1883), 111 U. S. 264 ; Douglas v. Knicker-
bocker Life (1881), 83 N. Y. 492.
This policy of insurance after two annual premiums shall have been paid
thereon shall not be forfeited or become void by reason of the non-payment of
premiums but the party insured shaU be entitled to have it continued in force for
a period to be determined as follows to wit The net value of the policy when the
:
premium becomes due and is not paid shall be ascertained according to the com-
bined experience or actuaries rate of mortality with interest at four per cent, per
annum. Pour fifths of such net value shall be considered as a net single premium
of temporary insurance and the term for which it will insure shall be determined
according to the age of the party at the time of the lapse of premium and the
assumption of mortality and interest as aforesaid or at his option may receive a
:
paid-up policy for the full amount of premium paid. Provided that unless this
policy shall be surrendered and such paid-up policy shall be applied for within
90 days after such non-payment of premiums as aforesaid then this policy shall
be void and of no eflect.
Kîapp v. JSomceopathic Life (1885), 117 U. S. 411.
If any premium shall not be paid when due the same shall be charged
against the policy as a loan if the loan value be sufficient to enable such
advance after providing for the existing loans and accrued interest, provided that,
if not sufficient to cover the entire premium due, a premium for a shorter period
but no less than a monthly premium shall be charged if the available loan value
is sufficient. Notice of such advance shall be mailed to the assured and at any
time while the policy is sustained in force the payment of premiums may be
resumed.
Shumaker v. Security Life (1907), 153 Fed. Eep. 332.
5. Receipts for Premiums

Except in the case of foreign agencies it is not usual upon Practice of
giving
the receipt of an application for life insurance to grant an
interim pro-
interim receipt covering the assured until the acceptance or tection in life
rejection of the risk. Eeceipts given for a first premium paid at insurance.
the time the proposal is signed will not be readily construed as
effecting any interim insurance (c). In America provisional
insurance pending the final decision of the company is probably
more common than it is here and where such intention is clearly
expressed the receipt will be given efl'ect to accordingly ((/). An
interim receipt may be given on the terms that it shall not be
binding until the life has been approved by the medical officer (e).
Eeceipts given for renewal premiums which are overdue are
sometimes given without medical examination but on the express
condition that the life is still in good health and if the condition
(o) Mohrstadt v. Mutual Life Insurance

Co. (1902), 115 Fed. Eep. 81
Steinle v. New York Life Insurance Co. (1897), 81 Fed. Kep. 489.
(d) Mutual Life Insurance v. Kean (1905), 135 Fed. Rep. 677.
(e) Henderson v. State Life (1905), 9 Out. L. R. 540.
— ;
is not satisfied the acceptance of subsequent premiums in due

course and unconditionally does not cure the defect {f).
Conditions which have been judiciously construed.
No interim Received for tlie first annual premium ... on his application for a policy of
insurance if insurance on the life of said policy of insurance to take effect and be in
. . .
application force from and after the date hereof provided the said application shall be
rejected. accepted by the said company but should the same be declined or rejected by
;
said company then the full amount hereby paid will be returned to applicant
upon delivery of this receipt. This receipt virill be void when applicant is notified
that a policy has not been issued and shall not be valid for any other consideration
than cash actually paid.
Mohrstadt v. Mutual Life Insurance Co. (1902), 115 Fed. Rep. 81 Steinle v.;
New York Life Insurance Go. (1897), 81 Fed. Rep. 489 Union Central Life
;
V. Bobinson (1906), 148 Fed. Rep. 358.
Interim In consideration of the application and £. . . the mutual life insur-

insurance. ance company does insure the life of for the sum of £ sterling for
the term of 90 days from date to wit until the day of subject to
the usual term of said company's policies. It is expressly stipulated that if the
officers of said company at New York shall not agree to continue the assurance
during the said 90 days they may terminate said insurance at any time by mail-
ing a registered letter to the said informing him of their decision and
said insurance shall thereupon become null and void. ... If on the other hand
the application for insurance is accepted by the officers of the said company at
New York a permanent policy shall be made out and delivered to the assured as
soon as may be and the amount herein acknowledged to have been received by
the company in exchange for this provisional policy shall be allowed in payment
of firstpremium.
Mutual Life Insurance Co. v. Kean (1905), 135 Fed. Rep. 677.
Eeceipt for The conditions on which the within payment is accepted are as follows :
overdue First. The said member is now living and of temperate habits and is now
premium. and has been during the past twelve months in continuous good- health and free
from all disease infirmity illness indisposition and weakness and he has not during
said period consulted or been prescribed for or attended by any physician for any
cause whatever otherwise said payment and this receipt and said policy shall be
null and void and the sum paid herein shall be subject to the order of the within
named person.
Second. The receipt and acceptance of the within named sum by the company
shall not be held to waive forfeiture or expiration of membership or to re-instate
membership or to create any liability of the company under said policy except on
fulfilment of the first condition of this receipt.
Third. The acceptance of the within sum after the sum became due shall not
establish a precedent for acceptance of future premiums by the company nor
shall any subsequent payment upon said policy impair waive alter or change any
of the conditions of this receipt or of said policy or of any agreements or conditions
relating thereto.
Handlerv. Mutual Beserve Fund Life (3,904), 90 L. T. 192 Mutual Beserve
;
Fund Life Association v. TucTtfeld (1908), 159 Fed. Rep. 833 Bonald v.
;
Mutual Beserve Fund Life (1892), 132 N. Y. 378.
6. Declaration and Warranties as to Truth of Statements

in Proposal
See Chapter V., Section VIL, pp. 375-392.
and Warranties which have been judicially construed.
Declarations
Declarations Proposal. I do declare that to the best of my knowledge and belief the above
in proposal particulars are true and I agree that this proposal and declaration shall be the
and medical basis of the contract between me and the company.
examination Medical .Wxamination Form. I do hereby declare with reference to the pro-
form. posal for assurance on my life and my declaration dated that the answers to
the foregoing questions are true.
Joel v. Law Union and Crown, [1908] 2 K. B. 863.
(/) Mutual Beserve Fund Life v. TucTcfeld (1908), 159 Fed. Kep. 833
Bonald v. Mutual Beserve Fund Life (1892), 132 N. Y. 378.
LIFE POLICIES 871
If anything so warranted aa aforesaid shall not be true or if any oiroumstanoe

material to this insiirance shall not have been truly stated or shall have been
misrepresented or concealed or shall not have been fully and fairly disclosed
and communicated to the said company or if any fraud shall have been practised
on the said company or any false statements made to them in or about the obtain-
ing or efleoting of this insurance this policy shall be null and void.
Anderson v. Fitzgerald (1853), 4 H. L. 0. 408; Cazenove v. British Equitable
(1859), 6 0. B. (n.s.) 437; (I860) 29 L. J. 0. P. 160; Everett v. Desborough
(1829), 5 Bing. 503; Fowkes v. Manchester, etc., Life (1862), 3 P. & P. 440;
(1863), 3 B. & S. 917; Aetna Life v. France (1875), 91 U. S. 510; Canning
v. Farguhar (1886), 16 Q. B. D. 727 Duckett v. Williams (1834), 2 0. & M.
;
348 Qrattan v. Metropolitan Life (1880), 80 N. Y. 281 Foster v. Mentor

; ;
Li/e (1854), 3 El. & B. 48; Geachy. Ingall (1845), 14 M. & W. 95; Ham-
borotigh V.' Mutual Life (1895), 72 L. T. 140; Suguenin v. Bayley (1815),
6 Taunt. 186 Macdonald v. Law Union (1874), L. E. 9 Q. B. 328 Thomson
; ;
V. Weems (1884), 9 A. 0. 671; Knecht v. Mutual Life (1879), 90 Pa. 118;

Equitable Life v. Eeiper (1908), 165 Fed. Hep. 595.
I hereby warrant that the above statements are true full and complete and . . .
are ofEered to the company together with those contained in the declaration to
the medical examiner as a consideration for and as the basis of the contract with
the said company.
Home Lifey. Fisher (1902), 188 U. S. 726; Fitz-Randolph v. Mutual Belief
Society (1890), 17 Can. S. C. 333 M'Clain v. Provident Saving Life (1901),
;
101 Fed. Eep. 80; Hubbard v. Mutual Reserve Life (1900), 100 Fed. Eep.
719; Doll v. Equitable Life (1905), 138 Fed. Rep. 705; Hrady v. U. S. Life
(1894), 60 Fed. Eep. 727.
It is hereby declared and warranted that the above are fair and true answers
to the foregoing questions and it is acknowledged and agreed by the under-
;
signed that this application shall form part of the contract of insurance and that
if there be in any of the answers herein made any untrue or evasive statements
or any misrepresentation or concealment of facts then any policy granted upon
this application shall be null and void and all payments made thereon shall be
forfeited to the company.
Moulor V. American Life (1884), 111 U. S. 335.
I, (the person whose life is to be insured) do hereby warrant and

guarantee that the answers given to the above questions are true to the best of
my knowledge and belief and that this proposal shall be the basis of the
. . .
contract and that any mis-statements or suppression of facts shall render null
and void the policy of insurance and I (the party in whose favour the
assurance is granted) do also hereby agree that this proposal and declaration shall
be the basis of the contract between me and the said association.
Confederation Life Assurance v. Miller (1887), 14 Can. S. C. 330 Phcenix ;
Life V. Baddin (1886), 120 U. S. 183.
7. Questions, Answers, and Statements in Proposal

See Chapter V., Section VIL, pp. 375-392.
Questions and Answers which have been judicially construed.
Name and residence of life. Name and

Orogan v.London, etc.. Life (1885), 53 L. T. 761 ; Huguenin v. Rayley (1815), residence,
6 Taunt. 186. etc.
Name residence profession or occupation.

Perrins v. Marine and General (1859), 2 E. & E. 317 Hartman v. Keystone ;
(1853), 21 Pa. 466 ; U?iited Brethren v. White (1882), 100 Pa. 12.
My habits of life are correct and temperate and I am in sound condition General
mentally and physically except as herein stated. declarations
Standard Life, etc. v. Sale (1903), 121 Fed. Eep. 664. as to temper-
n 1 ,., Bjxae and
ôoAhie. health.
Boss V. Bradshaw (1760), 1 Wm. Bl. 312.
Perfect health.
Muhcal Belief v. Webster (1889), 16 Can. S. C. 718.
Sound health.
Brown v. Metropolitan Life (1887), 65 Mich. 306 Deitz v. Metropolitan Life
;
(1895), 168 Pa. 504 Jacldin v. NaUonal (1894), 75 Hun. 595.

;
State whether now and ordinarily enjoying good health.

British Equitable v. Great Western (1869), 20 L. T. 422.
Good health.
Hutchison v. National Loan (1845), 7 D. 467; Ooucher v. North-Western
Travelling Insurance (1884), 20 Fed. Kep. 596 Campbell v. National (1874),
;
24 U. 0. 0. P. 133 Barnes v. Fidelity (1899), 191 Pa. 618 Manhattan Life

; ;
V. Carder (1897), 82 Fed. Bep. 986 ; Peacock v. New York Life (1859), 20
N. Y. 293 ; Grattan v. Metropolitan Life (1883), 92 N. Y. 274.
Sound constitution and good health.
Sieverts v. National Benefit (1895), 95 Iowa, 710.
In good health and nothing in my habits or condition which is likely to impair

my health or shorten life.
Richards v. Maine Benefit (1892), 85 Me. 99.
No disorder tending to shorten life.

Watson V. Mainwaring (1813), 4 Taunt. 763.
Not aware of any disorder or circumstance tending to Shorten life.
Jones V. Provincial (1857), 3 C. B. N. S. 65.
Not afflicted with any disorder tending to shorten life . . . and have not at
any time been afflicted with [certain specified diseases].
Geach v. Ingall (1845), 14 M. & W. 95.
Never had any sickness or disease.
Life Insurance Francisco (1873), 17 Wall. 672; Metropolitan Life v.
v.
M'Tague (1887), 49 N. J. Law, 587; Brown v. Metropolitan Life (1887), 65
Mich. 306.
Free from any and all diseases.
Fidelity Mutual v. Jeffcyrds (1901), 107 Fed. Eep. 402.
Sickness.
Mutual Benefit v. Wise (1871), 34 Ind. 582.
No disease or ailment.
Hubbard v, Mutual Reserve (1900), 100 Fed. Bep. 719.
Have been free from all ailments.
Sieverts v. National Benefit (1895), 95 Iowa, 710.
I have never had or been afflicted' with any sickness disease ailment injury or
complaint except as here stated.
Fidelity Mutual v. Miller (1898), 92 Fed. Eep. 68 Penn Mutual v. Mechanics ;
(1896), 72 Fed. Bep. 413.

Ever had since infancy any and what other disease.
Cazenove v. British EguitaUe (1859), 6 C. B. N. S. 437 ; (1860), 29 L. J. 0. P.
160.
Never had any serious illness local disease or personal injury.

Moore v. Connecticut (1878), 3 Ont. A. B. 230 Equitable Lifev. Keiper (1908),
;
165 Fed. Bep. 595 Doll v. Equitable Life (1905), 138 Fed. Eep. 705 In-
; ;
surance Co. V. Wilkinson (1871), 13 Wall. 222.
Severe injury or illness.

Goucher v. North- Western (1884), 20 Fed. Eep. 596 ; Bancroft v. Home Benefit
(1890), 120 N. Y. 14.
Severe sickness or disease.
Boose V. World Mutual Life (1876), 64 N. Y. 236.
Bodily infirmity.
Gotten V. Fidelity (1890), 41 Fed. Eep. 506.
No bodily mental infirmity.
or
Manufacturers v. Dorgan (1893), 58 Fed. Bep. 945 Black v. Travellers' In- ;
surance (1903), 121 Fed. Bep. 782 Bernays v. D. S. Mutual Accident

;
(1891), 45 Fed. Bep. 455 ; Gotten v. Fidelity, etc., Casualty (1890), 41

Fed. Eep. 506.
LIFE POLICIES 873
Never had any of the following diseases . . . afEeotion of the liver . . . kidney Declaration
disease. relating to
Connecticut Mutual Life
Union Trust (1884), 112 U. S. 250; Moulor v.
v. specified
American Life (1884), 111 U. S. 335 Life Insurance v. Francisco (1873), 17
; diseases.
Wall. 672 Hubbard v. Mutual Reserve (1900), 100 Fed. Rep. 719 Hogan v.
; ;
Metropolitan Life (1895), 164 Mass. 448 Cushman v. U. S. Life (1877), 70 ;
N. Y. 72; Knickerbocker Life v. Trefn (1881), 104 U. S. 197.

Gout.
Fowkes V. Manchester (1863), 3 B. & S. 917.
Eupture.
Aetna Insurance v. France (1875), 91 U. S. 510 ; Leori v. Metropolitan Life
(1895), 163 Mass. 117.
Paralysis.
Cruickshank v. Northern Accident (1895), 23 R. 147.
Spitting of Hood.
Oeach Ingall (1845), 14 M. & W. 95 March v. Metropolitan (1898), 186 Pa.
v. ;
629 ;Driser v. Continental Insurance (1885), 24 Fed. Rep. 670 Campbell ;
V. New England Mutual (1867), 98 Mass. 381.

Cough.
Oeach v. Ingall (1845), 14 M. & W. 95.
Disease of brain.
Knickerbocker Life v. Trefz (1831), 104 U. S. 197; Higbie v. Guardian
Mutual (1873), 53 N. Y. 603.
Not been with nor is subject to epileptic or other fits.
afflicted
Chattork Shaive (1835), 1 M. & Eob. 498 Shilling v. Accidental Death
v. ;
(1858), 1 F. & F. 116.
Q. Have the person's (whose life is to be insured) parents uncles aunts brothers Declaration
or sisters been afflicted with consumption, scrofula, insanity, epilepsy, disease of as to here-
the heart or any other hereditary disease ? A. No hereditary taint of any kind ditary taint.
in family on either side of house to knowledge. my
Insurance Co. v. Oridley (1879), 100 U. S. 614.
There is no history of consumption or insanity in my family, i.e. among

parents brothers or sisters uncles or aunts.
Doll V. EguitabU Life (1905), 138 Fed. Eep. 705.
When last ill and nature of Ulness. Questions
Brown v. Metropolitan Life (1887), 65 Mich. 306. relating to
Name and residence of usual medical attendant. last illness
Suttm V. Waterloo Life (1859), 1 F. & F. 735 Maynard v. Rhodes (1824), 5 and medical ;
Dow. & R. 266 Cushman v. U. S. Life (1877), 70 N. Y. 72 Huckman v. attendance.

; ;
Fernie (1888), 1 H. & H. 149; Everett v. Desborough (1829), 5 Bing. 503.
What medical men have you consulted ? When ? And what for ?
Joel v. Law Union and Crown, [1908] 2 K. B. 863.
Name and address of medical attendant or attendants employed on occasion of
such disease.
Cazenove v. British Equitable (1859), 6 0. B. N. S. 437.
How long since you were attended by a physician.
Moore v. Connecticut (1878), 8 Ont. A. E. 230.
Consulted or attended by a physician.
Hubbard v. Mutual Reserve (1900), 100 Fed. Rep. 719.
Consulted or been prescribed for by a physician.
Metropolitan Life v. M'Tague (1887), 49 N. J. Law, 587; Mutual Reserve v.
Dobler (1905), 137 Fed. Eep. 550; Hubbard v.Mutual Reserve (1900), 100
Fed. Rep. 719.
Attended by a physician for a complaint.
White V. Provincial Savings (1895), 163 Mass. 108.
Name of physician who last attended.
Brown v. Metropolitan Life (1887), 65 Mich. 306.
Give name and address of each physician who has prescribed for or attended
you within the past five years and for what disease or ailments and date.
Brady v. U. S. Life (1894), 60 Fed. Eep. 727.
;
Have you ever been an inmate of any infirmary sanitarium institution asylum or
hospital.
Farrell v. Security MiUioal (1903), 125 Fed. Rep. 685.
Questions Has the life been ofiered at any other olfloe and if so has it been accepted and
relating to at what rate ?
other insur. Anderson Fitzgerald (1853), 4 H. L. C. 484, 515; Fowkes v. Manchester
v.
ances or (1862), 3 P. & P. 440 Fidelity Mjitual v. Miller (1899), 92 Fed. Eep. 63
;
proposals. Penn Mutual v. Mechanics (1896), 72 Fed. Eep. 413 London Assurance v. ;
Mansel (1879), 11 Oh. D. 363; Macdonald v. Law Union (1874), L. R.Q

Q. B. 328 General Provincial Life, In re (1870), 18 W. K. 396 Manhattan
; ;
Life v. Willis (1894), 60 Fed. Rep. 236 Phoenix Life v. Baddin (1886), 120
;
U. S. 183 Webl v. Security Mutual Life (1904), 126 Fed. Eep. 635 Borne
; ;
Life V. Myers (1901), 119 Fed. Rep. 847.

Have you any other insurance ?
Mutual Reserve Life v. Dohler (1905), 137 Fed. Rep. 550.
State amount of insurance you now carry on your life with name of company
or association by whom granted and the year of issue.
Metropolitan Life v. Montreal Coal Co. (1904), 35 Can. S. 0. 266.
Questions Are you of sober and temperate habits ?
relating to Thomson v. Weems (1884), 9 A. C. 671 ; Sutton v. Waterloo Life (1859), 1
temperance. F. & F. 735 ; Desborough (1840), 2 M. & Rob. 328 Southcombe
Bawlins v. ;
v. Merriman (1842), Car. & M. 286 Life Association of Scotland v. M'Blain

;
(1875), Ir. E. 9 Eq. 176 Jones v. Brooklyn Life (1874), 61 N. Y. 79 Van

; ;
Valkenbrugh v. American Popular Life (1877), 70 N. Y. 605 Knickerbocker ;
Insurance v. Foley (1881), 105 U. S. 350; Aetna Life v. Davey (1887), 123
U. S. 739.
Do you drink wine spirits or malt liquor ? If so which of these and to what
extent ? Have youever used them freely or to excess ?
Home Life InsuroMce v. Fisher (1902), 188 U. S. 726 Provident Savings Life
;
v. Exchange Bank (1904), 126 Fed. Eep. 360 Provident Savings Life v.
;
Hadley (1900), 102 Fed. Rep. 856.

Has the party ever been addicted to the excessive or intemperate use of any
alcoholic stimulants or opium or does he use any of them often or daily ?
Aetna Life v. Davey (1887), 123 U. S. 739.
Does not nor will he practise any pernicious habit which obviously tends to
the shortening of life.
Knecht v. Mutual Life (1879), 90 Pa. 118.
General Are there any other circumstances within your knowledge which the directors
question ought to be acquainted with ?
requiring all Lindenau \. Desborough (1828), 3 Man. & Ry. 45; Connecticut Mutual v.
relevant M'Whirter (1896), 78 Fed. Eep. 444.
matters to be
I hereby warrant and agree that I am temperate in my habits now in good
disclosed.
health and ordinarily enjoy good health and that in the statements and
answers in this application no circumstance or information has been withheld
touching my past and present state of health and habits of life with which the
company ought to be made acquainted.
Penn. Mutual v. Mechanics (1896), 72 Fed. Eep. 413.
No state- It is covenanted and agreed that no statements or representations made or

ments dehors given to the person soliciting this application for a policy of insurance shall be
application binding on the said company unless such statements or representations be in
to have any writing in this application when the said application is received by the officers of
effect. the said company at the home office of the said company.
Continental Insurance v. Chamberlain (1889), 132 U. S. 304 New York Life ;
V. Fletcher' {1886), 117 U. S. 519.
Instruction Under no circumstances can an application be written upon the life of a

as to signa- husband for the benefit of a wife or on the life of a wife for the benefit of a
ture where husband unless the life fully understands and consents to the insurance and . . .
insurance on personally signs the examination form on the back of the application.
life of spouse Wakeman v. Metropolitan Life (1899), 30 Ont. 705; Mailhoit v. Metropolitan
applied for. Life (1895), 87 Me. 374.
LIFE POLICIES 875
8. Conditions relating to Authority of Agents to alter

Contracts or waive Forfeiture
Such clauses operate as notice to the assured that agents Efisotofsuch
have no power contracts or waive compliance with conditions,
to alter
conditions (g) and that the officers of the company have only
authority to do so by endorsement on the policy. The condition
however may, like any other condition in the policy in its favour,
be waived by the conduct of the company itself in permitting its
officers or agents to act contrary to the conditions (li). It has
also been held not to apply to arrangements, made by the assured
with an agent, which are conditions precedent to the contract of
insurance (i).
No person except one of the executive officers designed on the back of the Authority of
make alter or discharge contracts or waive forfeitures.
policy is authorised to agents.
Honicastle v. Equitable (1906), 22 T. L. B. 735.
No agent of the company has power to make or modify this or any contract of
insurance ... or to hind the company by making any promise or receiving any
representations or information.
Harnichell v. New York Life (1888), 111 N. Y. 390 Iowa Life v. Lewis (1902),
;
187 U. S. 335.
Agents of the company are not authorised to make alter or abrogate contracts
or waive forfeitures.
Insurance Co. v. Nm-toii (1877), 96 U. S. 234.
Noiwaiver alteration or modification of this contract shall be binding upon the No waiver
company unless the same is enclosed hereon or attached hereto and signed by the except by
president or secretary of the company. indorsement
Pemnsylvania Casualty v. Bacon (1904), 133 Fed. Eep. 907 Mutual Reserve signed as
;
Life V. Cleveland Woollen Mills (1897), 82 Fed. Eep. 508. prescribed.
9. Clause providing that Policy shall be indisputable
The object of this clause is to give the assured a feeling of Object of

absolute security in the validity of his policy and to render the °^^^^^-
poUcy more valuable as a marketable asset.
A proviso that the policy shall be indisputable except on the Efiect of
°^^'^^^-
ground of fraud after the lapse of the specified period means that
even although the policy was ah initio voidable on the ground of
innocent misrepresentation or breach of warranty if it has run
for the specified period without having been avoided by the
company the company cannot at any time thereafter avoid it on
such grounds {k). Nor can the company after the lapse of the
specified period avoid the policy for any breach of warranty
committed at any time during the currency of the policy (/t).
(g) Horncastle v. Equitable (1906), 22 T. L. B. 735 loiva Life v. Leivis

;
(1902), 187 U. S. 835; Pennsylvania Casualty v. Bacon (1904), 133

Fed. Eep. 907.
(h) Insurance Co. v. Morton (1877), 96 U. S. 234 Mutual Reserve Life
;
V. Cleveland Woollen Mills (1897), 82 Fed. Eep. 508.
(*) Harnichell v. New Yorh Life (1888), 111 N. Y. 390.

{k) Anstey v. British Premium Life (1908), 24 T. L. E. 871 North ;
American Life v. Elson (1903), 33 Can. S. C. 383.

Method of Where a policy was issued subject to the condition that it

reokouing
period after
should not be in force until the first premium was paid and the
whioh clause premium was not paid until some ten days after the day upon
takes effect. which the policy was dated and issued it was held nevertheless
that the time during which the policy should be deemed to have
been in force within the meaning of the indisputable clause should
be reckoned from the day on which the policy was dated and
issued (l). Where the condition was that the policy should be
indisputable after it had been in force three years and there was
a condition precedent that the policy should not come into force
unless the first premium was paid in the assured's lifetime and
while in good health and the condition as to good health was
broken it was held that that defence could not be taken after the
lapse of three years from the delivery of the policy and payment
of the premium (m).
Defences of The indisputable clause cannot however preclude the company
illegality, from taking the defence that the policy was illegal for want of
mistake, or
fraud not
insurable interest or otherwise nor from taking the defence that
precluded. there never was any contract between the parties as for instance
that there was a mistake or error in esscntialibus (n). Neither
does the clause prevent the company from alleging that the
policy was induced by fraud (o), nor does it prevent the lapse of
the policy from non-payment of the premium (p).
Where policy The assignee of an indisputable policy does not take any better
in hands of title than his assignor. The defences of illegality, error in
essentiallbus and fraud are accordingly open to the insurers even
although the indisputable clause is in the widest possible terms
and the assignee has taken for value and without notice.
The only way in which the assignee can protect himself against
the possible fraud of the assured is to become a party to the
contract in his own right and not merely as assignee of the
assured's interest.
Clauses which have been judiciaUy'constrtied.
After five When the policy shall have been five years in existence and shall have the age
years and age °^ ^^^ assured admitted thereon it shall thereafter be indisputable on any ground
admitted whatever except fraud.
Anctil V. Manufacturers' Life, [1899] A. C. 604.
After three ^^ *^^ policy shall have been in continuous force for three years from its date
ygjjjg^
it shallthereafter be incontestable except for non-payment of premiums as herein
provided or for misstatement of the age of the member in the application
therefor.
Mutual Beserve Fund Life v. Austin (1905), 142 Fed. Rep. 398.
After being in force three years the only conditions which shall be binding
upon the holder of the policy are that he shall make the payments hereon as
herein provided and that the provisions as to military and naval service and as
il) North American Life v. Elson (1908), 33 Can. S. C. 383.

(m) Mutual Reserve Fund Life v. Austin (1905), 142 Fed. Eep. 398.
(ra)Anctilv. Manufacturers' Life, [1899] A. C. 604.
(o) Anstey v. British Premium Life (1908), 24 T. L. E. 871.
(p) Schmertu v. U. S. Life Insurance Co. (1902), 115 Fed. Rep. 251.
LIFE POLICIES 877
to proof of age and death shall be observed. In all other respects after the
expiration of the said three years the liability of the company under this policy
shall not be disputed.
North American Life Assurance Co. v. Elsmi (1903), 33 Can. S. C. 383.
After two years from the date hereof if the premiums on this policy are duly After two
paid as herem stipulated the liability of the company under the policy shall not years,
be disputed.
Schmert2 v. U. S. Life Insurance Co. (1902), 118 Fed. Rep. 251.
This policy except as provided herein shall be indisputable from any cause
(except fraud) after it shall have been continuously in force for two years.
Anstey v. British Natural Premium (1908), 24 T. L. R. 871.
10. Conditions giving Assured a Right to demand a Loan

or Surrender Value
In a Scottish case (q) a surrender clause in a sickness and

accident policy was held to be a standing offer to the assured.
The assured stated to the office that he had decided to accept the
surrender value, but before the formal documents connected with
the surrender had been executed the assured made a claim on
the poHcy in respect of sickness. It was held that as the offer
to pay a surrender value had been accepted he had no other
claim under the policy.
At any time after this policy has been in force for one full year and premiums Promise to
have been paid up to the anniversary of the insurance next after the date when grant loan
the loan iff made the company will lend upon demand upon the sole security of on policy,
this policy the respective sum named in the table of cash loans herein which shall
include any previous loan then unpaid. Interest shall be at 5 per cent, per
annum in advance.
Lewis V. New York Life (1909), 173 Fed. Rep. 1009 Schumaker v. Security
;
Life (1907), 158 Fed. Rep. 332.
At any time after five years' premiums have been paid this policy may be Surrender for
surrendered for a cash payment which in no case will be less than one third cash,
of the whole premiums received and will increase with the duration of the
policy.
Ingram Johnson v. Century Insurance (1909), 46 S. L. R. 746.
11. Participating Policy Clause

This poUoy during its continuance shall be entitled to participate in the dis- Provisions for
tribution of the surplus of this society by way of increase to the amount insured application
according to such principles and methods as may from time to time be adopted of bonus,
by this society for such distribution which principles and methods are hereby
ratified and accepted by and for every person who shall have or claim any interest
under this contract but the society may at any time before a forfeiture upon the
request of the person holding the absolute legal title to this policy substitute a
cash payment to be fixed by said society in lieu of the said increase to the amount
insured and such payment may be made by reduction of subsequent premiums if
said policy^ holders shall so elect.
Baerlein v. Dickson (1909), 25 T. L. R. 585 Bosmead v. Norwich Union (1898),
;
15 T. L. R. 9; Equitable Life v. Brotvn (1900), 213 U. S. 25; Brown v.

Equitable Life (1907), 151 Fed. Rep. 1 ; Gadd v. Equitable Life (1907), 151
Fed. Rep. 1.
(q) Ingram Johnson v. Century Insurance (1909), 46 S. L. R. 746.

;
12. Conditions requiring Notice and Proof of Death

See Chapter VI., Section I., pp. 393-406.
Immediate Representatives shall give immediate notice in writing to the company stating
notice proofs the time place and cause of death
; and shall within seven months thereafter
. . .
within seven by direct and reliable evidence furnish the company with proofs of the same
months. giving full information.
Travellers' Insurance v. Edwards (1886), 122 U. S. 457
Satisfactory [Sum insured made payable] on satisfactory evidence -of the death of the
evidence. insured.
Life Insurance 'v. (187.3), 17 Wall. 672
ffrancisco Knickerbocker Life v. ;
Pendleton (1884), 112 U. S. 696 Iowa Life v. Lewis (1902), 187 U. S. 336
;
Crotby v. Union Mutual (1891), 144 U. S. 621 Orattan v. Metropolitan Life ;
(1880), 80 N. Y. 281.
Payment Ninety days after satisfactory proof of a valid claim,

due withm Home Life v. Randall (1899), 30 Can. S. C. 97.
specified Sixty days after due notice and proof of such notice,
period after O'Beilly v. Guardian Mutual Life (1875), 60 N. Y. 169.
On the lapse of three calendar months after proof shall have been given of the
death of the assured to the satisfaction of the directors of the said company.
Doyle V. City of Glasgow Life (1884), 53 L. J. Oh. 527.
Notice and Notice of claim and proof of death shall be submitted to the company within
proof within ninety days after decease.
ninety days. MElroy v. Hancock Mutual Life (1898), 88 Md. 137.
Full proofs. Full proof on oath shall be furnished.
Insurance Co. v. Newton (1874), 22 Wall. 32 Cushman v. U. S. Life (1875), ;
63 N. Y. 404 Hassencamp v. Mutual Benefit Life (1908), 120 Fed. Rep.

;
477 Cluff V. Mutual Benefit Life (1868), 99 Mass. 317.

;
Full proofs shall be presented within twelve mouths from the time the loss
occurs.
Prentice v. Knickerbocker Life (1879), 77 N. Y. 483.
The proposer alleging that he is interested in the life of the assured
. . . . . .
(at which allegation satisfactory proof has to be furnished to the directors).

Cowell V. Yorkshire Provident (1901), 17 T. L. K. 452.
Section III. —Fire Policies
1. Clauses describing Property Insured

These clauses are discussed in Chapter V., Section VI., pp.
360-375.
Description Built of brick and slated.

may be a Universal Non Ta/riff, In re (1875), L. R. 19 Eq. 485.
Warranted in stone and brick buildings.
tion, defini- Allom V. Property Insurance (1911), The Times, Feb. 9.
tion, or
warranty. Warranted conformable to the first class of cotton and wooUen rates delivered
herewith.
Newcastle Fire v. Macmorran d Co. (1815), 3 Dow. 255.
On main building.
Aelm.a Insuvamce y.A.-G. of Ontario (1890), 18 Can. S. C. 707.
Goods in D. & Oo.'s oar factory.
Blake v. Exchange Mutual (1882), 78 IVtass. 265.
In that one and a half story frame buUding occupied as a store-house, said
building shown on plan on back of application.
Guardian Insurance v. Connely (1891), 20 Can. S. C. 208.
FIRE POLICIES 879
Warranted to be in conformity with the description lodged at the office.

Hare v. Barstow (1843), 8 Jur. 928.
How bounded and distance from other buildings if less than 10 rods.
GatesV. Madison Country (1851), 5 N. Y. 469.
Warranted by the assured that a continuous clear space of 100 feet shall
hereafter be maintained between the propercy hereby insured and any wood-
working or manufacturing establishment.
Petit V. German Insurance (1898), 98 Fed. Eep. 800.
Nature and material structure of the building and property insured.

Baxendale v. Harvey (1859), 4 H. & N. 445.
On grist mill valued at $6000.
Shannon v. Gore District Mutual (1878), 2 Ont. A. E. 396.
Onstock ... in premises situated at Nos. 754 and 756, George Street, Sydney,
built of stone and brick roofed with slate and iron attached on the north to
brick iron and shingles and on the south to brick and slate and occupied by
the assured as a shop or dwelling.
Hordem v. Commercial Union (1884), 5 N. S. W. E.. (Law) 309.
On building (Pianoforte Factory) Grover and Grover (Ltd.), The Bank House,
Newington Green, N.
Grover v. Matthews (1910), 26 T. L. E. 411.
Stock-in-trade, household furniture, linen, wearing apparel and plate.
Watchorn v. Langford (1813), 3 Camp, 422.
Stock-in-trade consisting of corn, seed, hay, straw, fixtures and utensils in

business.
Joel V. Harvey (1857), 5 W. E. 488.
$1000 on general stock-in-trade of groceries.

ButUr V. Standard Fire (1879), 4 Ont. A. E. 391.
On 120 sacks of green coffee while stored in the three-story brick patented
roofed building X.
Merchants Fire v. Eciuity Fire (1905), 9 Ont. L. E. 241.
On rick of hay in hay-yard £400, on smaller rick of hay in said hay-yard £200.
Gorman v. Hand-in-Hand (1877), Ir. E. 11 C. L. 224.
|800 on his wagons, harnesses, covers, poles and stack ropes and other tent
equipments not more hazardous all while contained in the frame shingle roof
barn A. B.
Mead v. American Fire (1897), 13 Hun. 476.
On merchandise in all or any of the brick or stone warehouses and while in
transitu in or on any of the streets, yards or wharves of the cities of New
York, etc., but if any specific parcel be insured in this or any other office,
this policy shall not extend to cover the same excepting only as far as relates
to any excess of value beyond the amount of such specific insurance.
Fairchild v. Liverpool and Londojt (1872), 51 N. Y. 65.
Upon wool in any shed or store on station, or in transit to Sydney by land
only, or in any shed or store or any wharf in Sydney, until placed on ship.
Australian Agricultural Insurance v. Saunders (1875), L. E. 10 0. P. 660.
Upon rolling stock . upon the line of the road hereby insured and its
. .
bran<|}ie^, spars, side-tracks, and yards owned or operated by the insured but . . .
this insurance shall not apply on the line of any road leased by the insured
unless the name of such leased road is specified.
Liverpool, London and Globe v. M'Neill (1898), 89 Fed. Eep, 181.
Upon vessel X
whilst running on the inland lakes, rivers and canals during
the season of navigation. To be laid up in a place of safety during winter months.
London, Assurance v. Great Northern Transit Co. (1899), 29 Can. S. C. 577.
Upon goods their own or held by them in trust or on commission.
Trust or
Pittsburg Storage Co. v. Insurance Co. (1895), 168 Pa. 522; Roberts v. Fire-
commission
men's Insurance (1894), 165 Pa. 55; California Insurance v. Union Com- clause
press (1890), 133 U. S. 387 ; Hough v. People's Fire (1872), 36 Ind. 398 •
De Forest v. Fulton Fire (1828), 1 Hall (N. Y.) 94.

Goods .held by them in trustior on conmiission for which they are responsible.
. .
North British amd Mercantile v. Moffat (1871), L. E. 7 0. P. 25 North British ;
and Mercantile v. London Liverpool and Globe (1877), 5 Oh. D. 569.

—
Merchandise their own or held by them in trust or in which they have an

interest or liability.
Home Insurance v. Baltimore (1876), 93 TJ. S. 527.
Goods his own or held by him in trust for others or sold, but not delivered,
while in custody of B. & Oo. warehousemen.
GranoUn v. Rochester German Insurance (1884), 107 Pa. 26; Pelzer Manu-
facturing Co. V. St. Paul Fire and Marine (1890), 41 Fed. Eep. 271.
On goods sold but not delivered.
Lochhart-v. Cooper (1882), 87 N. C. 514; 42 Am. E. 514.
On goods sold but not removed.

Waring v. Indemnity Fire (1871), 45 N. Y. 606; 6 Am. R. 146.
The assured's property or held by the assured (warehouseman) on trust or
commission, loss, if any, payable to A (owner) as interest may appear.
Traders' Insurance v. Pacund (1894), 150 lU. 245.
General Money, books of account, securities for money and evidences of debt or
exception o£ title are not insured.
money, secu- Statutory Condition, Revised Statutes of Ontario, 1897, c. 203, s. 168 (6).
rities, etc.
Plate, plate glass, plated ware, jewelry, medals, paintings, sculptures,
curiosities, scientific and musical instruments, bullion, works of art, articles of
vertu, frescoes, clocks, watches, trinkets, and mirrors are not insured unless
mentioned in the policy.
Statutory Condition, Revised Statutes of Ontario, 1897, u. 203, s. 168 (7).
2. Clauses describing Risk and Exceptions therefrom

These clauses are discussed in Chapter VII., Section I., pp.
666-671.
Risks gene- The company is not liable for the losses following, that is to say :
rally (a) For the loss of property owned by any other party than the assured unless
excepted. the interest of the assured is stated in or upon the policy.
(h) For loss caused by invasion, insurrection, riot, civil commotion, military
or usurped power.
(c) Where the insurance is upon buildings or their contents : for the loss caused
by want of good and substantial brick or stone chimneys or by ashes ;
or embers being deposited with the knowledge and consent of the

assured in wooden vessels or by stoves or stove-pipes being to the
;
knowledge of the assured in an unsafe condition or improperly

secured.
(d) For loss or damage to goods destroyed or damaged while undergoing any
process in or by which the application of fire heat is necessary.
(e) For loss or damage occurring to buildings or to their contents while the
buildings are being repaired by carpenters, joiners, plasterers, or other
workmen, and in consequence thereof, unless permission to execute such
repairs has been previously granted in writing signed by a duly authorized
agent of the company. But in dwelling-houses 15 days are allowed in
each year for incidental repairs without such permission.
(/) For loss or damage occurring while petroleum or rock-earth or coal-oil,
camphene, gasoline, burning fiuid, benzene, naphtha or any liquid pro-
ducts thereof, or any of their constituent parts (refined coal-oil for
lighting purposes only not exceeding five gallons in quantity, or lubri-
cating oil not being crude petroleum nor oil of less specific gravity than
required by law for illuminating purposes not exceeding five gallons in
quantity, excepted), or more than 25 lbs. weight of gunpowder is or are
stored or kept in the building insured or containing the property insured,
unless permission is given in writing by the company.
Statutory Condition, Revised Statutes of Ontario, 1897, o. 203, s. 168 (10).
(a) Davidson v. Waterloo Mutual Fire (1905), 9 Ont. L. R. 394.
(/) Eqûity Fi/re v. Thompson (1909), 41 Can. S. 0. 491 reversed by P. C. (1910),
;
25 T. L. R. 287; Mitchell v. City of London Assurance (1888), 15 Ont. A. R.

262.
;
FIEE POLICIES 881
This Company shall not be liable for loss caused directly or indirectly by Invasion,
invasion, insurrection, riot, civil war or commotion, or military or usurped power, insurrection,
or by order of any civil authority or for loss or damage occasioned by or through
; riot, etc.
any volcano, earthquake, or hurricane, or other eruption, convulsion, or disturb-
ance, or by theft, or by neglect of the assured to use all reasonable means to save
and preserve the property at and after a fire, or when the property is endangered
by fire in neighbouring premises, or (unless a fire ensues, and in that event for
the damage by fire only) by explosion or any kind of lighting.
miliamsbiirgh City Fire v. Baker (1908), 161 Fed. Rep. 404.
to cover loss or damage by fire happening during tho existence of any
Not
invasion, foreign enemy, rebellion, insurrection, riot, civil commotion, military or
usurped power, or martial law within the'county or locality in which the property
insured is situated, unless proof be made to the satisfaction of the directors that
such loss or damage was not occasioned by or connected with but occurred from
a cause or causes independent of the existence of such invasion, etc.
Boyal Insurance v. Martin (1903), 192 U. S. 149.
Eiot or civil commotion.
Field V. Receiver of ilelropoUlan Police, [1907] 2 IC. B. 853 ; Langdale v.
Masm (1780), Park Ins., 8th ed., 965 ; Wycominj Fire v. Schwenk (1880),
95 Pa. 89.
Military or usurped power.

Drinkwater v. London Assurance (1767), 2 Wils. 363 City Fire ; v. Corlies
(1839), 21 Wend. 367; Insurance Co. v. Boon (1877), 95 U. S. 117.
By order of any civil authority.

Conner Manchester Assurance
v. (1904), 130 Fed. Rep. 743.
Not to cover loss or damage by fire during (rmless it be proved by the assured Earthquake,
that the loss or damage was not occasioned thereby) or in consequence of invasion, hurricane,
insurrection . earthquake or hurricane.
. . etc.
Scottish Union and National v. Alfred Pawsey, Ltd. (1908), The Times,
October 17.
By or through earthquake.
Tootal Broadhurst Lee v. London and Lancashire (1908), The Times, May 21
Williams'burcih Fire v. Baker (1908), 164 Fed. Rep. 404 ; Commercial Assurance
V. Pacific Union (1909), 169 Fed. Rep. 776.
Directly or indirectly by earthquakes.

Bichmond Coal Co. v. Commercial Union (1908), 159 Fed. Rep. 985.
Shall cover loss or damage by lightning . . . but in no case to include loss or
damage by cyclone, tornado, or wind.
Beaker v. Phcenix Insurance (1894), 148 N. Y. 402 ; Holmes v. Phcenix Insurance
(1899), 98 Fed. Rep. 240.
Loss or damage by cyclone.
Maryland Casualty v. Fhich (1906), 147 Fed. Rep. 388.
Loss or damage by explosion. Explosion.
Stanley v. Western (1868), L. R. 3 Ex. 71 Taunton v. Boyal Insurance (1864),
;
2 H. & M. 135 Insurance Co. v. Tweed (1868), 7 Wall. 44 American Steam

; ;
Boiler Insurance y. Chicago Sugar Co. (1892), 57 Fed. Rep. 294; Dows v.
Faneml Hall Insurance (1879), 127 Mass. 346 Smiley v. Citizens' Insurance ;
(1878), 14 W. Va. 33 Tannerct v. Merchants' Mutual (1882), 34 La. Ann. 249.

;
Not liable for loss in case of fire happening by any insurrection . . . nor explo-
sions of any kind.
Heffron v. Insurance Co. (1890), 182 Pa. 580.
Loss occasioned by the explosion of a steam boiler.
St. John V. American Mutual (1854), 11 N. Y. 516.
Not liable for any loss caused by explosion unless fire ensues, and then for the
loss or damage by fire only.
Transatlantic Fire v. Dorsey (1880), 56 Ind. 70'; Washburn v. Farmers' Insurance
(1880), 2 Fed. Rep. 304 Briggs v. American Mercantile (1873), 53 N. Y.
;
446; Mitchell v. Potomac Insurance (1901), 183 U. S. 42.
_
Not liable for loss caused by explosion except for such loss or damage as shall
arise from explosion by gas.
Stanley v. Western (1868), L. R. 8 Ex. 71.
I.L. 56
;;
The Company will make good loss caused by the explosion of coal gas in »
building not forming part of gas works, and loss by fire caused by any other
explosion or by lightning.
Statutory Condition, Revised Statutes of Ontario, 1897, ch. 203, sec. 168 (11)
Hobbs V. Guardian (1886), 12 Can. S. 0. 681.
Not liable for loss or damage occasioned by the keeping of explosive substances
in quantities exceeding the allowance by local or civil laws ... or the storage on
or in the premises of gunpowder, nitro-glycerine, etc., except when such are used
in manufacture, and then only in such quantities as shall be deemed necessary to
the carrying on of such trade and as customary thereto. Any excessive, unneces-
sary, or unusual quantity will void the insurance thereon.
Hammond v. Citizens (1886), 26 N. Br. 371.
No loss is to be paid arising from petroleum or other explosive oils.
Insurance Co. v. Express Co. (1877), 95 U. S. 227.
Incendiar- Not liable for any loss occasioned by or in consequence of incendiarism.
ism. Walker v. London Provincial (1888), L. R. I. 23 C. L. 572 Thurlell ; v. Beau-
mont (1824), 8 Moore, 612.
Gross In case of gross negligence of the assured the policy shall be absolutely void.
negligence. Campbell v. Monmouth Mutual (1871), 59 Me. 480.
Fallot If a building shall fall except as the result of fire all insurance on it or its
building. contents shall immediately cease and determine.
Tootal Broadhurst Lee v. Lancashire and i'ire (1908), The Times, May 21;
Orient Insurance v. Leonard (1902), 120 Fed. Bep. 808 Foster v. Home ;
Insurance (1906), 148 Fed. Rep. 307 Phcenix Insurance v. Luce (1903),
;
123 Fed. Rep. 257 Eiesel & Co.y. Sun Insurance (1898), 88 Fed. Rep. 243
; ;
Dows V. Faneuil Hall Insurance (1879), 127 Mass. 346; Huck v. Globe
Insurance (1879), 127 Mass. 306; Western Assurance v. Mohlman (1897),
83 Fed. Rep. 811.
Loss caused Where property insured is only partially damaged, no abandonment of the ,
by removal. same will be allowed unless by the consent of the company or its agent, and in
case of removal of property to escape conflagration the company will contribute
to the loss and expenses attending such act of salvage proportionately to the
respective interests of the company or companies and the assured.
Statutory Condition, Revised Statutes of Ontario, 1897, ch. 203, sec. 168
Thompson v. Insurance Co. (1850), 6 U. C. Q. B. 319 ; M'Laren v. Com-
mercial Union (1885), 12 Ont. A. B. 279.
Not to cover damage caused by the removal of property from a building except
it be proved that such removal was necessary to preserve the property.
Balestracci v. Insurance Co. (1802), 34 La. Ann. 844.
Tlieatre. Not to cover any loss or damage by fire which may originate in the theatre
proper.
Sohier v. Norwich Fire (1865), 93 Mass. 336.
Plate glass, AH loss or damage
originating from any cause whatsoever except fire, breakage
all risks during removal, alteration or repair of premises.
other than Marsden v. City and County (1866), L. R. 1 C. P. 232.
fire, etc.
3. Conditions relating to Payment of Premiums and

Duration of Bisk
This subject is discussed iu Chapter IV., pp. 228-267.^
Conditions wMch have been judicially construed.
No insurance No insurance is considered by this office to take place until the premium be
until actually paid by the assured his her or their agent or agents,
premium Newcastle Fire v. MacMorran (1815), 3 Dow. 255; Insurance Co. v. Colt
paid. (1874), 20 Wall. 560; Becker v. Exchange Mutual Fire (1908), 165 Fed.
Rep. 816 ; Western Assurance v. Provincial (1880), 5 Ont. A. R. 190.
Not liable for Provided that this policy will not be in force until nor will the company be
loss before liable in respect of any loss or damage happening before the premium or deposit
payment on account thereof is actually paid,
of premium. Equitable Fire and Accident v. The Ching Wo Hung, [1907] A. 0. 96.
;
riRE POLICIKS 883
And during such further period or periods for which the assured shall from Renewal
time to time have paid in advance the renewal premium or premiums required premium.
by the company and for which the company shall have issued a renewal receipt
or receipts.
Doherty v. Millers' and Manufacturers' Insurance (1902), i Ont. L. R. 303 ;
6 Ont. L. R. 78.
Where a note is received the company shall not'be liable for any loss or damage Premium
under this policy occurring at the time when such note or part thereof given for note dis-
such premium in whole or in part shall be part due or unpaid. honoured.
Schultz V. Sawkeye Insurance (1875), 42 Iowa, 239 Nedrow v. Farmers' In- ;
surance (1876), 43 Iowa, 24 Oarlick v. Mississippi

; Valley Insurance (1876),
44 Iowa, 553.
In case any promissory note for a cash premium or for any payment or assess-
ment on any premium note or undertaking given to the company or to any officer
or agent thereof be not paid when due, the policy in connection VTith which such
promissory note shall have been given shall be null and void and the company
shall not be liable for any loss occurring either before or after the maturity of
such promissory note.
Ballagh v. Boyal Mutual Fire (1880), 5 Ont. A. R. 82.
4. Conditions avoiding the Policy for Misdescriptions or

Omissions
This subject is discussed in Chapter V., Section VI., pp.
360-375.
Any material misdescription of any of the property proposed to be hereby Warranty
insured, or of any building or place in which the property to be so insured is that there is
contained, and any misstatement of or omission to state any fact material to be no material
known for estimating the risk renders the policy void as to the property affected misdescrip-
by such misdescription, misstatement or omission respectively. tion, mis-
Universal Non-Tariff Fire, In re (1875), L. R. 19 Eq. 485. statement, or
concealment.
If in the said application the assured shall make any erroneous or untrue
representation or statement or omit to make known to the company any fact
material to the risk .this policy shall be void.
. .
Parsons v. Standard Insurance (1879), 4 Ont. A. R. 396 (6 Ont. A. R. 521;

5 Can. S. G. 238).
If any person or persons insures his or their buildings or goods, and causes
the same to be described otherwise than as they really are to the prejudice of the
company, or misrepresents or omits to communicate any circumstance which is
material to he made known to the company in order to enable it to judge of the
risk it undertakes, such insurance shall be of no force in respect to the property
in regard to which the misrepresentation or omission is made.
Statutory Conditions, Revised Statutes of Ontario, 1897, ch. 203, sec. 168 (1)
Moore v. Citizens Fire (1888), 14 Ont. A. R. 582 Findley v. Fire Insur-;
ance (1894), 25 Ont. R. 515 Eeddick v. Saugeen Mutual (1888), 15 Ont. A. R.

;
363 ; Butler v. Standard Fire (1879), 4 Ont. A. R. 391 ; Lount v. London

Mutual Fire (1905), 9 Ont. L. R. 549 Davidson v. Waterloo Mutual Fire
;
(1905), 9 Ont. L. R. 394; Coulter v. Equity Fire (1904), 9 Ont. L. R. 35 ;
Fritzley v. Qermania, etc., Fire (1909), 19 Ont. L. R. 49.

The representations made in the application for insurance shall contain a just
fuU and true value of the property insured so far as the same are known to the
assured and if any material fact or circumstance shall not have been fairly
;
represented, the .policy shall cease and be of no further efiect.

Billington v. Provincial Insurance (1879), 3 Can. S. C. 182.
Any fraudulent misrepresentation in the application, or any false or incorrect
statement representing the title or ownership of the applicant, or the conceal-
ment of any mortgage or execution or any incumbrance on the property or on
the land on which it is situate shall avoid the contract.
Beddick v. Saugeen Mutual (1888), 15 Ont. ,A. R. 363 Bedford v. Mutual ;
Fire (1876), 38 U. 0. Q. B. 538 Eiach v. Niagara District Mutual (1871),

;
21 U. C. 0. P. 464 Shannon v. Hastings Mutual (1875), 25 U. 0. 0. P. 470

;
;
Schuster -v. Dutchess Cou/nty Insurance (1886), 102 N. Y. 260; Sinclair \.

Canadiam Mutual (1876), 40 U. 0. Q. B. 206.
884 CLAtJSES AND CONDITIONS
Warranty The assured hereby covenants and engages that the representation given- in
that repre- the application for this insurance is a warranty on the part of the assured, and-
sentations in contains a just true and full exposition of all the facts a,nd circumstances in
application regard to the condition situation and value of the property insured applioa- . . .
contain a tion for insurance on property shall specify the construction and material of the
full aTnd building to.be insured by whom occupied its situation
. . .
whether any . . .
true exposi- manufacture is carried on within or about it, and such description or specifica-
tion of risk. tion shall be deemed a part of this policy and a warranty on the part of the
insured.
Blake v. Exchange Mutual (1858), 78 Mass. 266.
If there shall be any untrue or inaccurate statement whether intentional or

not.
Parsmsv. Citizens' Insurance (1878), 43 U. 0. Q. B. 261; Williams y. Com-
mercial Union (1816), 26 U. C. C. P. 591; Butler v. Standard Fireil&J9),
4 Out. A. B. 891.
Warranty Persons insuring will forfeit their rights unless the buildings insured or con-
that premises taining the goods insured be accurately described the trades carried on therein
are accurately specified and the nature of the property correctly stated.
described. Shaw V. Bobberds (1837), 6 A. & E. 75 Pirn v. Beid (1843), 6 Man. & Tr. 1 ; ;
Friedlander v. London Assurance (1832), 1 M. & Eob. 171.
Unless the nature and material structure of the buildings and property
insured ... be fully and accurately described.
Baxendale v. Harvey (1859), 4 H. & N. 445.
If the assured causes the premises to be described otherwise than they really
are to the prejudice of the company.
,, - Sit/v. 0«awa(1879), 29U. C. C. P. 557.
Warraixty The applicant shall specify in writing of what materials such buildings are
that premises respectively constructed both externally and internally, where situated and by
are truly and' whom occupied and whether as private dwellings or how otherwise
: and if . . .
accurately' such specification do not traly and circumstantially describe the property and
described. the several particulars regarding the same as aforesaid so that the nature and
degree of the risk may be justly estimated the policy or insurance thereon shall
be null and void.
Hordern v. Commercial Union (1884), 5 N. S. W. B. (Law), 309.
Houses, buildings, etc. shall be truly and accurately described.
. . .
Freidlander v. London Assurance (1832), 1 M. & Bob. 171.
Warranty It is hereby declared that the foregoing is a just full and true exposition of all
that risk is the facts and circumstances in regard to the condition situation value and risk
accurately of the property to be insured so far as the same are known to the applicant and
and fuUy material to the risk, and the said applicant hereby agrees and consents that the
described so same shall be held to form the basis of the liabilities of the company,
far as known North British and Mercantile v. McLellan (1892), 91 Can. S. G. 288 Stott v. ;
to assured. London and Lancashire Fire (1891), 21 Ont. B. 312; Kerr v. Hastings
Mutual Fire (1877), 41 U. 0. Q. B. 217 National Bank v. Hartford (1877), ;
95 U. S. 673.
If any person shall insure his building or goods and shall cause them to be
described otherwise than they really are to the prejudice of the company, or
should misrepresent or omit to communicate any circumstance material to be
made known to the company in order to enable them to judge of the risk they
undertake such insurance shall be of no force.
Butler V. Standard Fire (1879), 4 Ont. App. 391 Klein v. Union Fire (1888), ;
8 Ont. 234; Hammond v. Citinens' Insurance (1886), 26 N. Br. 371.
Description -A^d such application or any survey, plan or description of the property to be
of premises referred to herein shall be considered a part of this policy and every part of it a
to constitute warranty By the assured, but this oompanyiwill not dispute the correctness of any
a warranty diagram or plan prepared by its agent from a personal inspection. . . . And in
except in so case any agent takes part in the preparation of the application for this insurance
far as a plan ^^ shall with the exception above provided for in case of a diagram or plan, be
is prepared regarded in that work as the agent of the applicant.
by company's Quintan v. Union Fire Insurance (1883), 8 Ont. A. B. 376 ; Norwich Union Fire
aênt '^- -^« S«M (1899), 29 Can. S. 0. 470; Beacon Life and Fire v. Oibb (1862),
° ' 1 Moore, P. C. (n.s.) 73 ; May v. Buckeye Mutual (1870), 25 Wis. 291.
. ;
FIRE POLICIES 885
If the insured shall cause the property to be insured for more than its value Warranty
the policy shaU be void. against over-
Field v. Insurance Co. (187i), 6 Biss. 121 Miller v. Alliance (1881), 7 Fed.
;
valuation.
Hep. 649.
Value.
Harrington Fitchburg Insurance (1878), 124 Mass. 126; Franklin Fire v.
v.
Vaughan U. S. 516 Bedford v. Mutual Fire (1876), 38 U. 0. Q. B.
(1875), 92 ;
538; Parsons v. Citizens' Insurance (1878), 43 U. 0. Q. B. 261 Williams v. ;
Commercial Union (1876), 26 XJ. C. C. P. 591 National Bank v. Hartford ;
(1877), 95 U. S.673; Biach v. Niagara District Mutual (1871), 21 U. 0. C. P.

464 Sly v. Ottawa (1879), 29 U. 0. 0. P. 557 Shannon v. Hastings Mutual
; ;
(1875), 25 XJ. C. 0. P. 470.
Present cash value.

Moore v. Citizens' Fire (1888), 14 Ont. A. E. 582.
Condition that Policy shall be deemed to be in accordance

with Application
See Chapter III., Section VII., p. 213; and Chapter X.,
Section L, p. 859.
Condition which has been judicially construed.

After application for insurance it shall be deenaed that any policy sent to Policy
the assured is intended to be in accordance with the terms of the application deemed to be
imless the company point out in writing the particulars wherein the policy difEers in accordance
from the application. with applica-
Statutory Condition, Bfevised. Statutes of Ontario, 1897, ch. 203, see 168 (2) tion.
Mutchmoor v. Waterloo Insurance (1902), 4 Ont. L. E. 606 ; City of London
Fire v. Smith (1888), 15 Can. S. C. 69.
6. Specific Warranties relating to Risk
See Chapter V., Section IV., pp. 322, 345 ; and Section VI.,
pp. 360, 371.
Warranties which have been judicially construed.
Warranted to be on same rate terms and identical interest as A. B. Insurance, Same rate,
and to foUow their settlement. etc., and to
Barnard v. Faber, [1893] 1 Q. B. 340. follow settle-
To foUow A. B^ Insurance Company, which has £1000. ments of
A. B.
Bancroft v. Heath (1901), 6 Com. Oas. 137.
To pay the same percentage as may be settled by the A. B. Insurance.
Beauchamp v. Faber (1898), 8 Com. Gas. 308.
If the premises should be used for the purpose of carrying on therein any Warranty
trade or occupation, or for storing or keeping therein articles denominated against
hazardous or extra hazardous or specially hazardous in the second class of hazards hazardous
annexed to the policy except as herein specially provided for or hereinafter agreed trade or
to by this corporation in writing upon the policy the policy shall be of no effect. goods.
Sovereign Fire Insurance v. Moir (1887), 14 Can. S. C. 612; Steinbach v.
Insurance Co. (1871), 13 Wall. 183 Mayor of New York v. Brooklyn Fire
;
(1864), 41 Barb. 231.

If the trade or business of an innkeeper shall be carried on.
Doe V. Laming (1814), 4Camp. 73, 76.
Worked by day only.
Man/all v. Mitford (1837), 6 A. & E. 670 ; Whitehead v. Price (1835), 2 C. M. & E.
447.
If there shall at any time be more than 56 lb. weight of gunpowder. Warranty
M'Ewan v. Guthridge (1860), 13 Moore, P. C. 304. against gun-
powder and
more than 20 lb. weight of gunpowder shall be upon the premises
If at the
explosive oils,
time when any loss happens such loss shall not be made good
etc.
Beacon Life and Fire v. Gibb (1862), 1 Moore, P. C. (n.s.) 73.
If gunpowder, phosphorus, saltpetre, naphtha, benzine, benzoin, varnish,

benzola, petroleum or crude earth oils are kept on the premises, or if camphene,
burning fluid, refined coal or earth oils are kept for sale, stored or used on the
premises in quantities exceeding one barrel at any one time without written
permission indorsed on the policy.
Insurance Co. v. Slaughter (1870), 12 Wall. 404; Phcenix v. Flemming (1898),
65 Ark. 54 First Congregational v. HolyoJce Mutual (1893), 158 Mass. 475.
;
If (anyusage or custom of trade or manufacture to the contrary notwithstand-

ing) there be kept, used or allowed in the above described premises, benzine,
benzola, dynamite, ether, fireworks, gasoline, Greek-fire, gunpowder, exceeding
25 lb. in quantity, naphtha, nitro-glycerine or other explosives.
St. Paul Fire v. Penman (1907), 151 Fed. Eep. 961 London and Liverpool ;
Fire v. Fischer (1899), 92 Fed. Eep. 500; Putnam v. Commonwealth (1880),

18 Blatohf. 868.
Petroleum rook-earth coal, kerosene or carbon oils of any description whether
crude or refined, benzine, benzola, naphtha, camphene, spirit gas, burning fluid,
turpentine, gasoline, phosgene or any other inflammable liquid are not to be
stored and kept or allowed in the above premises temporarily or permanently for
sale or otherwise unless with written permission indorsed on this policy except-
ing the case of refined coal, kerosene or other carbon oil for lights if the same is
drawn and the lamps fiUed by daylight, otherwise this policy shall be null and
void.
Gunther v. Liverpool, London and Olobe (1889), 134 U. S. 110.
7. Answers to Specific Questions relating to the Risk

See Chapter V., Section VI., pp. 360-375.
Questions and Ansioers which have been jiuKcially construed.
Questions Q. What is your title and interest to the property ?

relating to A. Deed.
interest. Dacey v. Agricultural Insurance (1880), 21 Hun. 88.
Q. Nature of applicant's title whether fee simple, leasehold or by bond or

agreement, and if others interested give names, interest and value.
A. Fee simple (insurance being on stock-in-trade).
Butler V. Standard Fire (1879), 4 Ont. A. R. 391.
Danger from Q. Have you any reason to believe your property is in danger from incen-
incendiarism. diarism ?
A. No.
Greet v. Citizens' Insurance (1880), 5 Ont. A. E. 596.
Other Q. What other insurance if any is there on the property and in what office ?
insurances. Parsons v. Standard (1879), 4 Ont. A. R. 326; (1880), 5 Can. S. C. 238.
Q. State the amount insured on the interests herein proposed in other offices.
HamUy v. Pacific Fire (1893), 14 N. S. W. E. (Law), 224.
Q. Has risk been declined in any other office ?

Davies v. National Fire and Marine, [1891] A. C. 485.
Previous flres
Q. Have you ever had any property destroyed by fire ? Give date of fire and
if insured name of company interested.
and claims.
Western Assurance v. Harrison (1903), 33 Can. S. C. 473.
Q. Has proponent ever been a claimant on a fire insurance company ?

Dames v. National Fire and Marine, [1891] A. 0. 485.
Precautions Q. Are your chimneys fire-places fire boards stoves and pipes all well secured
and will you engage to keep them so ?
against fire.
A. Yes.
Miskeyv. Burlington Insurance (1872), 35 Iowa, 174.
Q. Issmoking or drinking of spirituous liquors allowed on the premises ?

A. No.
Hosford V. Germania Fire (1888), 127 U. S. 399.
;
FIRE POLICIES 887
8. Clauses and Conditions relating to Occupancy
See Chapter V., Section VI., pp. 362, 367, 873.

Clauses which have been judicially oonstrued.
Occupied by the assured. Occupied by,
Joyce V. Maine Insurance (1858), 45 Me. 168 ; Parmelee v. Hoffman (1873) etc, descrip-
54 N. Y. 193. tion, repre-
sentation, or
Goods in the dwelling house of the assured.
warranty.
Friedlander v. London Insurance (1832), 1 M. & Rob. 171.
Occupied by a tenant for dwelling and store.
Somerset Mutual Fire v. Usaw (1886), 112 Pa. 80.
Occupied as a dwelling.
Alexander v. Germania Fire (1876), 66 N. Y. 464 ; O'Niel v. Buffalo Fire (1849),
3 N. Y. 122.
Used as a dwelling.
Woodruff Y. Imperial Fire (1880), 83 N. Y, 133.
Occupied as a storehouse.
Wall V. East River Mutual (1852), 7 N. Y. 370.
Occupied for stores below the upper portion to remain unoccupied.
Stoiit V. City Fire (1861), 12 Iowa, 371.
All while contained in [specified house] and occupied all the year round.
Bing v. Phanix (1888), 145 Mass. 426.
Shall specify by whom the premises are occupied.
Sordem v.Commercial Union (1884), 5 N. S. W. R. (Law), 309.
Occupied and only while occupied as a normal school and dwelling.
Connecticut Fire v. Buchanan (1905), 141 Fed. Rep. 877.
If any change be made as to tenants or occupancy. Change of
Somerset Mutual Fire v. TJsaw (1886), 112 Pa. 80 ; Connecticut Fire v. Buchanan ocoucanov
'^ ^'
(1905)^ 141 Fed. Rep. 877.
insurance being effected any building or buildings so insured become If premises
If after
vacant or unoccupied, notice of the same shall be given to the company that the become
directors may decide whether it would be prudent to retain the risk. unoccupied
Canada Credit Co. v. Canada Agricultural Insurance (1870), 17 Grant, 418. insurers to
The policy shall be void in case the premises insured shall become vacant and ^^ notified,
unoccupied. Policy void
EerrmanY. Merchants (1880), 81 N. Y. 184 WoodriiffY. Imperial Fire (1880), if premises
;
83 N. Y. 133 Brighton Manufacturing Co. v. Reading Fire (1887), 33 Fed. unoccupied

;
Rep. 232 De Mories Ice Co. v. Insurance Co. (1896), 99 Iowa, 193 Whitney v.
; ;
Blach River (1878), 72 N. Y. 117.

Vacant or unoccupied.
Herrmann v. Adriatic (1881), 85 N. Y. 162 Hanscorn v. Home Insurance ;
(1897), 90Me. 333; Foster v. Council Bluffs (1885), 74 Iowa, 676; Fitch v.
North British and Mercantile (1884), 136 Mass. 491 Corrigan v. Connecticut ;
Fire (1877), 122 Mass. 298 Sugden v. Fireman's Fund (1859), 78 Iowa, 146
;
;
Dereraisora V. Pfcosmis (1879), 52 Iowa 457; Limhurg v. Ferman Fire (1894).

90 Iowa, 709; Eddy v. Hawkey e Insurance (1886), 70 Iowa, 472; Roe v.
Dwelling House (1892), 149 Pa. 94 M'Murray v. Capital (1893), 87 Iowa,
;
453 CUfton Coal Co. v. The Scottish Union (1897), 102 Iowa, 300.
;
Unoccupied.
Keith V. Quincy Mutual (1865), 92 Mass. 228 Albion Lead Works v. Williams-;
burg (1880), 3 Fed. Rep. 479 Harrington v, Fitchburg Insurance (1878), 124
;
Mass. 126.
If premises should be vacated.
Doud V. Citizens' Insurance (1891), 141 Pa. 47 Franklin Fire ; v. Kepler (1880),
95 Pa. 492 ; Harrison v. City Fire (1864), 91 Mass. 231.
Become vacant.
Ashworth v. Bunders' Mutual (1873), 112 Mass. 422; Sottenberg v. Con-
tinental (1898), 106 Iowa, 565 Kimball v. Monarch (1900), 175 Mass, 529
;
Johmon v. Norwalk Fire (1900), 175 Mass. 629.

Warranted a family to live in said house throughout the year.

Poor V. Humboldt Insurance (1878), 125 Mass. 274 Poor ; v. Hudson Insur-
ance (1880), 2 Fed. Eep. 432.
The policy shall be void ... if the premises remain unoccupied for 30 days
unless notice be given to the company and its consent obtained in writing.
Adams v. Qreenmoh Insurance (1876), 9 Hun. 43.
If property be idle or shut down for more than 30 days at any one time.
Kentucky Vermillion Co. v. Norwich Union Fire (1906), 146 Fed. Eep. 695.
If saw mill ceases to be operated for more than 10 consecutive days.

Sadd V. Aetna (1893), 70 Hun. 490.
Caretaker or Warranted at all times when the property herein described shall be idle or
watchman. inoperative, a constant day and night watchman shall be kept on duty.
Kentucky Vermillion Co. v. Norwich Union (1906), 146 Fed. Bep. 195.
Q. Is a watch kept on the premises during the night ? A. The building is
never left alone, there being always a watchman left in the building when not
running.
Worswick v. Canada Fire (1878), 3 Ont, A. B. 487.
Caretaker shall be kept in charge.
Nicholson v. Colonial (1887), 12 Vict. L. E. 58.
Clerk sleeps in store.
Frisbie v. Fayette Mutual (1856), 27 Pa. 325.
Building risk, It is understood thht the above buildings are in course of construction and
notice of privilege is hereby given to complete the same ; this company to be notified as
occupation to soon as the assured are ready to commence manufacturing and the rate to be
be given, adjusted.
Franklin v. Phcenix (1894), 64 Fed. Bep. 773.
It is warranted that the premises hereby insured shall not be occupied for a
longer period than 30 days without special permission being granted in writing
hereon and readjustment of rate.
Scottish Union v. Encampment Co. (1908), 166 Fed. Eep. 231.
9. Conditions avoiding the Policy upon Alteration or

Change of Risk
See Chapter V., Section VI., pp. 360-375.
Conditions which have heen judicially construed.
Alteration any alteration or addition be made in or to any building insured or in
If
increasing which any insured property is contained or in or to any building adjoining or
risk or any near to the property insured belonging to or occupied by the party insured by
other increase which the risk of fire to which the building or property insured, or the building
of risk to be containing such property is or may be exposed, be increased or if such risk be
;
allowed by increased either by any of the means adverted to in the third condition, or in any
indorsement, other manner or if any property insured be removed into other premises such
;
alteration or addition, increase of risk or removal must be immediately notified

to the Society in order to its being allowed by indorsement on the policy, such
indorsement being signed by one of the Society's secretaries or agents otherwise
the policy will be void.
Baxendale v. Harvey (1859), 4 H. & N. 445 Barrett v. Jermy (1849), 3 Ex.
;
535 Shaw v. Bobberds (1887), 6 Ad. & E. 75.

;
If the premises shall be occupied or used so as to increase the risk or the risk
be increased by the erection or occupation of neighbouring buildings or by any
means whatever [within the control of the assured] without the assent of this
company endorsed hereon then and in every such case this policy shall be void.
Long V. Beeber (1884), 106 Pa. 466 Plinsky v. Oermania Fire (1887), 32 Fed.
;
Eep. 47 Martin v. Capital Insurance (1892), 85 Iowa, 643 Crane v. City

; ;
Insurance (1880), 3 Fed. Bep. 558.

If after insurance the risk shall be increased by any means whatsoever or if
the property be used or occupied so as to render the risk more hazardous than at
the time of insuring and the assured shall neglect to notify the company of said
increased risk or fails to pay such additional premium as the company shall
;
FIRE POLICIES 889
determine and obtain the written consent of the secretary to a continuance of

the policy such insurance shall be void and of no efiect.
Pottsville Mutual v. Soran (1879), 89 Pa. 438 Manley v. ; Insurance Co. (1869),
1 Lans. 20.
If the use or occupation of the above-mentioned premises shall at any time
during the period for which this policy would otherwise continue in force
without the consent of the company enclosed thereon be so changed or appro-
priated applied or used to or for the purpose of carrying on or exercising therein
any trade business or vocation which would increase the risk or hazard or the
risk be increased in any manner by means within or not within the control of the
award thenceforth and immediately upon the same being so changed this policy
;
shall cease and be of no force or effect.

Naughter v. Ottawa Agricultural Insurance (1878), 43 U. C. Q. B. 121 Esch ;
v. Home Insurance (1889), 78 Iowa, 334.
In case of any material increase of risk to the property insured, such increase
of risk must be notified to the company and written permission therefor obtained.
All material alterations and additions to building, a change of ownership, change
of business, or occupant, or the act of renting or vacating the property occupied
by the owner when insured shall vitiate the policy issued on the same unless such
alteration or change shall be first notified to the board of directors in writing.
Martin Y. Mutual Fire (1876), 45 Ind. 51.
Andin ease of any circumstance happening after an insurance has been Any increase
efieoted whereby the risk shall in any way be increased, the insured is required to of risk to be
give notice thereof in writing to the company and the same must, previous to a allowed by
loss occurring, be allowed by indorsement on the policy, otherwise the policy is indorsement.
void and all title to any benefit from the insurance become forfeited.
Glen V. Letois (1853), 8 Ex. 607.
In case of any circumstances happening to or occurring on the premises of the Increase of
assured or on those adjacent thereto, within the knowledge of the assured after an risk within
insurance has been effected. . . . knowledge of
HillermanY. National Insurance (1870), 1 Vict. (Law), 155. assured.
If during the existence of this policy or any renewal thereof the risk shall be
increased by any means whatever with the knowledge of the insured, and he
shall neglect to notify the company thereof and have the same indorsed hereon,
paying therefor such additional premium as shall be demanded . this policy . .
shall be null and void.

Brighton Manufacturing Co. v. Beading Fire (1887), 33 Fed. Eep. 232
Franklin Fire v. Gruver (1882), 100 Pa. 266 ; Preoria Sugar v. People's
Fire (1885), 24 Fed. Rep. 773.
If there be any change in the exposure by the erection or occupation of
adjacent buildings or by any means whatever in the control or knowledge of the
assured,
Davis V Western Home Insurance (1890), 81 Iowa, 496.
Whenever a building hereby insured shall be altered, enlarged or appropriated Alteration or
to any other purpose than those herein mentioned or the risk otherwise increased any other
by the act or with the knowledge or consent of the assured, the consent of the increase of
directors not being first obtained and signified by the secretary in writing, then risk by the
this policy shall be void. Act or with
Luce Y. Dorchester Mutual (1872), 110 Mass. 361. the know-
If after insurance is efieoted ledge or con-
the risk be increased by any means within
. . .
the control of the assured or if such buildings or premises shall be with the sent of
;
assent of the assured occupied in any way so as to render the risk more hazardous assured.
than at the time of insuring such insurance shall be void and of no effect. Any increase
Foy Aetna Insurance (1854), 3 Allen (N. Br.) 29 Fourdrinier v. Hartford
V. ; of risk within
Fire (1865), 15 U. 0. Q. B. 403 Gill v. Canada Fire Co. (1B82), 1 Ont. E.
; control of
341; Hervey v. Mutual Fire (1861), 11 U. C. C. P. 394; Heneker v. British assured to
America Assurance (1864), 14 U. 0. C. P. 57 Albion v. Williamsburg City ; avoid policy.
Fire (1880), 2 Fed. Rep. 479 Crittenden v. Insurance Co. (1892), 85 Iowa,
;
652 Mmdoch v. Chenango Mutual (1849), 2 N. Y. 210 Townsend v. North-

; ;
western Insurance (1858), 18 N. Y. 168 Bentley v. Lumbermen's Insurance

;
(1899), 191 Pa. 276.'

If the hazard be increased by any means within the control or knowledge of the Within con-
assured. trol or know-
Des Moines v. Insurance Co. (1896), 99 Iowa., 193; Collins v. Insurance Co. ledge of
(1895), 165 Pa. 298. assured.
;;
Any increase If the situation or circumstances affecting the risk thereupon shall be so altered
of risk by or or changed, by or with the advice agency or consent of the assured, as to
with the increase the risk thereupon . . . the risk hereupon shall cease and determine
advice, and the policy be null and void!.
agency, or Commonwealth v. Hide, etc., Insurance (1873), 112 Mass. 136 ; First Congre-
consent of gational V. Holyoke Fire (1898), 158 Mass. 475 Jones Manufacturing Co.
;
assured. V. Manufacturers' Fire (1851), 62 Mass. 82.

Any altera- In case of any alteration being made in a building insured or containing any
tion in property insured or of any steam engine, stove, kiln, furnace, oven, or any other
building, description of fire-heat being introduced or of any trade, business, process, or
introduction operation being carried on or goods deposited therein, not comprised in the
of fire heat original insurance or allowed by indorsement thereon ox the making of any com-
or new munication from one buUding to another notice thereof must be given and ;
business to every such alteration must be allowed by indorsement on the policy, and any
be allowed further premium which the alteration may occasion must be paid and unless;
by indorse- such notice be duly given such premium paid and such indorsement made no
ment and benefit will arise to the insured iu case of loss.
extra Glen V. Lewis (1853), 8 Ex. 607; Stokes v. Cox (1856), 1 H. & N. 320, 533
premium Todd V. Liverpool, etc., Insurance (1868), 18 U. C. C. P. 192.
paid.
Any change material to the risk and within the control or knowledge of the
Any change assured shall avoid the policy as to the part affected thereby unless the change is
material to promptly notified in writing to the company or its local agent and the company
;
risk within when so notified may return the premium for the unexpired period and cancel the
control or policy or may demand in writing an additional premium which the assured shall
knowledge of if he desires the continuance of the policy forthwith pay to the company and if
;
assured to be he neglects to make such payment forthwith after receiving such demand the
notified with policy shall be no longer iu force.
option to Statutory Condition, Bevised Statutes of Ontario, 1897, ch. 203, sec. 168
company to M'Kay v. Norwich Union (1896), 27 Ont. E. 251 Querin v. Manchester Fire
;
cancel or Johnston v. Dominion Orange Fire (1896), 23 Ont.
(1898), 29 Can. S. C. 139 ;
require extra A. E. 729 Peck v. Phoenix Mutual (1881), 45 U. 0. Q. B. 620 Howes v.

; ;
premium. Dominion Fire, etc. (1883), 8 Ont. A. E. 644 Lount v. London Mutual Fire
;
(1905), 9 Ont. L. E. 699; London, etc.. Trusts Co. v. Canada Fire (1908), 16
Ont. L. E. 217.
Removal of The following circumstances will vitiate a policy unless written notice contain-
property, ing full particulars shall be given to the secretary of this company and the consent
alterations, of the board obtained thereto endorsed on the policy and signed by the president
or change of and secretary, the board reserving to themselves the power to approve or reject
occupancy such. 1. Of the removal of goods or other personal property insured in this
without company. 2. Of alienation by mortgage or otherwise or any change in title or
consent ovraership of property insured in this company. 3. Of any insurance subsisting
indorsed on or that shall be effected in any other company on property insured in this
policy will company without the consent of the board. 4. Of any alteration or addition to
vitiate the building insured iu this company. 5. Of the erection or alteration of any
insurance. building within the limits described in the application. 6. Of any misrepresenta-
tion in the answers given to the several queries in the application. 7. Any
change in the occupancy of the premises assured.
Lindsay v. Niagara District Fire (1869), 28 U. C. Q. B. 326.
Alterations When, any alterations or additions are made to any building irjsured with this
or additions company, notice of the same shall be forthwith given to the secretary in writing
to be notified, and the agent shall, if so directed, survey the same and report to the board
and if they whether such alterations or additions have increased the risk; and if so an
increase risk additional premium note shall be taken for such amount as shall be determined
company may upon by the board, and it may be optional with the company to reject such
cancel or alterations and to cancel the policy. And in the event of any alterations to any
charge extra adjacent buUdings or by the erection of others or of any other thing deemed
premium. dangerous within the limits described in the application of the insured a similar
notice shall be forthwith given and the company may in like manner cancel the
policy, the same to be recorded on the policy by the secretary.
Lindsay v. Niagara District Fire (1869), 28 U. C. Q. B. 326; Diehl v. Adams
Mutual (1868), 58 Pa. 443 Sykes v. Perry Mutual (1859), 34 Pa. 79.
;
Thepolicy shall cease and be of no effect if the property shall be so altered or

appropriated or used for the purpose of carrying on therein any trade or business
which, according to the class of hazards hereto annexed, would increase the risk
unless it be by the consent of the company in writing endorsed upon the policy.
FIRE POLICIES 891
. Whenever any alteration is made in the property the assured shall make
.
application to the secretary or agent who shall examine the property and certify
whether the hazard be thereby increased or not. If the property shall be
rendered more hazardous by any means within or not within the control of the
assured notice shall be given to the secretary and the directors may elect either
to continue the insurance upon the same terms or at higher rates or may cancel
the policy.
Planters' Mutual v. Rowland (1886), 66 Ind. 236; Gates v. Madiston Mutual
(1851), 5 N. Y. 469.
any property hereby described be removed from the building or place in

If
which it is herein described as being contained without in such and every such
oases the assent or sanction of the society signified by endorsement hereon the
insurance as to the property affected thereby ceases to attach.
Gorman v. Hand-in-Hand (1877), Ir. R. 11 C. L. 224.
This policy shall be void and of no effect if without notice to this company
and permission therefor in writing endorsed hereon the premises shall be
. . .
used or occupied so as to increase the risk ... or the risk be increased ... by
any means within the knowledge or control of the assmed or if mechanics are
employed in building, altering, or repairing premises named herein except in
dwelling houses where not exceeding five days in one year are allowed for repairs.
Imperial Fire v. Coos County (1893), 151 U. S. 452 German Insurance v. ;
Seame (1902), 117 Fed. Rep. 289.

The working of carpenters and other mechanics in building, altering,
or repairing the building shall cause forfeiture unless with written consent
given.
Imperial Fire v. Coos County i(1893), 151 U. S. 452; Newport v. House In-
surance (1900), 163 N. Y. 237 Mack v. Rochester (1887), 106 N. Y. 560
;
;
Summerfield v. Phcenix Insurance (1894), 65 Fed. Rep. 292; Franklin Fire

V.Chicago Insurance (1872), 36 Ind. 102 James v. Lycoming (1874), 4 Cliff.
;
272.
Five days for incidental repairs.

Bann v. Home Insurance (1874), 59 N. Y. 387.
10. Conditions reserving Liberty to terminate the Risk

It is not uncommon in fire policies to provide that either
party shall have the right to terminate the risk at any time
during the currency thereof subject to the return of a propor-
tionate part of the premium for the unexpired term. In some
policies the return of the unearned portion of the premium is
made a condition precedent to the insurer's right to terminate
the risk {n), but in others the risk is determined either imme-
diately upon or within a specified number of days after notice by
the insurers and the obligation to return the premium is merely
collateral (o). The
right of the insurers to terminate the risk
may be hmited where there is an increase of hazard but
to cases
as a rule the policy reserves to them an absolute discretion to
terminate in any circumstances (p). If the policy is already
voidable at the option of the insurers
by reason of some breach
of warranty on the part of the assured the assured cannot
elect to cancel the policy and claim a return of
unearned
premium {q). The notice to terminate the risk must be given
(n) Caldwell v. Stradacona Fire, etc. (1883), 11 Can. S. 0. 212.

(o) Swarzschild v. Phoenix Insurance (1903), 124 Fed. Rep. 62.
(p) Sun Fire v. Hart (1889), 14 A. C. 98.
(2) Colby V. Ceda/r Ba^ds Insivrance (1885), 66 Iowa, 577.
;
to the contracting party or to some person who has, or is held out

as having, sufficient authority to receive such notice on his
behalf (?•).
Liberty to The insurance may be terminated by the company by giving notice to that
company to and if on the cash plan, by tendering therewith a rateable proportion of the
effect,
terminate the premium for the unexpired term, calculated from the termination of the notice.
risk. In the case of personal service of the notice, five days' notice, excluding Sunday,
shall be given. Notice may be given by any company having an agency in
Ontario by registered letter addressed to the assured at his last post office address
notified to the company, or where no address notified, then to the post office
address of the agency from which the application was received and where such ;
notice is by letter then seven days from the arrival at any post office in Ontario
shall be deemed good notice. And the policy shall cease after such tender
and notice aforesaid and the expiration of the five or seven days as the case
may he.
The insurance if for cash may also be terminated by the assured by giving
(a)
written notice to that effect to the company or its authorised agent, in which case
the company may retain the customary short rate for the time the insurance
has been in force, and shall repay to the assured the balance of the premium
paid.
Barnes v. Dominion Orange (1895), 22 Ont. A. E. 68.
(a) Shillings v. Boyal Insurance (1903), 6 Ont. L. R. 401 Merchants' Fire v.
;
Equity Fire (1905), 9 Ont. L. R. 241.
And if by reason of such alteration or addition, or from any other cause what-
ever, the company or its agent shall desire to terminate the insurance effected by
this policy, it shall be lawful for the company or its agent so to do by notice to
the assured or his representative, and to require this policy to be given up for the
purpose of being cancelled, provided that in any such case the company shall
refund to the assured a rateable proportion for the unexpired term thereof of the
premium received for the insurance.
Caldwell v. Stradacona Fire, etc. (1883), 11 Can. S. 0. 212 ; Sun Fire v. Sart
(1889), 14 A. 0. 98.
Liberty to This insurance may be terminated at any time at the request of the assured,
either to inwhich case the company shall retain only the customary short rates for the
terminate time the policy, has been in force. The insurance may also be terminated at any
insurance time at the option of the company on giving notice to that effect and refunding a
subject to rateable proportion of the premium for the unexpired term.
apportion' Grace v. American Central (1883), 109 U. S. 278 Boyal Insurance v. Wight
;
ment of (1893), 55 Fed. Rep. 455 ; Colby v. Cedar Bapids Insurance (1885), 66 Iowa,
premium. 577.
This policy shall be cancelled at any time at the request of the insured or by
the company giving five days' notice of such cancellation. If this policy shall be
cancelled as herein-before provided, or become void or cease, the premium having
been actually paid, the unearned portion shall be returned on surrender of this
policy or last renewal, the company retaining the customary short rate, except
that when this policy is cancelled by the company giving notice they shall retain
only the pro rata premium.
Swarzschild & Co. v. Phmnix Insurance (1903), 124 Fed. Rep. 52 Northern ;
Assurance v. Standard Leather Co. (1908), 165 Fed. Rep. 602 Insurance ;
Co. V. Wisconsin Central (1905), 184 Fed. Rep. 794.
(r) Grace v. American Central (1883), 109 U. S. 278 Northern Assurance

;
V.Standa/rd Leather (1908), 165 Fed. Bep. 602 Insurance Co. v. Wisconsin
;
Central (1905), 134 Fed. Eep. 794; Boyal Inswance v. Wight (1893), 55
Fed. Rep. 455.
;;
FIEE POLICIES 893
11. Conditions requiring Interest to be stated and

prohibiting Incumbrances
See Chapter II., Section II., pp. 126, 128 ; and Chapter V.,
Section III., p. 310, and Section VII., p. 372.
Condilions toHch have been judicially construed.
If the interest of the insured in the property be not truly stated herein, or if Interest other
the interest of the assured be other than unconditional and sole ownership . . . than uncon-
this policy shall he void. ditional and
Ditpuy V. Delaware Insurance (1894), 63 Fed. Eep. 680 Citizens' Fire v. Doll sole owner-
;
(1871), 35 Md. 89; Lewis v. Neiu England Fire (1886), 29 Fed. Eep. 496; ship to be
Schroedal v. Humboldt Fire (1893), 168 Pa. 459. disclosed.
the assured in the property, whether as owner, trustee, con-

If the interest of
mortgagee, lessee, or otherwise, be not stated in the policy.
signee, factor, agent,
Dakin v. Liverpool, etc., Insurance (1879), 77 N. Y. 600 De Armand v. Home ;
Insurance (1886), 28 Fed. Rep. 603 WestcJiestcr Fire v. Weaver (1889),

;
70 Md. 536.
If the interest of the assured in the property be any other than the entire,
unconditional, and sole ownership of the property for the use and benefit of the
insured, or is incumbered by any lien, whether by deed of trust, mortgage, or
otherwise, or if the building insured stands on leased ground, it must be so repre-
sented to the company, or so expressed in the written part of the policy, otherwise
the policy shall be void.
Washington Mills v. Commercial Fire (1882), 13 Fed. Eep. 646 13S Mass. 503 ;
Hosford V. Germania Fire (1888), 127 U. S. 399 London and Liverpool Fire ;
v. M'Elroy v. British American Assurance

Fischer (1899), 92 Fed. Eep. 500 ;
(1899), 94 Fed. Eep. 990; Imperial Fire v. Dunham (1888), 117 Pa. 460;
O'Neill V. Ottawa Agricultural Insurance (1879), 30 U. C. G. P. 151 Dolliver ;
V. St. Joseph Fire, etc. (1880), 128 Mass. 315; Dakin v. Liverpool, etc.,
Insurance (1879), 77 N. Y. 600 Millville Mutual v. Wilgus (1878),-88 Pa. 107
;
Chandlery. Commerce Fire (1878), 88 Pa. 223; Kronk v. Birmingham Fire

(1879), 91 Pa. 300; Watertown Fire v. Simons (1880), 96 Pa. 520 Insurance ;
Co. V. Haven (1877), 95 U. S. 242; Waller v. Northern Assurance (1881),

10 Fed. Eep. 232.
Unconditional and sole ownership.
Meaning of
Erb V. Fidelity (1896), 99 Iowa, 727; Western Assurance v. Temple (1901),
unconditional
31 Can. S. C. 373 Hubbard v. Hartford Fire (1871), 33 Iowa, 325 De Witt
; ;
and sole
i. Agricultural Insurance (1898), 157 N. Y. 353 Lumber Exchange v. ;
ownership.
American Central (1898), 183 Pa. 366 Rochester German Insurance v.
;
Schmidt (1908), 162 Fed. Eep. 447 ; Phceni.v Insurance v. Kerr (1904), 129
Fed. Eep. 723 Milwaukee Mechanics' Insurance v. Bhea (1903), 123 Fed. Eep.
;
9 Manchester Fire Assurance v. Abrams (1898), 89 Fed. Eep. 932

; Syndicate ;
Insurance v. Bohn (1894), 65 Fed. Eep. 165 Wood v. American Fire (1896),
;
149 N. Y. 382 ; Burson v. Fire Association (1890), 136 Pa. 267 ; Walter v. Sun
Fire (1895), 165 Pa. 881 ; Collins v. London Assurance (1895), 165 Pa. 298 ;
Yost V. Dwelling House Insurance (1897), 179 Pa. 381 ; Williams v. Buffalo
German Insurance (1883), 17 Fed. Eep. 63 Bumsey ; v. Pliosnix Insurance
(1880), 1 Fed. Eep. 396.
Entire, unconditional, and sole ownership.
American Basket Co. v. Farmville (1878), 3 Hughes, 251 ; Pelton v. Westchester
Fire (1879), 77 N. Y. 605.
Sole, absolute, and unconditional owner.

Orandin v. Rochester German Insurance (1884), 107 Pa. 26.
Soleand undisputed owner of the land and the property to be insured.
Qarver v. Hawkeye Insurance (1886), 69 Iowa, 202.
Unconditional owner.
Mattocks V. Des Moines Insurance (1888), 74 Iowa, 233.
Owner.
Compton V. Mercantile Insurance (1880), 27 Grant, 334; Sinclair v. Canadian
Mutual (1876), 40 U. C. Q. B. 206 Pennsylvania Fire v. Dougherty (1883),
;
iXjA jra. 000.

;
Entire, absolute, unconditional, unincumbered, fee simple ownership.

Brecht v. Law Union and Crown (1907), 153 Fed. Bep. 452 Cross v. National ;
Fire (1892), 132 N. Y. 138 Hartford v. Keating (1898), 86 Md. 180 ; Carpenter
;
V. German American (1892), 135 N. Y. 298; Brooks v. Eric Fire (1902),

76 App. Div. N. Y. 275 Traders' Insurance v. Pacaud (1894), 160 111. 243
;
Western v. Home Insurance (1891), 145 Pa. 846 Hanover Fire v. Bohn (1896), ;
48 Neb. 743.
Interest not absolute.
Washington Fire v. Kelly (1870), 82 Md. 421.
Leasehold _
the interest of the property to be insured be a leasehold interest or other
If
interest to be interest not [fee simple] absolute, it must be so stated in the policy, otherwise
disclosed. the same shall be void.
Davis V. Iowa State Insurance (1885), 67 Iowa, 494 Elliott v. Insurance Co. ;
(1888), 117 Pa. 548; Dohn v. Farmers' Joint Stock Insurance (1871),
5 Lans. 275.
If insurance is desired on property on leased ground, or on property of any
kind in which the interest of the applicant for insurance does not amount to the
entire, sole, and absolute ownership, it must in every such case be represented to
the company and clearly expressed in the body of the policy, otherwise there will
be no liability hereunder as to such property or limited interest.
Ellis V. Insurance Co. (1887), 32 Fed. Rep. 646.
Goods held Goods held in trust or on commission must be insured as such, otherwise the
in trust to be policy wiU not extend to cover them.
insured as London and North Western v. Q-lyn (1859), 1 El. & El. 652 ; South Australian
such. Insurance v. Randall (1869), 3 L. B. 101.
If the property to be insured be held in trust or on commission, or be leasehold
or other interest not amounting to absolute or sole ownership ... it must be so
represented to the company and expressed in the policy in writing, otherwise the
insurance as to such property shall be void.
Lebanon Mutual v. Erb (1886), 112 Pa. 149.
Warranty No incumbrance.
against Dohn V. Farmers' Joint Stock Insurance (1871), 5 Lans. 275 Franklin Fire v. ;
incum- Vaughan (1875), 92 U. S. 516 Hosford v. Hartford Fire (1887), 127 U. S. 404.
;
brances. Concealment of any incumbrance on the insured property.

Core District Mutual v. Samo (1878), 2 Can. S. C. 411 Lount ; v. Mutual Fire
(1905), 9 Ont. L. E. 549.
If the said property should be or become encumbered by a chattel mortgage.
Hunt Springfield Fire (1904), 196 U. S. 47 ; Atlas Reduction Co. v. New
V.
Zealand Insurance (1905), 138 Fed. Bep. 497; Fries BresUn Co. v. Star
Fire (1907), 154 Fed. Bep. 35 Pennsylvania Fire Insurance v. Hughes
;
(1901), 108 Fed. Bep. 497 Perry v. London Assurance (1909), 167 Fed. Bep.
;
902 Mulrooney v. Royal Insurance (1908), 163 Fed. Bep. 833.

;
Are there any incumbrances ?

FrankUn v. Vaughan (1875), 92 Vid. 516 ; Dohn v. The Farmers' Joint Stock
(1871), 5 Lans. 275.
If incumbrance be placed thereon.
~ " V. Capital Insurance (1894), 91 Iowa, 103.
12. Conditions prohibiting Transfer of Property or Change

of Title, Interest, or Possession
See Chapter II., Section II., pp. 128, 129.

Warranty This policy shall cease to be in force as to any property hereby insured which
shall pass from the insured to any other person otherwise than by will or operation
transfer of of law unless notice thereof be given to the company and the subsistence of the
property. insurance in favour of such other person be declared by a memorandum endorsed
hereon by or on behalf of the company.
Eoyal Insurance v. Martin (1903), 192 U. S. 149 ; Forbes <t Co. v. Border
Counties Fire (1873), 11 M. 278; Liverpool, do. v. McNeill (1898), 89 Fed.
Bep. 131.
;
;;
FIRE POLICIES 895

If the property insured is assigned without a written permission
indorsed Against
hereon by an agent of the company duly authorised for such purpose the policy assignment
shall thereby become void; but this condition does not apply to change of title of property.
by succession or by the operation of the law or by reason of death.
(4)
Penchen v. City Mutual (1891), 18 Ont. A. R. 446; Bull v. North British
Insurance (1888), 15 Ont. A. R. 421 Ardill v. Gitinens' Insurance (1893)
;
20 Ont. A. R. 605 May v. Standard Fire (1880), 5 Ont. A. R. 605 Dimlop v

; ;
Usborne, do. Fire (1895), 22 Ont. A. R. 364.

If the property insured is assigned without a written permission endorsed on
the policy by an agent of the company duly authorised for such purpose the policy
shall be void.
McQueen v. Phcenix Mutual (1879), i Can. S. C. 660 ; Sorcreign Fire Insiiranco
V. Peters (1886), 12 Can. S. C. 33.
If the said property should be sold or conveyed or the interest of the parties Against sale
therein be changed in any manner whether by act of the parties or by operation or change of
of law. interest.
Dacey Agricultural Insurance (1880), 21 Hun. 83; Torrop v. Imperial Fire
(1896), 26 Can. S. C. 585 Walton v. Agricultural Insurance (1889), 116 N. Y.
;
317 Mine v. Woolworth (1883), 93 N. Y. 75 Sherwood v. Agricultural Insur-

; ;
ance (1878), 73 N. Y. 447.

If any change takes place in the interest, title, or possession (except in case of Against any
succession by the death of the assured) whether by legal process or judicial decree change in
or voluntary transfer or conveyance. interest, title,
Thompscm v. Phoenix (1889), 136 U. S. 287 Vancouver Bank v. Law Union
; or possession.
and Crown (1907), 153 Fed. Rep. 440; Scottish Union v. Bagan, [1900] 102
Fed. Rep. 919; Small v. Westchester Fire (1892), 51 Fed. Rep. 789; Muss-
baum V. Northern Insurance (1889), 37 Fed. Rep. 524 Wood v. American ;
Fire (1896), 149 N. Y. 382 Burson v. Fire Association (1890), 136 Pa. 267
;
;
Collins V. London Assurance (1895), 165 Pa. 298 Boby v. American Central ;
(1890), 120 N. Y. 510; Barry v. Hamburg-Bremen Fire (1888), 110 N. Y. 1

Keeney v. Home Insurance (1877), 71 N. Y. 396 Erb v. Insurance Co. (1896), ;
98 Iowa, 606.
If the property be sold lOr transferred or any change take place in title or
possession whether by legal process or judicial decree or voluntary transfer or
conveyance.
Insurance Companies v. Thompson (1877), 95 U. S. 547; Mussbaum v. Northern
Insurance (1889), 37 Fed. Rep. 524 Frienen v. Almania Fire (1887), 30 Fed.
;
Rep. 352; London Assurance v. Drennen (1885), 166 U. S. 461; Bailey v.

American CcwiraZ (1882), 13 Fed. Rep. 250; Bunklev. Citizens' Insurance
(1881), 6 Fed. Rep. 143 California Inszirance v. Union Compress (1889),
;
133 U. S. 388; Germania Insurance v. Home Insura7ice (1894), 144 N. Y.

195; Browning v. Home Insurance (1877), 71 N. Y. 508; Girard Fire v.
Hebard (1880), 95 Pa. 45 Oldham v. Anchor Fire (1894), 90 Iowa, 225
;
Bishop V. Clay Insurance (1878), 45 Conn. 430; Brunsivick v. Commercial

Union Insurance (1878), 68 Me. 313.
Or if any change other than by the death
of the insured takes place in the
interest, title or possession ofthe subject of insurance (except change of occu-
pants without increase of hazard) whether by legal process or judgment or by
voluntary act of the insured or otherwise.
Walradt v. Phoenix Insurance (1893), 136 N. Y. 375 Greenlee v. Mercantile ;
Insurance (1897), 102 Iowa, 427.

If the said property shall be sold or this policy assigned, or if the title or
possession of the property, or any part thereof, is transferred or changed (other
than by succession by reason of the death of the assured) whether by legal process,
judicial decree, voluntary transfer, conveyance or otherwise.
Jones V. Phoenix Insurance (1896), 97 Iowa, 275.
In case of any transfer, partial transfer, or change of title in property insured
by this company ... or if the property herein insured, or any part ofit, shall be
transferred by any contract or change of partnership or ownership, the policy
shall be void.
West Branch v. Halfenstein (1861), 40 Pa. 289.
In case any transfer or termination of the
of interest of the assured in the
property insured, or in the policy either by sale or transfer.
Grosvenor v. Atlantic Fire (1858), 17 N. Y. 391.
It is agreed tliat this insurance shall be void in case this policy or the interest
insured thereby shall be sold, assigned, transferred or pledged without the previous
consent in writing of the insurers.
Atherton v. Phmnix Insii,rance (1871), 109 Mass. 32.
If any change takes place in the title, ownership or possession.
Lodge v. Capital Insurance i{1894), 91 Iowa, 103 Taylor ; v. Merchants, etc.
Insurance (1891), 83 Iowa, 402.
If this policy be assigned before a loss ; or if any.ohange take place in the title,
interest, location, or possession of the property insured thereby.
Imperial Fire v. Dunham (1888), 117 Pa. 460.
upon the passing or entry of a decree
If the property be sold or transferred or
of foreclosure, or if any change takes place in title or possession, or if the interest
of the assured whether as owner, trustee, consignee, factor, agent, mortgagee,
lessee, or otherwise be not truly stated in the policy, the policy is void.
Dolliver v. St.Joseph Mre (1880), 128 Mass. 815; Judge v. Connecticut Fire
(1882), 132 Mass. 521; Malley v. Atlantic Insurance (1883), 51 Conn. 222.
If the title of the property is transferred incumbered or charged.
Hathaway v. State Insurance (1884), 64 Iowa, 229.
When the property insured shaU become alienated the policy thereon shall
become void unless assigned by the consent of the president and secretary to the
alienee.
M'Kissick v. Mill Oioners' Mutual (1878), 50 Iowa, 116.
Change in title.
Citizens' Insurance v. Salteris (1894), 23 Can. S. 0. 155 ; Springfield Fire v.
Allen (1871), 43 N. Y. 389.
Parted with his interest.
Planters' Mutual v. Rowland (1886), 66 Ind. 236; Mauley v. Insurance
Company (1869), 1 Lans. 20.
If the property shall be sold.

Broiun v. Cotton, etc.. Insurance (1892), 156 Mass. 587 Bryam v. Traders' ;
Insurance (1888), 145 Mass. 389; Sviith v. Union Insurance (1876), 120
Mass. 90.
Sold or conveyed.
Washington Fire v. Kelly (1870), 32 Ind. 421 Strong v. Manufacturers' ;
Insurance (1830), 27 Mass. 40.

Alienated by sale or otherwise.
Tillon V. Kingston Mutual (1851), 5 N. Y. 405.
Change in possession.
California Insurance v. Union Compress (1889), 133 U. S. 387.
Without a written permission.
Bates v. Equitable (1869), 10 Wall. 33.
Provision for In case any property real or personal be alienated by sale insolvency, or other-
transfer of wise the policy shall be void but the assignee may have the policy trans-
. . .
policy to ferred to him and shall be entitled to all the rights and privileges and be
. . .
assignee. subject to all the liabilities and conditions to which the original party insured
was subject. Provided however in oases where the assignee is a mortgagee the
directors may permit the policy to remain in force and to be transferred to him by
way of additional security . without his becoming in any manner personally
. .
liable for premium.

Mechanics v. Gore District Mutual (1878), 3 Ont. A. B. 151.
Warranty with the knowledge of the assured foreclosure proceedings be commenced

If
against fore- or notice of sale of any property covered by this policy be given by virtue of any
closure mortgage or trust deed.
proceedings. Collins V. London Assurance (1895), 165 Pa. 298.
If with the knowledge of the insured foreclosure proceedings be commenced or
notice given of sale of any property covered by this policy by virtue of any
mortgage or trust deed, or if any change other than by the death of the insured
take place in the interest title or possession of the subject of insurance (except
change of occupants without increase of hazard) whether .by legal process or
judgment.
Fries Breslin Co. v. Sta/r Fire (1907), 154 Fed. Hep. 85 ; Brecht v. Law Union
and Crown (1907), 153 Fed. Rep. 452 Perry v. London Assurance (1909),
;
167 Fed. Kep. 902.

; ;
FIRE POLICIES 897

Foreclosure proceedings.
Delaware Insurance v. Greer (1903), 120 Fed. Bep. 916.
the insured property should be levied upon or taken into possession or Legal process
If
custody under any legal process or the title should be disputed in any, proceeding against
in law or equity the policy shall cease to be binding. property
May V. Standard Fire (1880), 5 Ont. A. B,. 605.
If the title or possession be now or hereafter become involved in litigation. Litigation as
Small V. WesU:hester Fire (1892), 51 Fed. Eep. 789. to title.
13. Condition prohibiting Assignment of Policy

See Chapter VII., Section VIII., pp. 764, 766.
the assured shall assign part with or in any way encumber the policy or
If Conditions
any interest therein without the consent of the company endorsed on the policy against
this poUcy shall be void. assigning
Salterio v. City of London Fire (1894), 23 Can. S. C. 82 Jackson v. Boylston
; or charging
Mutual (1885), 139 Mass. 508 West Branch v. Halfenstein (1861), 40 Pa. assured's
;
289 Small v. Westchester Fire Insurance (1892), 51 Fed. Rep. 789 interest in
;
Washington Fire v. Kelly (1870), 32 Md. 421 Manley v. Insurance of North the policy.
;
Atnerica (1869),! Lans. 20; Lazarus v. Commonwealth Insurance (1837),

36 Mass. 81.
If this policy should be assigned the assignment must be entered within
21 days after the making thereof.
Sadlers Go. v. Badcock (1743), 2 Atk. 364.
The may be transferred by endorsement

interest of the policy made with the
consent of the agent but not otherwise.
Grozier v. Phoenix (1870), 2 Han. N. Br. 200.
14. Mortgagee Clause and other Conditions in favour of

Mortgagee or other Assignee
See Chapter IL, Section III., pp. 139-143 ; and Chapter VII.,
Section VIII., pp. 772-776.
be made payable to a mortgagee of the insured real estate

If this policy shall Mortgagee
no act or default of any person other than such mortgagee or his agents, or those responsible
claiming under him shall affect such mortgagee's right to recover in case of loss for his own
on such real estate provided that the mortgagee shall on demand pay according acts and
to the established scale of rates for any increase of risk not paid for by the defaults only
insured and whenever this company shall be liable to a mortgagee for any loss
; subrogation
under this policy for which no liability exists as to the mortgagor or owner, to mortgage,
and this company shall elect by itself or with others to pay the mortgagee the full
amount secured by such mortgage, then the mortgagee shall assign and transfer
to the company interested upon such payment the said mortgage together with
the note and debt thereby secured.
Attleborough Bank v. Security (1897), 168 Mass. 147 Newhamjpshire Fire v.
;
National Life (1901), 112 Fed. Eep. 199.

It is hereby specially agreed that this insurance as to the interest of the
mortgagee only therein shall not be invalidated by any act or neglect of the
mortgagor or owner of the property insured, nor by the occupation of the premises
for purposes more hazardous than are permitted by this policy. It is also pro-
vided and agreed that the mortgagee shall notify the company of any change of
ownership or increase of hazard not permitted by their policy to the mortgagor
or owner as soon as the same shall come to his or her knowledge, and shall on
reasonable demand pay the additional charge for the same according to the
established scale of rates for the time such increased hazard may be or shall have
been assumed by this company during the continuance of this insurance. And
it is further agreed that whenever the company shall pay the mortgagee any
sum for loss under this policy and shall claim that as to the mortgagor or owner
I.L. 57
;
no oompany shall at onoe be legally subrogated to

liability therefor existed, said
all the rights of the mortgagee under aU the securities held as collateral to the
mortgage idebt to the extent of such payment, but such subrogation shall not
impair the right of the mortagee to recover the full amount of his claim or at
its option said company may pay to the mortgagee the whole principal due or to
grow due on the mortgage with the interest then accrued and shall thereupon
receive a full assignment and transfer of the mortgage and all other securities
held as collateral to the mortgage debt.
Hastings v. Westchester Fire (1878), 73 N. Y. 141 Klein v. Union Fire (1883),
;
3 Ont. 284 Imperial Fire v. Bull (1889), 18 Can. S. C. 697 Anderson v.

; ;
Saugeen Mutual (1899), 18 Ont. 355 Liverpool, London and Globe v. Agri-
;
cultural (1908), 38 Can. S. 0. 94 Howes v. Dominion Fi/re (1888), 8 Ont. A. E.

;
644 Syndicate Insurance v. Bohn (1894), 65 Fed. Eep. 165 Hartford Fire
; ;
V. Williams (1894), 63 Fed. Rep. 925 Mutual Fire v. Alvord (1894), 61 Fed.
;
Rep. 752 Ulster Co. v. Leake (1878), 78 N. Y. 161

; Phcenix v. Lloyd ;
(1879), 19 Hun. 287 Eddy v. London Assurance (1892), 65 Hun. 807

;
Lett V. Q-uardian Life (1889), 52 Hun. 570.
Mortgagee Where a ground rent mortgage or other lien on real estate is specifically
not respon- insured such insurance shall not be affected by any sale or change of occupation
sible for actsor use of the premises mortgaged or charged vyithout the knowledge of the
of assured ; insured though the, risk may be thereby increased. ... In all such oases upon
company's any loss the oompany shall have the option of paying to the insured either such
option to pay proportion of the sum insured as the damage by fire to the premises mortgaged
debt to or charged shall bear to their value immediately before the fire but not
mortgagee. exceeding such value or else the full amount of such lien or mortgaged debt or
the principal of such ground rent in which latter cases this oompany shall be
entitled to require an assignment of such ground rent mortgage or other lien in
due form.
Thornton v. Enterprise (1872), 71 Pa. 234.
Application If with the consent of this company an interest under the policy shall exist in
of conditions favour of a mortgagee or of any person or corporation having an interest in the
in case of subject of insurance other than the interest of the insured as described herein
transfer to the conditions herein-before contained [i.e. as regards title alienation and change
mortgagee. of possession] shall apply in manner expressed in such provisions and conditions
of insurance relating to such interest as shaU be within, upon, attached or
appended hereto.
Brecht v. Laio Union and Crown (1908), 160 Fed. Eep. 399 ; Delaware In-
surance V. Greer (1903), 120 Fed. Rep. 916.
Loss payable Payable in case of loss to A B mortgagee as his interest shall appear.
to mortgagee. Guerin v. Manchester Fire (1898), 29 Can. S. C. 139 Wyman v. Imperial In- ;
surance (1888), 16 Can. S. C. 715 Agricultural Savings Co. v. Liverpool,

;
London and Globe (1901), 3 Ont. L. E. 127 Haslem v. Egmty i^'ire (1904),
;
i
8 Ont. L. R. 246 Mitchell v. Gii/y of London Assurance (1888), 15 Ont.

;
A. R. 262 Marrie v. Stadacona Insurance (1879), 4 Ont. A. E. 330 Brecht

; ;
V. Law Union and Crown (1908), 160 Fed. Eep. 399 Delaware Insurance v.;
Greer (1903), 120 Fed. Eep. 916.

Loss payable to mortgagee,
Heilmann v. Westchester (1878), 75 N. Y. 7 ; Wymam v. Imperial Insurance
(1888), 16 Can. S. C. 715.
Loss payable to A B as his interest may appear.
Atlas Beduction v. New Zealand Insurance (1905), 188 Fed. Eep. 497.
15. Conditions relating to Average Double Insurance and

Contribution
These clauses are fully discussed in Chapter VII., dealing with
fire insurance claims (s). The contribution and average clauses
in British policies are mostly of a uniform type, and where a
Lloyd's policy was merely expressed as being " subject to average "
the Court had no difficulty in applying the usual first condition
(s) Vide infra, pp. 705-733.

;;;
FIEE POLICIES 899
of the average clause (t). In America there are many variations

from the forms used in this country, and in one case where a
sUp was pasted on the policy " subject to co-insurance clause,"
it was held that it was impossible in the absence of any universal
form of such clause to give any effect to the slip (m). If the
company's ordinary forms of policy contain contribution average
or similar clauses, and a contract to insure is made such clauses
bind the assured even before the policy is issued (r). In America
the clause avoiding the policy in case of any double insurance
without consent has been held to be a reasonable clause (x).
In Canada a clause differing from the statutory condition, and
providing that all policies, floating or otherwise, attaching in
whole or in part to property insured should be considered as
contributing insurance for the full amount was held to be
unreasonable and, therefore, void as a variation from the statutory
condition (y).
If the assured shall have or shall hereafter make any other insurance Policy void
[whether valid or not] upon the property hereby insured [or any part thereof] in case of
without the consent of the company written hereon in such case this policy shall other insur-
be void. ance without
Hubbard v. Hartford Fire (1871), 33 Iowa, 325 Mead v. American Fire (1897), consent.
;
13 Hun. App. 474 Bussell v. Fidelity Fire (1891), 84 Iowa, 93 Cannon

; ;
V. Home Insurance (1897), 49 La. 1367 M'Master v. North American In-

;
surance (1873), 55 N. Y. 222 Northern Assurance v. Grand View Building

;
Go. (1901), 183 U. S. 308 United Fireman's Insurance v. Thomas (1897), 82

;
Fed. Eep. 406 Palatine Insurance v. M'Elroy (1900), 100 Fed. Kep. 391
;
M'Elroy v. British American Insurance (1899), 94 Fed. Eep. 990; Noad v.

Provincial (1859), 18 U. C. Q. B. 584 De Witt v. Agricultural Insurance
;
(1898), 157 N. Y. 353 Ramsay v. Mutual Fire (1854), 11 U. 0. Q. B. 517

;
Hatton V. Beacon Insurance (1859), 16 U. C. Q. B. 316 Dafoe v. District ;
Mutual (1858), 7 tJ. C. C. P. 55 Park v. Phcenix Insurance (1859), 19

;
U. G. Q. B. 106; Mason v. Andes Insurance (1893), 23 U. 0. C. P. 37;

Morrow v. Lancashire Insurance (1899), 26 Ont. A. E. 173 Foster v. Equit- ;
able Mutual 68 Mass. 216 Union National v. German Insurance

(1854), ;
(1896), 71 Fed. Eep. 473; Georgia Home Insurance v. Eosenfield (1899), 95

Fed. Eep. 358 Palatine Insurance v. Ewing (1899), 92 Fed. Eep. Ill
;
Fireman's Fund Insurance v. Norwood (1895), 69 Fed. Eep. 71 Druce v. ;
Gwe District Mutual (1869), 20 U. C. Q. B. 207 Erb v. Fidelity Insurance ;
(1896), 99 Iowa, 728 Burton v. Gore District Mutual (1865), 12 Grant, 156
; :
Taylor v. State Insurance (1899), 107 Iowa, 275 Planters'' Mutual v. Bowland ;
(1886), 66Iud. 236; Hayes y. Milford Mutxial (1898), 170 Mass. 492; Hart-
ford Fire v. Small (1895), 66 Fed. Eep. 490.
The company is not liable for loss if there is any prior insurance in any other
company unless the company's assent thereto appears herein or is endorsed hereon
nor if any subsequent insurance is efiected in any other company unless and
until the assents thereto or unless the company does not dissent in
company
writing within two weeks
after receiving written notice of the intention or desire
to effect the subsequent insurance or does not dissent in writing after that time
and before the subsequent or further insurance is efiected.
Statutory Condition, Eevised Statutes of Ontario, 1897, ch. 203, s. 168 (8)
Manitoba Assurance v. Whitla (1903), 34 Can. S. 0. 191 Fair v. Niagara ;
{t) Aetna Wood Paving Co. v. Boss (1910), 15 Com. Cas. 24.
(u) Phoenix Insurance v. Wilcox (1895), 65 Fed. Eep. 724.
{v) JacobsV. Equitable (1858), 7 U. 0. Q. B. 85.
(x) Northern Assurance v. Qrand View (1901), 183 U. S. 308,
(y) Graham v. Ontario Mutual (1887), 14 Ont. E. 358.
;
District (1876), 26 U. C. 0. P. 398; M'Crea v. Waterloo County (1877), 1

Out. A. R. 218 GautUer v. Waterloo Mutual (1881), 6 Out. A. B. 231
;
M'Intyre v. East Williams Mutual (1889), 18 Ont. B. 79 Moo^-e v. Citizens' ;
Fire (1888), li Out. A. B. 582; Mutchmoor v. Waterloo Insurance (1902), 4

Ont. L. B. 606 Imperial Bank v. i?oi/aZ Insurance (1906), 12 Ont. L. B.
;
519 Thompson v. Egûity Fire (1907), 17 Ont. L. B. 214.

;
Notice of The insured must at the time of effecting the insurance give notice to the
other insur- company of any insurance or insurances already made elsewhere on the property
ance to be hereby insured or any part thereof, and on effecting any insurance or insurances
given. during the currency of this policy elsewhere on the property hereby insured or
any part thereof, the insured must also forthwith give notice to the company
thereof so that the particulars thereof may be indorsed on the policy, and unless
such notice be given the insured will not be entitled to any benefit under this
policy, and on the happening of any loss or damage the insured shall forthwith
declare in writing to the company all other insurances effected by him or by
any other person on any of the property, and the giving of such notices at the
respective times aforesaid shall be a condition precedent to the recovery of any
claim under this policy.
Equitable Fire and Accident v. The Ching Wo Hong, [1907] A. C. 96.
Notice of In case subsequent insurance on any interest in property assured by this

of
other insur- company (whether the interest assured be the same as that assured by this
ance to be company or not) notice thereof must be given in writing at once and such sub-
given and sequent insurance indorsed on the policy granted by the company or otherwise
indorsed on acknowledged in writing, in default whereof such policy shall thenceforth cease
policy. and be of no effect.
Western Assurance v. Doull (1886), 12 Can. S. C. 446.
If the assured or any other person or parties interested shall have existing
during the continuance of this policy any other contract or agreement for
insurance (whether valid or not) against loss or damage by fire upon the property
hereby insured.
Acer V. Merchants' Insurance (1870), 57 Barb. 68.
If the assured or his assigns shall hereafter make any other insurance on the
same property and shall not give immediate notice thereof to the secretary and
have the same endorsed on this instrument or otherwise acknowledged by him in
writing then this policy shall cease and be of no effect and in case the assured
shall have already any other insurance against loss by fire on the property hereby
insured not notified to this company and mentioned in or indorsed upon this
policy then this insurance shall be void and of no effect.
Blake v. Exchange Mutual (1882), 78 Mass. 265 Parsons v. Standard Insur- ;
ance (1880), 5 Can. S. C. 283 Lowson v. Canada Farmers' Fire (1881), 6

;
U. 0. App. 512 Shannon v. Gore District Mutual (1878), 2 Ont. A. B. 396

;
;
BilUngton v. Provincial (1877), 2 Ont. A. B. 158; (1879), 3 Can. S. 0. 182;

Grant v. Citizens (1880), 5 Ont. A. E. 596 Commercial Union v. Temple
;
(1898), 29 Can. S. C. 206; Western Assurance v. Temple (1901), 31 Can. S. C.

373 ; Carpenter v. Providence Washington (1842), 16 Pet. 495 Traders' ;
Insurance Co. v. Bohert (1832), 9 Wend. 404 Manitoba Assurance v. ;
Whitla (1903;, 34 Can. S. C. 191.

This policy shall be void if the assured or his assigns shall hereafter make any
other insurance on the said property and shall not with aU reasonable diligence
give notice thereof and have the same endorsed on the said policies respectively.
Dickson v. Provincial (1874), 24 U. C. C. P. 157.
The assured must give notice to the company of any other insurance effected
on the same property and have the same endorsed on this policy or otherwise
acknowledged by the company in writing and failure to give such notice shall
void the policy.
Citizens' Insurance v. Parsons (1881), 7 A. C. 96, 118 ; Benjamin v. Saratoga
Mutual (1858), 17 Ca/rroU v. Charter Oak (1863), 40 Barb. 292
N. Y. 415 ; ;
Jacobs V. Eguitable (1858), 7 U. 0. Q. B. 35 Jacobs v. Equitable (1860), 9

;
U. C. Q. B. 250 ; Weimhaugh v. Provincial (1870), 20 U. C. 0. P. 405.

Insurance subsisting or effected with other companies must be notified to the
board and if approved of to be indorsed on the policy and signed by the secretary.
M'Bride v. Gore District Mutual (1870), 30 U. C. Q. B. 451.
Notice of No claim shall be recoverable if the property insured be previously or subse-
other insur- quently insured elsewhere unless the particulars of such insurance be notified to
;;;
FIRE POLICIES 901
the company in writing and allowed by endorsement hereon provided that on ance to be
such notice being given after the issue of the policy it shall be optional with the given and
company to cancel the same, returning the rateable premimn for the unexpired company to
term thereof. have option
A^^stralian Agricultural Go. v. Saunders (1875), L. E, 10 0. P. 668 Hendrick- to cancel.
;
son V. Queen Insurance (1871), 31 U. C. Q. B. 547; Hordcnt v. Commercial

Union (1884), 5 N. S. W. E. (Law), 309.
No additional insurances even though noted hereon are to be considered as Non-
thereby sanctioned if they shall be in any respect more limited or specific than concurreDt
the insurance effected by this policy so as to interfere with their operating insurances
concurrently therewith prohibited.
Eordern v. Commercial Union (1884), 5 N. S. W. E. (Law), 309.
Shall not apply to or cover any goods which may at the time of loss be Property
covered in whole or in part by a marine policy. covered by
California Insurance v. Union Compress (1889), 188 U. S. 887. other insur-
ance excepted
Persons insuring property at this office must when required give notice of any from risk.
other insurance made elsewhere on the same property in their behalf and cause a
Contribution
minute or memorandum of any other insurance to be indorsed on their policies
clause.
in which case this company shall only be liable to the payment of a rateable
proportion of any loss or damage which may be sustained and unless such :
notice be given the assured shall not be entitled to any benefit under such policy.
Stoat V. Boyal Insuratice (1865), 49 Pa. 14 Millaudon v. Western Marine
;
(1886), 9 La. 27 Boijal Insurance v. Boedel (1875), 78 Pa. 19.

;
If at the time of any loss or damage by fire happening to any property hereby
insured there be any other subsisting insurance or insurances [whether valid or
invalid] and whether efieoted by the insured or by any other person covering the
same property, this company shall not be liable to pay or contribute more than its
rateable proportion of such loss or damage [and without reference to the default
or repudiation of any other insurance company. And the payment of premium
of such other insurance shall be held conclusive evidence that the same has been
effected within the meaning of this clause].
Andrews v. Patriotic Assurance (1886), 18 L. E. Ir. 355 Traders' Insurance
;
V. Pacaud (1894), 150 111. 245 Nicols v. London and Provincial (1884),
;
5 N: S. W. E. (Law), 333 Hordern v. Commercial Union (1884), 5 N. S.

;
W. B. (Law), 309 NichoUs v. Scottish Union (1885), 2 T. L. E. 14 E.

; ;
1094; Glasgow Provident v. Westminster Fire (1887), 14 E. 947; (1888), 13

A. C. 699; Scottish Amicable v. Northern Assurance (1883), 11 E. 287;
North British and Mercantile v. London, Liverpool and Globe (1877), 5 Ch.
D. 569.
In the event of any other insurance on the property herein described having
been assented to as aforesaid, then this company shall if such other insurance
remains in force on the happening of any loss or damage, only be liable for the
payment of a rateable proportion of such loss or damage without reference to tho
dates of the different policies.
Statutory Condition, Eevised Statutes of Ontario, 1897, ch. 203, s. 168 (9)
Eacretty. Gore District Mutual (1903), 6 Ont. L. E. 592.
This company
shall not be liable under this policy for a greater proportion of
any on the property described than the amount hereby insured, shall bear to
loss
the whole insurance whether valid or invalid, or by solvent or insolvent insurers
covering such property.
Bateman v. Lumberman's Insurance (1899), 189 Pa. 465 Golde v. Whipple &
;
Co. (1896), 7 Hun. 48 Lisene v. Lumber Insurance (1897), 101 Iowa, 514
;
Hoffmann v. Manufacturers' (1889), 38 Fed. Eep. 487 Erb v. Fidelity

;
(1896), 99 Iowa, 727; Dickenson v. German American (1896), 6 Hun. 550;

Bardwell v. Conway Mutual (1877), 122 Mass. 90 Home Insurance v. Balti-
;
more (1876), 93 U. S. 527 Page v. Sun Insurance (1896), 74 Fed. Eep. 203
;
Hough V. People's Fire (1872), 36 Md. 398; Bobbins v. Firemen's Fund

(1879), 16 Blatchf. 122 Ogden v. East River (1872), 50 N. Y. 388 Clarke v.
; ;
Western (1891), 146 Pa. 561; Howard Insurance v. Scribner (1843), 5 Hill,
N. y. 298 Lumber Exchange v. American Central (1898), 183 Pa. 366
;
Liebrandt v. M'Dowell Stove Co. (1888), -35 Fed. Eep. 30 Tiick v. Insurance
;
Co. (1876), 56 N. H. 326 Unitarian Congregation v. Western (1866), 26 U. C.

;
Q. B. 175; Hartford Fire v. Peebles Hotel Co. (1897), 82 Fed. Eep. 546;
Lebanon Insurance v. Kepler (1884), 106 Pa. 28.
It is further agreed that in case of any other insurance upon the property
hereby insured, then this company shall not he liable under this policy for a
greater proportion of any loss sustained than the sum hereby insured bears to the
whole amount of insurance on said property issued to or held by any party or
parties having an insurable interest therein.
Hartford Fire v. Williams (1894), 63 Fed. Hep. 925.
Other insur- In case of any other current insurance upon the property hereby insured
ance attach- whether valid or not , such insurance, so long as it attaches in whole or in
. .
ing in whole part to the property covered by this policy, shall as between the insured and this
or iu part to company he considered as contributing insurance for the full amount of such
be deemed and liable as such to pay pro rata any loss total or partial on the property
policy,
contributing. hereby insured.
Hammond v. Citizens (1886), 26 N. Br. 371.
Any policy floating or otherwise attaching in whole or in part to the property
covered by this policy shall as between the assured and this company be con-
sidered as contributing insurance for the full amount of such policy and liable as
such to pay pro rata any loss total or partial on the property hereby insured.
Oraham v. Ontario Mutual (1887), 14 Ont. E. 358 Lowell Manufacturing Co.
;
V. Safegua/rd Fire (1882), 88 N. Y. 591 ; Fi/re Insurance v. Merchants' (1886),

66 Md. 339.
Pro rata
average It is hereby declared and agreed that where a sum insured is declared subject
to the conditions of average if the property so covered shall at the breaking out
condition.
of any fire be collectively of greater value than the sum insured thereon then the
company shall pay and make good such proportion only of the loss or damage as
the sum so insured shall bear to the whole value of the said property at the time
when the fire shall first happen.
Australian Agricultural Co. v. Saunders (1875), L. E. 10 0. P. 668.
This company shall be liable only for such proportion of the whole loss as the
amount of this insurance bears to the cash value of the whole property herein
described.
Barnes v. Hartford Fire (1882), 9 Fed. Eep. 813.
To pay only such proportion of the sum insured as the damage by fire to the
premises mortgaged or charged shall bear to their value immediately before the fire.
Teutonia Insurance v. Mund
(1883), 102 Pa. 89.
Second But at the same time declared and agreed that if any property included
it is
condition of in such average shall at the breaking out of any fire be insured by any other
average. policy which, whether subject to average or not, shall apply to part only of the
buildings or places or of the property to which such average extends, then this
policy shall not cover the same excepting as regards any excess of value beyond
the amount of such more specific insurance which said excess is said to be under
the protection of this policy and subject to average as aforesaid.
Australian Agricultural Co. v. Saunders (1875), L. E. 10 C. P. 668.
If at the happening of any fire the assured shall have insurance under a
floating policy or policies not specific but covering goods generally in various
places not designated and yet within limits which include the property insured
such policy as between the insured and this company shall be considered as
covering any excess of sound value of the subject insured beyond the amount
covered by the specific insurances thereon.
Merrick v. Oermania Fire (1867), 54 Pa. 277,
To be subject In case of the assured holding any other policy on the same property, subject
to average in to average, then this policy is declared subject to average in the same manner,
like manner and in no case where any property insured by this company is insured elsewhere,
as concurrent shall this company he liable to pay more than their rateable proportion of the
insurance. loss or damage.
Australian Agricultu/ral Co. v. Saunders (1875), L. E. 10 0. P. 668.
In case of any other insurance upon the property hereby insured whether
prior or subsequent to the date of this policy, the assured shall be entitled to
recover of this company no greater proportion of the loss sustained than the sum
hereby insured bears to the whole amount insured thereon whether such insur-
ance be by specific or by general or floating policies and it is hereby declared
:
that in case of the assured holding any other policy in this or any company on
the property insured subject to the conditions of average, this policy shall be
subject to average in like manner.
Adams v. Greenwich Insurance (1876), 9 Hun. 45 ; Hastings v. Westchester
Fire (1878), 73 N. Y. 141.
; — ; ; ; — ;
FIRE POLICIES 903

Seventy-five per cent, oo-insuranoe clause. It is a part of the consideration of American
this policyand the basis upon which the rate of premium is fixed that the insured co-insurance
shall maintain insurance on the property covered by this policy of not less than clause.
seventy-five per cent, of the actual cash value thereof, and that failing so to do
the assured shall be a co-insurer to the extent of such deficit and in that capacity
shall bear his her or their proportion of any loss.
Wanless v. Lancashire Insurance (1896), 23 Out. A. E. 224; Eckardt v.
LancasMre Insurance (1900), 31 Can. S. 0. 72.
The company in no case pay more than two-thirds on personal property

Vfill Limit of
and three-quarters on real estate of the actual cash value of the property at risk liability to
at the time of the fire. fi:xedpropor-
Suchins v. People's Mutual (1855), 31 N. H. 288 Snowden v. Kittanning ;
tion of pro-
Insurance (1888), 122 Pa. 502 Williamson v. Qore District Mutual (1866),
; perty or loss.
26 U. 0. Q. B. 145.
The company shall be liable to pay two-thirds of all such loss or damage by
fireas shall happen to the above-mentioned property [amounting to no more in
the whole than $ and to pay no more on any of the different properties
above described than two-thirds of the whole cash value of each at the time of
such loss and not exceeding on each the sum it is insured for in this policy].
King v. Prince Edward Mutual (1868), 19 U. 0. G. P. 134; M'Intyre v. East
Williams Mutual (1889), 18 Ont. R. 79.
The assured shall not be entitled to recover from the company more than two-
thirds of the actual cash value ofany building and in case of further insurance
then only the rateable proportion of such two-thirds of the actual cash value
unless more than such two-thirds value as represented in the application shall
have been insured in which case the company shall be liable for such proportion
of the actual value as the amount insured bears to the value given in the appli-
cation. In the case of property other than buildings, if the property insured is
found by arbitration or otherwise to have been overvalued in the application for the
policy the company shall be liable (in the absence of fraud) for such proportion of
the actual value as the amount insured bears to the value given in the application.
Eacrett v. Gore District Mutual (1903), 6 Ont. L. R. 592.
In case any of the property covered by this policy shaU have any liens or in- Limit of
cumbrances thereon either by mortgage or otherwise the company will not insure liability to
or pay in any event to exceed two-thirds of the amount of the interest of the fixed propor-
assured in such property and such interest is declared to be the diflerenee tion of
between the actual cash value of such property and the aggregate amount of such assured's
liens and incumbrances. interest after
Sopkims V. Hawkye Insurance (1881), 57 Iowa, 203. deducting in-
cumbrances.
16. Conditions relating to Notice and Proof of Loss
See Chapter III., Section VI., p. 204 ; and Chapter V., Sec-
tion I., p. 273.

Proof of loss must be made by the assured although the loss be payable to a Statutory
third party. conditions in
Statutory Condition, Revised Statutes of Ontario, 1897, ch. 203, sec. 168 (12) Ontario.
Anderson v. Saugeen Mutual (1889), 18 Ont. R. 355.
Any person entitled to make a claim under this policy is to observe the
following directions :
la) He is forthwith after loss to give notice in writing to the company ;
(b) He is to deliver, as soon after as practicable, as particular an account of

the loss as the nature of the case permits
(c) He is also to furnish therewith a statutory declaration declaring
That the said account is just and true

When and how the fire originated so far as the declarant knows or
believes
That the fire was not caused through his wilful act or neglect, procure-
ment, means, or contrivance
The amount of other insurances ;
All liens and incumbrances on the subject of insurance ;
The place where the property insured if moveable was deposited at the
time of the fire.
(d) Heis in support of his claims if required and if practicable to produce

books of account . warehouse receipts and stock lists, and furnish
. .
invoices and other vouchers to furnish copies of the written portion of

;
all policies; to separate as far as reasonably may be the damaged from

the undamaged goods, and to exhibit for examination all that remains
of the property which was covered by the policy.
(e) He is to produce if required a certificate under the hand of a magistrate,
notary public, commissioner for taking affidavits, or municipal clerk,
residing in the vicinity in which the fire happened and not concerned
in the loss or related to the assured or sufferers, stating that he has
examined the circumstances attending the fire, loss or damage alleged,
that he is acquainted with the character and circumstances of the
assured or claimant, and that he verily believes that the assured has
by misfortune and without fraud or evil practice sustained loss and
damage on the subject assured to the amount certified.
Statutory Condition, Revised Statutes of Ontario, 1897, oh. 203, sec. 168 (13).
(e) Logan v. Commercial Union (1886), 13 Can. S. C. 270.
Immediate On the happening of any loss or damage the assured shall forthwith give notice
notice, par- thereof in writing to the company and shall within thirty days or such further
ticulars time as the company may allow deliver to the company a claim in writing con-
within speci- taining as particular an account as may be reasonably practicable of the several
fied period, items of property and articles destroyed or damaged, and of the amount of the
and further loss or damage thereto respectively, and shall give to the company such further
information particulars, proof and information, as may be reasonably required and if such :
and proof as a claim be not so delivered and such requirements be not complied with the
required. company shall not be liable for any loss or damage and if the claim be in any
:
respect fraudulent or any fraudulent devices are used by the assured or any one
acting on his behalf to obtain any benefit under this policy all benefit thereunder
shall be forfeited.
Gaio V. British Law Fire, [1908] 1 Ir. R. 245; Weir v. Northern Counties
(1879), 4 L. R. Ir. 689,
All persons insured by the company sustaining any loss or damage by fire are
immediately to give notice to the company or its agents and within five days after
such loss or damage has occurred are to deliver as particular an account of their
loss or damage as the nature of the case wiU. admit of and make proof of the same
by their declaration or affirmation and by their books of accounts or such other
proper evidence as the directors of this company or its agents may reasonably
require.
Caldwelly. Stradacona Fire (1883), 11 Can. S. G. 212; Nixon v. The Queen
(1893), 23 Can. S. 0. 26.
All persons insured by the company and sustaining loss or damage by fire are
forthwith to give notice thereof to the company, and apply for its blank claim
forms which must be executed and filed within fifteen days from occurrence
of fire.
Hammond v. Citizens' Insurance (1886), 26 N. Br, 371.
Notice of loss. Shall give immediate notice of loss.
White Y.Western (1876), 22 Low. Can. J. 215 Northern Assurance v. Standard
;
Leather Co. (1908), 165 Fed. Rep. 602 PeUt v. German Insiirance (1898),
;
98 Fed. Rep. 800 Ermentrout v. Girard Fire (1895), 63 Minn. 305.

;
Shall within sixty days next after the loss give notice thereof in writing to
the directors.
Canvphell v. Monmouth Mzitual (1871), 59 Me. 430.
Particulars. Shall furnish to the insurers a full and detailed statement of the loss and
the amount claimed.
Fuller V. District Fire and Marine (1888), 36 Fed. Rep. 469.
If a fire occurs the assured shall within sixty days thereafter render a . . .
statement, signed and sworn to by him, setting forth his knowledge and belief as
to the time and origin of the fire, the interest of the insured and of all others
in the property, the cash value of each item thereof, and the amount of loss
thereon.
Aetna Insurance v. People's Bank (1894), 62 Fed. Rep. 222.
Certificate of A particular statement of the loss shall be rendered to the company at their
magistrate. soon after the fire as possible, signed and sworn to by the assured, stating
office as
such knowledge or information as the assured has been able to obtain as to the
FIRE POLICIES 905
time, origin, and circumstances of the fire, and shall, if required, furnish a certifi-
cate . under the hand and seal of a magistrate nearest to the place of fire.
. . . . .
WorsUy v. Wood (1796), 6 T. R. 710; Boutledge v. Burrell (1789), 1 Hen. Bl.

255 Oldham v. Bewicke (1786), 2 Hen, Bl. 577 n. Williams v. Queen Insur-
; ;
ance (1889), 39 Fed. Rep. 167 Cohtmbian Insurance v. Lawrence (1886),

;
10 Pet. 507 M'Nalhj v. The Phamix (1893), 137 N. Y. 389.

;
shall give written notice of loss accompanied by an affidavit

The assured . . .
and shall as soon as possible thereafter deliver in as particular an account of their

loss or damage, signed with their own hands, as the nature of the case will admit
of . and shall procure a certificate under the hand of a magistrate
. . . . .
and until such affidavit and certificate are produced the claim shall nob be
payable.
Columbian Insurance v. Lawrence (1829), 2 Pet. 25 Kelly ; v. Sun Fire (1891),
141 Pa. 10; Bussell v. Fidelity Fire (1891), 84 Iowa, 93.
In case of fire the assured shall give notice forthwith and the proofs declara- Proofs,
tions evidences and examinations called for by or under the policy must be declarations,
furnished to the company within 30 days after said loss and upon receipt of evidences,
notice and proofs of claim as aforesaid the amount shall be payable in three
. . . and examina-
months after the receipt by the company of such proofs. tions.
Mutual Fire v. Frey (1880), 5 Can. S. C. 82.
If a fire occur the insured shall give immediate notice of any loss thereby in Immediate
writing to this company, protect the property from further damage, forthwith notice, pro-
separate the damaged and undamaged goods and personal property, put it in the tect property,
best possible order, make a complete inventory of the same stating the quality full particu-
and and the amount claimed thereon and within 60 days
cost of each article ; lars, examina-
after the fire, unless such time is extended in writing by this company, shall tion under
render a statement to this company, signed and sworn to by the said insured, oath, produc-
stating the knowledge and belief of the insured as to the time and origin of the tion of books
fire the interest of the insured and all others in the property
; the cash value of ;
and vouchers,
each item thereof and the amount of loss thereon and the insured as often . . ,
as required ishall exhibit to any person designated by this company all that
remains of any property herein described and submit to examinations under oath
by any person named by this company and subscribe the same and as often as :
required shall produce for examination all books of account bills invoices and
other vouchers, or certified copies thereof if originals be lost, at such reasonable
place as may be designated by this company or its representative and shall permit
extracts and copies thereof to be made.
Hyde v. Lefaivre (1902), 32 Oan. S. C. 474 Astrich v. German American (1904),
;
131 Fed. Rep. 13.

The assured under this policy hereby covenants and agrees to keep a set of Condition
books showing a complete record of business transacted including all purchases that assured
and sales both for cash and credit together with the last inventory of said busi- shall keep
ness and further covenants and agrees to keep such books and inventory securely
; proper books
locked in a fireproof safe at night and at all times when the store mentioned in and deposit
the within policy is not actually open for business, or in some secure place not them in fire-
exposed to a fire which would destroy the house where such business is carried proof safe at
on and in case of loss the assured agrees and covenants to produce such books and
; night,
inventory and in the event of the failure to produce the same this policy shall be
deemed null and void and no suit or action at law shall be maintained thereon for
any loss.
Liverpool, London and Globe v. Kearnay (1900), 180 U. S. 132 Lozano v. Pala- ;
Insurance (1896), 78 Fed. Rep. 278 Western Assurance v. Redding (1895),

tine ;
68 Fed. Rep. 708 Jones v. Southern Insurance (1889), 38 Fed. Rep. 19.
;
Assured if required shall produce his books of account and other proper Assured to
vouchers and exhibit the same for examination at the office of the company, and produce
permit extracts and copies thereof to be made and submit to an examination by books and
the agent representative or attorney of the company and answer all questions vouchers and
touching his knowledge of anything relating to such loss or damage or to his submit to
claim thereupon and subscribe affirm or declare to such examination as may be examination,
required, the same being reduced to writing.
Hammond v. Citizens' Insurance (1886), 26 N. Br. 371 Insurance Co. v. ;
Weides (1871), 14 WaU. 375; Claflin v. Commonwealth Insurance (1883),

110 U. S. 81.
The assured shall if required submit to an examination or examinations Assured to
under oath by any person appointed by the company and subscribe thereto when submit to
the same is reduced to writing ... all fraud or attempt at fraud by false swearing examination ;
; ;
false swearing or otherwise shall forfeit all claims on this company and be a perpetual bar to any
a bar to recovery under this policy.
recovery. Claflin V. Commonwealth Insuramce (1883), 110 U. S. 81.
Proof of loss The above proofs of loss'may be made by the agent of the assured in case of the
may be by absence or inability of the assured himself to make the same, such absence or
agent of inability being satisfactorily accounted for.
assured. Statutory Condition, Eevised Statutes of Ontario, 1897, c. 203, s. 168 (14).
Fraud or Any fraud or false statement in a statutory declaration in relation to any of
false state- the above particulars shall vitiate the claim.
ment to Statutory Condition, Eevised Statutes of Ontario, 1897, c. 203, s. 168 (15)
vitiate claim. Eeddick v. Saugeen Mutual (1888), 15 Ont. A. R. 863.
And if there appears any fraud overcharge or imposition or any false swearing
the claimant shall forfeit all claim to restitution or payment by virtue of his
policy.
Newcastle Fire v.MacMorran (1815), 3 Dow. 255, 262 Chapman v. Pole (1870),
;
22 L. T. 306 ;Britton v. Boyal Insurance (1866), 4 F. & F. 905 Levy v. ;
Baillie (1881), 7 Bing. 349; Goulstone v. Royal Insurance (1858), 1 F. & P.

276; Park v. Phcenix Insurance (1859), 19 U. C. Q. B. 110; Insurance Co.
V. Weides (1871), 14 Wall. 375; Hilton v. Phcenix Insurance (1893), 72 Me.
272; Daul v. Fireman's Insurance (1883), 85 La. Ann. 98; Balestracci v.
Firemen's Inswance (1882), 34 La. Ann. 844 Hoffmcm v. Western Marine
;
(1846), 1 La. Ann. 216; Marchesseau y. The Merchants' (1842), 1 Rob. (La.)
438; Claflin Y. Commonwealth Insurance (1883), 110 U. S. 81; Schuster v.
Dutchess County Insurance (1886), 102 N. Y. 260.
Loss payable Payment of losses shall be made 90 days after complete proofs and adjustments
after com- thereof at the office of the company.
plete proof. Snowden v.Eittanning Insurance (1888), 122 Pa. 502.
Loss payable 60 days after notice thereof and proofs of loss have been received
by the company.
Clover V. Greenwich Insurance (1886), 101 N. Y. 277; Morrow v. Lancashire
Insurance (1899), 26 Ont. App. 173 Hamilton v. Phoenix Insurance (1894),
;
61 Fed. Eep. 879 Hastings v. WestchesUr Fire (1878), 73 N. Y. 141.

;
The loss shall not be payable until 60 days after the completion of the proofs
of loss unless otherwise provided for by the contract of insurance.
Statutory Condition, Eevised Statutes of Ontario, 1897, c, 203, s. 168 (17)
City of London Fire v. Smith (1887), 15 Can. S. C. 69.
17. Conditions relating to Arbitration

Different The arbitration clause in a policy may take one or other of
forms of
these three forms (1) a reference of all disputes to arbitration,
:
arbitration
clause. the award of the arbitrators to be a condition precedent to any
action on the policy ; (2) a reference of any difference as to the
amount of loss to arbitration and no action to be brought except
for such amount as may be awarded by the arbitrators ; (3) a
reference either of all matters in dispute or of the amount of
loss to arbitration but without any stipulation that such
reference shall be a condition precedent to legal proceedings.
How far There is a rule of law that parties cannot by their private
jurisdiction
contract oust the jurisdiction of the Court (z) but it has been ;
of Court may
be ousted. held that parties may nevertheless agree that no cause of action
shall arise upon the contract until any matter in dispute shall
have been determined by arbitration and that then action will
(«) Scott V. Avery (1856), 5 H. L. C. 811. But an arbitration clause

contained in a private Act of Parliament may operate to oust the jurisdiction
of the Court so oomipletely that even the assent of the parties could not give
power to the Court to hear and determine the matters in dispute. Joseph
Crosfield d Sons v. Manchester Ship Carnal, [1905] A. C. 421.
. .
FIRE POLICIES 907
only lie in accordance with the arbitrators' award (a). Thus it is

competent to agree that any question between assured and
insurers shall be referred to arbitration and that the reference
shall be a condition precedent to action, and even where the
question at issue is whether one of the parties has been guilty of
fraud the determination of the matter by arbitration is still a
condition precedent to the accrual of any right of action (h)
It is not always easy to determine whether the arbitration Scope of
submission to
clause is intended to refer all questions to arbitration or merely arbitration.
questions as to the amount of loss or damage. Some policies
clearly refer all questions in dispute (b), others are ambiguous (c),
and others clearly confine the scope of the reference to the issue
of the amount of loss (d).
There may
also be difficulty in determining whether arbitra- Question
whether arbi-
tion is made
a condition precedent to any action on the policy or
tration a
is
is merely a collateral agreement which does not directly affect condition
the promise to pay. If it is the former then any action brought precedent to
action.
before the matter has been referred may be dismissed, but if
there is merely a collateral agreement to refer the utmost the
Court will do to stay and suspend the proceedings pending
is
the reference toand decision of the arbitrators. Where there is
an express promise to pay the amount of loss, and then a bare
agreement that the amount of loss shall be ascertained by
arbitration, such arbitration is not a condition precedent to the
maintenance of an action on the promise to pay the loss (c) but ;
if the insurers only agree to pay such amount as may be

awarded by the arbitration, arbitration does become a condition
precedent to action (/) Thus if the loss is expressed to be
.
payable after adjustment and the policy provides arbitration as

the proper method of adjustment in case of dispute, then no
action can be brought until the loss is adjusted by arbitration (g).
Where ttie policy of a mutual insurance association contained no
express promise to pay the loss and there was provision for
the settlement of disputed claims by a reference to a general
meeting of the association, it was held that the only promise to
pay which could be implied was a promise to pay such sum as
a general meeting of the association found to be due (h)
As a rule where the amount of the loss or damage is the only Where arbi-
tration clause
is confined
(a)Scott V. Avery (1856), 5 H. L. C. 811. to differences
{h)Spurrier v. La Cloche, [1902] A. C. 446 Gaw v. British Law Fire,
;
touching the
[1908] 1 Ir. E. 245 ; Scott v. Mercantile Accident (1892), 66 L. T. 811. amount of
(c) Scott V. Avery (1855), 5 H. L. C. 811 Hercules Insurance v. Hunter
; loss or
(1835), 14 S. 147. damage.
{d) Caledonian Insurances. Oilmour, [1893] A. C.85 ; Viney v. Bignold
(1887), 20 Q. B. D. 172.
(e) Collins v. LocTce (1879), 4 A. C. 674: Gorman v. Hand-in-Hand
(1877), Ir. E. 11 C. L. 224 ;Hamilton v. Home Insurance (1890), 187 U. S.
870.
(/) Bramnstein v. Accidental Death (1861), 1 B. & S. 782.
ig) Viney v. Bignold (1887), 20 Q. B. D. 172 Elliott v. Boyal Exchange
;
(1867), L. E. 2 Ex. 237.

(h) Edwards v. Aberayron Mutual (1875), 1 Q. B. D. 563.
. ;
matter which the parties agree to refer to arbitration, then if the

insurers entirely repudiate Habihty on the poKcy there is no
obhgation on the assured to arbitrate as to the amount before
commencing an action on the pohcy (i) Sometimes the policy
.
provides that the settlement by arbitration of any difference as to

amount shall be a condition precedent to the commencement
of any action on the policy whether or not the right to recover
on the policy be disputed, and where this is so the company may
apparently by disputing the amount of the loss claimed as well
as the liability on the policy compel the assured to incur the costs
of what will be a fruitless arbitration if the company are justified
in their denial of all liability (k).
Waiver of The company may in certain circumstances be held to have
arbitration by
waived their right to arbitration or to be estopped by their
company.
conduct from insisting in such right as where they have not
demanded arbitration within a reasonable time or have obstructed
or delayed the arbitration proceedings (l).
Where com- An agreement to refer to arbitration any difference which
pany elect to should arise in the adjustment of a loss has been held not
reinstate.
to apply to a case where the company had elected to reinstate
and the only dispute was as to the sufficiency of the rein-
statement (m)
Company Where arbitration is made a condition precedent to the
may waive commencement of any action and the assured declines arbitration
condition
precedent and
and commences an action the company may either set up the
apply for stay. clause as an absolute defence to the action or waive the con-
dition precedent and, treating the clause as merely a collateral
agreement to refer, apply for a stay of proceedings pending a
reference, and this latter is the safer course if there is any
possible doubt as to the construction of the arbitration clause, or
any reason to suppose that the company may have already
waived their right to insist on arbitration as a condition precedent
to action (n).
Arbitration An
arbitration clause is binding on the assured and is a
clause bind- valid submission to arbitration on his part as well as on the part
ing although
of the company notwithstanding that the policy is executed by
not signed by
assured. the company only and contains no signature by or on behalf of
the assured (o).
Submission When there is a condition in the policy to the affect that the
to foreign parties agree to submit to the jurisdiction of a foreign Court that
jurisdiction.
(i) Kahn v. Travellers' Insurance (1893), 4 Wy. 419.

(k) Viney v. Bignold (1887), 20 Q. B. D. 172.
(J,)
Lesure v. Lumber Co. (1897), 101 Iowa, 514 M'Intyre v. National
;
Insurance (1880), 5 Ont. A. R. 580 Kahnweiler v. Phoenix Assurance (1895),

;
67 Fed. Rep. 480; Connecticut Fire v. Hamilton (1894), 59 Fed. Rep. 258
Hamilton y. Phcenix Assurance (1894), 61 Fed. Rep. 379; British American
Asswrance v. Da/rragh (1904), 128 Fed. Rep. 890.
(to) Wynlcoop v. Niaga/ra Fire (1883), 91 N. Y. 478.
(m) Hodson v. Railway Passengers, [1904] 2 K. B. 833.
(o) Baher v. Yorkshire Fire and Life, [1892] 1 Q. B. 144 ; Nolan v.
Ocean Accident (1903), 5 Ont. L. R. 544.
FIRE POLICIES 909
is a reference to the arbitration of such foreign Court and any

action commenced in England may be stayed (p).
In Scotland a simple agreement to refer future differences to Arbitration
the arbitration of persons unnamed is not binding on the parties clause in
Scotland.
and the Court will not stay an action on the policy merely on
the ground that it contains such a clause (q). But it is competent
in Scotland, as well as in England, for the parties to agree that
no cause of action on the policy shall accrue until all matters in
dispute have been referred to the arbitration of persons named
or unnamed, and therefore where such a clause is contained in a
Scottish policy the company may plead it as an absolute defence
to an action which is commenced without regard to their
demand for arbitration (r).
Where an insurance is effected in Scotland upon property in English
policy issued
Scotland belonging to a domiciled Scotsman it is competent for
in Scotland.
the parties to agree that they shall be bound not by the Scottish
but by the English law relating to arbitration. Thus where an
English company grants an insurance in Scotland upon an
EngUsh form of policy with an arbitration clause referring
differences to unnamed arbitrators and an action is brought
upon such pohcy in a Scottish Court the Court will stay or sist
the proceedings in accordance with English law (s).
The jurisdiction of the Court to stay proceedings where there Stay of pro-
ceedings
is an agreement to arbitrate is conferred by section 4 of the
under Arbi-
Arbitration Act, 1889 (i), which provides that if any party to a tration Act,
submission commences any legal proceedings against any other 1889, s. i.
party to the submission any party to such legal proceedings may

at any time after appearance and before delivering any pleadings
or taking any other step in the proceedings apply to the Court
to stay the proceedings, and that the Court, if satisfied that there
is no sufficient reason why the matter should not be referred in
accordance with the submission and that the applicant was at

the time the proceedings were commenced and still remains
ready and willing to do all things necessary to the proper con-
duct of the arbitration, may make an order staying the pro-
ceedings. The Court has a judicial discretion and may grant or
withhold a stay accordingly {ii). The onus of proof lies on the
party who desires to keep out of arbitration (x). The Court will
not as a rule grant a stay where serious and difficult questions of
law are involved (;y). But even where difficult questions of law
may have to be determined the Court may nevertheless grant a
stay if there are also substantial issues of fact which can be
ip) Austrian Lloyd v. Qresham Life, [1903] 1 K. B. 249 Kirshner

; <&
Co. V. Truban, [1909J 1 Oh. 413.
(';) Tanered, Arrol d Co. v. Steel Co. of Scotland (1890), 15 A. 0. 125.
(r) Caledonian Insurance v. Oilmour, [1893] A. 0. 85.
{«) Hamlyn v. Talisker Distillery, [1894] A. 0. 202.
(t) 52& 53 Vict. c. 49.
(tt) Walmsley v. White (1892), 40 W. E. 675.
(x) Skinner v. Uzielli & Go. (1908), 24 T. L. E. 266.
[y] Workman v. Belfast Harbour Commissioners, [1899] 2 Ir. E. 234.
satisfactorily decided by arbitration and the decision of which

may dispose of the whole case (z). The Court will not as a rule
grant a stay where charges of fraud or dishonesty have been
made (a). Application for a stay must be made after appearance
and before any step has been taken in the proceedings.
Attending before the master on a summons for directions is
taking a step in the proceedings which will disentitle a plaintiff
frora afterwards applying for a stay (&). A County Court judge
has jurisdiction to stay proceedings in an action brought in the
County Court (c).
Reference to Where it was agreed that all differences should be referred and
County Court decided
by the judge of the County Court for the district within
judge.
which the claimant might reside and that the judge or his
deputy should alone have jurisdiction to hear and determine
any dispute and an action on the policy was commenced in the
County Court, it was held that the clause did not disentitle the
judge from trying the case with a jury. The proper course if
the defendants desired to insist on the reference to the judge
alone was to apply at the proper stage to stay the pro-
ceedings (d).
How far In a Scottish case where there was a valid submission to
finding of
arbitration as to the amount of loss only it was held that the
arbitrators
as to value finding of the arbitrators as to the value of the property before
of property is and after the fire was conclusive not only as to the amount
conclusive.
recoverable but also on the question whether there had been a
fraudulent over-valuation. It was held however that on the
defence that the policy was effected with a fraudulent intention
of destroying the property evidence as to the actual value of such
property was admissible notwithstanding the finding of the
arbitrators as to the value (e).
Reference of If any difference shall at any time arise betvpeen the company and the insured
all differences or any claimant under this policy as to the liability or the amount or extent of
condition the liability of the company in respect of any claim for loss or damage under this
precedent to policy every such difference as and when the same arises shall be referred to the
action. arbitration of. . And it is hereby expressly declared to be a condition of the
. .
making of this policy and part of the contract that the party insured shall
. . .
not be entitled to commence or maintain any action at law or suit in equity on

this policy till the amount due to the insured shall have been awarded as herein-
before provided and then only for the sum so awarded and the obtaining of such
award shall be a condition precedent to the commencement of any action or suit
upon the policy.
Spurrier v. La Cloche, [1902] A. C. 446 Gaw v. British Law Fire, [1908]
;
1 Jr. R. 246; Scott v. Mercantile Accident (1892), 66 L. T. 811; Hodson v.

Railway Passengers, [1904] 2 K. B. 833 Nolan v. Ocean Accident (1903),
;
6 Ont. L. R. 544.
(z) aUrmer v. UzielU & Go. (1908), 24T. L. E. 266.

(a) Vawdry v. Svmpson, [1906] -1 Ch. 166.
(6) Ochs V. Ochs Bros., [1909] 2 Oh. 121, and cases there cited.
(c) Morriston Tinplate Co. v. BrodTcer, Bore A Co., [1908] 1 K. B. 403.
(d) Cowell V. YorTcshire Provident Life (1901), 17 T. L. R. 452.
(e) Hercules Inswomce v. Hunter (1835), 14 S. 147.
;
J?IRE POLICIES 911
The sum to be paid by this association to any suffering member for any loss Reference
or damage shall in the first instance be ascertained and settled by the committee condition
.and if a difference shall arise between the committee and any suffering precedent,
.
member relative to the settling any loss or damage ... or any other matter
relating to the insurance, in such case the member dissatisfied shall select one
arbitrator on his or her behalf and the committee shall select another. And if
the committee refuse for 14 days to make such selection the suffering member
sbaU select two and in either case the two selected shall forthwith select a third
which three arbitrators or any two of them shall decide upon the claims and
matters in dispute provided always (and it is hereby expressly declared to
. . .
be a part of the contract of insurance between the members of this association)

that no member who refuses to accept the amount of any loss as settled by the
comtaittee hereinbefore specified shall be entitled to maintain any action at law
or suit in equity on his policy until the matters in dispute shall have been
referred to and decided by arbitrators appointed as hereinbefore specified and ;
then only for such sum as the said arbitrators shall award. And the obtaining
the decision of such arbitrators on the matters and claims in dispute is hereby
declared to be a condition precedent to the right of any member to maintain any
such action or suit.
Scott v. Aoenj (1856), 5 H. L. 0. 811.
All persons assured upon any loss or damage by fire forthwith to

. . . are Reference
give notice thereof . damage after the same shall be adjusted
. . which loss or not made
shall immediately be paid in money by the said corporation without any deduc- condition
tion. ... In case any difference shall arise touching any loss or damage such precedent,
difference shall be submitted to the judgment and determination of arbitrators
indifferently chosen whose award in writing shall be conclusive and binding on
all parties.
Elliott V. Eoyal Exchange (1867), L. R. 6 Ex. 237 ; London and Lancashire
Insurance v. Honey (1876), 2 Viet. L. R. 7.
In case any difference shall arise upon the claims made on the ofS.oe such
be submitted to arbitrators mutually chosen whose award or that
difference shall
of their umpire shall be final the arbitrators or valuators shall fix the . . .
original value and the value after the fire and this company shall pay and make
good the difference between these two sums.
Sercules Insurance v. Hunter (1835), 14 S. 147.
When the company does not claim to avoid its liability under the policy on Reference of
the ground of fraud or nonfulfllmeut of any of the conditions hereinbefore set difference as
forth but a difference at any time arises between the company and the insured, to amount
or any claimant under the policy, as to the amount payable in respect of any condition
alleged loss or damage by fire, every such difference when and as the same arise precedent
shall be referred to the arbitration of one person to be chosen by both parties or where com-
of two iudependent persons. And it is hereby expressly declared to be a condition
. . .
pany does
of the making of this policy and part of the contract between the company and the not allege
insured that when the company does not claim to avoid its liability under the fraud or
poUoy on the ground of fraud or non-fulfilment as aforesaid the party insured or breach of
claimant shall not be entitled to commence or maintain any action at law or suit warranty,
in equity on this policy till the amount due to the insured shall have been
awarded as hereinbefore provided and then only for the sum so awarded and the
obtaining of such award shall be a condition precedent to the commencement of
any action or suit upon the policy.
CaledonioM Insurance v. Oilmour, [1893] A. 0. 85.
If any difference shall arise in the adjustment of a loss the amount (if any) to Reference of
be paid by the society shall, whether the right to recover on the policy be dis- difference as
puted or not and independently of aU other questions, be submitted to the arbi- to amount
tration of . and the award of the arbitrators or umpire (as the case may be)
. . condition
shallbe conclusive evidence of the amount of the loss, and the party insured precedent
shallnot be entitled to commence or maintain any action at law or suit in equity even although
upon his policy until the amount of the loss shall have been referred and deter- company
mined as hereinbefore provided, and then only for the amount so awarded. repudiates all
7iney v. Bignold (1887), 20 Q. B. D. 172 Guerim, v. MoMchester Fire (1898), ; liability.
29 Can. S. C. 189 M'lntyre v. National Insurance (1880), 5 Ont. A. R. 580
;
Wynkop v. Niagara Fire (1883), 91 N. Y. 478.

In case any difference or dispute shall arise between the assured and this Reference of
company touching the amount of any loss or damage sustained by him such difference as
difference shall be submitted to the judgment of arbitrators whose decision to amount . . .
condition thereupon shall be final and conclusive and no action suit or proceeding at law
precedent. or in equity shall be maintained on this policy unless the amount of loss or
damage in case of difference or dispute shall be first thus ascertained.
Hamilton v. Idverpool, London and Olobe (1889), 136 U. S. 242 ; Williamson
V. Liverpool, London and Olobe (1904), 122 Fed. Eep. 59; Kahn v. Traders'
Insurance (1893), 4 Wy. 419.
No claim The company shall be liable to make the following payment or compensation
except for ... in case such accident should not cause the immediate death of the assured
such amount but should cause any bodily injury to the assured of a serious natui'e such sum
as arbitrators by way of compensation as should appear just and reasonable and in proportion
may award. to the injury received, such sum to be ascertained in case of difference or dispute
in manner provided by the stipulations and conditions indorsed hereon ... in
case of difference of opinion as to the amount of compensation payable in any
case the question shall be referred to the arbitration of the secretary for the time
being of the Master of the Rolls and all expenses and costs shall be subject to the
decision of such arbitrator and the award made on such arbitration shall be taken
as a final settlement of the question and may be made a rule of Court.
Braunstein v. Accidental Death (1861), 1 B. & S. 782.
If any member of the society shall be dissatisfied with the decision of the
directors as to the settlement of any loss or damage sustained by such member
or as to any claim or other matter settled adjusted or decided by the directors,
and such members so dissatisfied shall procure ten other members of the society
not being directors to join with him in a written requisition to the directors to
reconsider and revise their decision, the directors shall thereupon call a board of
directors not less than ten and reconsider and revise such decision ; and in case
such member shall be dissatisfied with the further decision of such board of
directors such member so dissatisfied together with twenty other members of the
society may by writing under their hands require the secretary to summon a
special general meeting of the society to be held at any time not exceeding fourteen
days from the receipt of such writing by the secretary and such special general
meeting shall have full power to confirm or vary the decision of the directors and
whatever shall be decided by the special general meeting shall be final and
binding as well upon the society as upon all the parties interested in the decision.
Edwards v. Aberayron Mutual (1875), 1 Q. B. D. 663.
Assured's In the event of disagreement as to the amount of loss the same shall ... be
compliance ascertained by two competent and disinterested appraisers the assured and the
with arbitra- company each selecting one and the two so chosen shall first select a com-
. . .
tion clause petent and disinterested umpire and the award in writing of any two shall
. . .
condition determine the amount of such loss. ... No suit or action in this policy for the
precedent to recovery of any claim shall be sustained until after full compliance by the
. . .
action. assured of all the foregoing requirements.

Lesure v. Limiber Go. (1897), 101 Iowa, 514 British American Insurance v. ;
Darragh (1904), 128 Fed. Eep. 890 Western Assurance v. Decker (1899), 98
;
Fed. Bep. 381; Kahnweiler y Phcenix Co. (1895), 67 Fed. Eep. 483 Con-
. ;
necticut Fire v. Hamilton (1894), 59 Fed. Rep. 258; Hamilton v. Phljenix

Collateral If any difference as to the amount of loss payable shall arise it shall be
agreement to referred to arbitration ... or to an umpire whose decision shall be final and
refer question binding on all parties . and this condition shall be deemed and taken to be
. .
of amount. an agreement to refer as aforesaid.

Gorman v. Hand-in-Hdnd (1877), Ir. E. 11 C. L. 224: Mutual Fire v. Alvord
(1894), 61 Fed. Eep. 752; Gere v. Council Bluffs (1885), 67 Iowa, 272;
Hamilton v. Hotne Insurance (1890), 137 U. S. 370.
If any difierence arises as to the value of the property insured, of the property
saved or of amount of the loss, such value and amount and the proportion
thereof if any to be paid by the company shall whether thS right to recover on
the policy is disputed or not and independently of all other questions be sub-
mitted to the arbitration of some person to be chosen by both parties or if they
cannot agree on one person then to two persons one to be chosen by the party
assured and the other by the company and a third to be appointed by the persons
so chosen or on their failing to agree then by the County Judge of the county
wherein the loss has happened and such reference shall be subject to the pro-
;
visions of the Arbitration Act and the award shall if the company is in other
;
respects liable be conclusive as to the amount of the loss and proportion to be

paid by the company where the full amount of the claim is awarded the costs
;
;;
FIRE POLICIES 913
shall follow the event and in other oases all questions of costs shall bo in the
discretion of the arbitrators.
Statutory Condition, Eevised Statutes, Ontario, 1897, c. 203, s. 168 (16) ;
M'Intyre v. National Insurance (1880), 5 Ont. A. K. 580; Haslem v. Equity

Fire (1904), 8 Ont. L. R. 246; Cole v. London Mutual Fire (1907), 15 Ont.
L. E. 619 Cole v. Canadian Fire (1907), 15 Ont. L. R. 336.
;
For disputes which may arise out of the contract of insurance all the
all Submission
parties interested expressly agree to submit to the jurisdiction of the Courts of to foreign
Budapest having jurisdiction in such matters. jurisdiction.
Aiistrian Lloyd Steamship Co. v. Gresham Life, [1903] 1 K. B. 249.
18. Conditions relating to Valuation of Property and

Adjustment of Loss
See Chapter VII., Section II., pp. 671-676.
The said damage to be estimated according to the true and actual cash
loss or Actual cash
value of the said property at the time the same shall happen. value.
Liverpool, London, and Olobe v. M'Fadden (1909), 170 Fed. Rep. 179;
Commonwealth Insurance v. Bennett (1860), 37 Pa. 205 ; Foley v. Manufac-
turers' Fire (1897), 152 N. Y. 131.
The cash value of property destroyed or damaged by fire shall in no case
exceed what would be the cost to the assured of replacing it.
Fisher v. Crescent Insurance (1887), 33 Fed. Rep. 544 Clover v. Oreenioich ;
Insurance (1886), 101 N. Y. 277.

Any member who shall sustain loss by fire shall give immediate notice to the Loss to be
president of the company who shall appoint a committee of three of the managers adjusted by
that shall examine and inquire into the same and the said managers with all
;
committee
convenient expedition shall inquire into the same and after ascertaining the of three
sum which said party shall be lawfully entitled to shall make provision and managers.
payment as specified.
Insurance Co. v. Bupp (1858), 29 Pa. 526.
19. Conditions relating to Reinstatement

See Chapter VII., Section III., pp. 687-694.
It shallbe optional with the company to repair rebuild or replace the Option to
property lost or damaged with other of like kind or quality within a reasonable reinstate by
time, giving notice of their Intention so to do within sixty days after the com- giving notice
pletion of the proofs herein required. within sixty
Langan v. Aeima Insurance (1899), 96 Fed. Rep. 705 (1900), 99 Fed. Rep. 374 days after
; ;
Wynkoop v. Niagara Fire (1883), 91 N. Y. 478 Beals v. Home Insurance proof of loss.
;
(1867), 36 N. Y. 522; Kelly v. Sun Fire (1891), 141 Pa. 10: M'Allaster v.
Niagara Fire (1898), 156 N. Y. 80 Maryland Home Insurance v. Kimmell
;
(1899), 89 Md. 443; Dant v. Fireman's Insurance (1883), 35 La. Ann. 99;
Hedger v. Union (1883), 17 Fed.*Rep. 498 Zaleska v. Iowa State Insurance
;
(1899), 108 Iowa, 392 Fire Assurance v. Rosenthal (1885), 108 Pa. 474
;
Ryder v. Commonwealth Fire (1868), 52 Barb. 447 Henderson v. Insurance ;
Co. (1896), 48 La. 1031 Morrell v. Irving Fire Co. (1865), 33 N. Y. 429
;
Parker v. Eagle Fire (1857), 75 Mass. 152 Hartford Fire v. Peebles Hotel
;
(1897), 82 Fed. Kep. 546 Heilmann v. Westchester Fire (1878), 75 N. Y. 7

;
Lancashire Insurance v. Barnard (1901), 111 Fed. Rep. 702.

The company instead of making payment may repair rebuild or replace,
within a reasonable time, the property damaged or lost, giving notice of their
intention within fifteen days after receipt of the proofs herein required.
Statutory Condition, Revised Statutes of Ontario, 1897, c. 203, s. 168 (18).
Unless within sixty days after notice of such loss or damage the said company Option to
shall have replaced the said property lost or damaged with other of the like kind reinstate by
or quality. replacing the
Tohnan v. Manufacturers' (1848), 55 Mass. 73. property
•
I.L, 58
within sixty Or the said corporation shall, at the end and expiration of sixty days after
days after notice of the loss shall be given, provide and supply the assured with the like
notice of loss. quantity of goods of the same sort and kind and of equal value and goodness with
Option to re-
those burned or damnified by fire or expend in rebuilding or repairing any build-
by
instate ing damaged or destroyed by fire the sum assured thereon under the direction of
oommenoing able and experienced workmen if the loss or damage shall in their opinion amount
operations thereto.
sixty days Bisset v. Boyal Exchange Assurance (1821), 1 S. 174.
after notice (Promise to pay within sixty days after claim) unless the directors shall at the
of loss. charge of the society on reasonable notice given of the loss by fire of the said
building or buildings begin to rebuild within the said sixty days, and procure the
said building or buildings to be built and put into as good condition as the same
was or were before the fire happened and in case the said building or buildings
;
be not demolished but only damaged by fire to repair or cause to be repaired the
damage so happening and the same to be put in as good condition as before the
fire happened.
Alchorne v. Favill (1825), 4 L. J. (0. S.) Ch. 47.
Bight to The directors may within a reasonable time rebuild repair or replace the
elect within property lost or damaged.
a reasonable Haskins v. Hamilton Mutttal (1855), 71 Mass. 432.
time. And in every case of loss the company reserves the right of re-instatement in
preference to the payment of claims if it should judge the former course to be
more expedient.
Sutherland v. Sun Fvre (1852), 14 D. 775; Brown v. Boyal Insurance (1859),
1 El. & El. 853.
Eight to join The company may if it think fit re-instate or replace property damaged or
with other destroyed instead of paying the amount of the loss or damage and may join with
companies in any other company or insurers in doing so in cases where the property is also
reinstate- insured elsewhere.
ment. Scottish Amicable v. Northern Assurance (1883), 11 E. 287 Anderson v. Com-
;
mercial Union (1885), 55 L. J. Q. B. 146.
Company's In case of any depreciation the assured shall pay to the company the difference
right to con- between the new and the old property such difference to be determined in default
tribution in of agreement by arbitration.
respect of Zaleska v. Iowa State Insurance (1899), 108 Iowa, 392.
new for old. And the insured shall contribute one fourth of the expense of rebuilding.
Parker v. Ecbgle Fire (1857), 75 Mass. 152.
And when they rebuild or replace any whole subject or item of insurance the
assured shall contribute one third of the expense.
Haskins v. Hamilton Mutual (1855), 71 Mass. 432.
Security for And the directors shall not be authorised to proceed therein until the assured
assured's shall have furnished them satisfactory security .for the payment of the
. .
contribution amount which he shall be found liable to contribute nor shall the company be
;
to be fur- found liable to any action for the loss until such security shaU have been furnished,
nished before nor unless the company shall neglect for thirty days thereafter to proceed to
company rebuild, repair or replace.
bound to Haskins v. Hamilton Mutual (1855), 71 Mass. 432.
rebuild.
20. Conditions relating to* Limitation of Action

Efiect of A
limitation of the period within which action can be brought
condition. after loss is valid notwithstanding that it gives a shorter period
than the Statutes of Limitations (/) The limitation sometimes

.
runs from the time when the money becomes payable as where
it is payable so many days after proof of loss {g), but more
usually the limitation runs from the date of loss. If the
insurers cause delay in the settlement of the loss, or induce the
assured to refrain from commencing proceedings by promise of
(/) Biddlesburger v. Ha/rtford Insurance (1868), 7 Wall. 386.

(g) Steel v. Phoenix Insurance (1893), 51 Fed. Rep. 715
;
FIRE POLICIES 915
payment, or definite hopes of settlement, the condition may be

held to be waived Qi), or the period may be held to have been
enlarged by suspension of the condition during the negotiations
for settlement (i).
No company for the recovery of any claim by virtue

suit or action against this Twelve
of this policy shallbe sustained in any court of law or chancery unless such
. . . mouths'
suit or action shall be commenced within twelve months next after the date of limitation
the fire from which such loss shall occur and should any suit or action be from date of
commenced against this company after the expiration of the aforesaid twelve fire,
months the lapse of time shall be taken as conclusive evidence against the validity
of such claim any statute of limitations to the contrary notwithstanding.
Thompson v. Phoenix Insurance (1889), 136 U. S. 287; Steel v. Phcenix
Insurance (1893), 51 Fed. Eep. 715; Biddlesburger v. JSartford Insurance
(1868), 7 WaU. 386; Lynchhurg'fiotton Mills v. Travellers' Insurance (1905),
140 Fed. Eep. 718; Bosenbaum v. Council Bluffs Insurance (1889), 37 Fed.
Rep. 724; Curtis v. Home Insurance (1865), 1 Biss. 485.
Every action or proceeding against the company for the recovery of any claim
under or by virtue of this policy shall be absolutely barred unless commenced
within the term of one year after the loss or damage occurs.
Statutory Condition, Revised Statutes of Ontario (1897), ch. 203, sect. 168 (22)
Merchants' Fire v. Equity Fire (1905), 9 Ont. L. R. 241 Preoria Stigar
;
Refining Co. v. Canada Fire, etc. (1885), 12 Ont. A. R. 418.
21. Conditions relating to Subrogation
See Chapter VII., Section VII., pp. 733-764.
In the event of loss the assured agrees to subrogate to the insurers all their
claims against the transporters of said merchandise not exceeding the amount
paid by said insurers. ... In case of any agreement or act past or future by the
insured whereby any right of recovery of the assured against any person or
corporation is released or lost which would on acceptance of abandonment or
payment of loss by this company belong to this company but for such agreement
or act or in case this iusurance is made for the benefit of any carrier or bailee
of the property insured other than the person named as insured the company
shall not be bound to pay any loss but its right to retain or recover the premium
;
shall not be efiected.

Fayerweather v. Phcenix (1890), 118 N. Y. 324; Inman v. South Carolina
Bailway (1888), 129 U. S. 128.
When company shall claim that the fire was caused by an act or omission
this
of any person town or corporation which created a cause of action ,the party to
whom the loss is payable under this policy shall on receiving payment assign to
this company such cause of action.
Niagara Fire v. Fidelity (1888), 128 Pa. 516 St. Paitl Fire, etc. v. Kidd (1893),
;
55 Fed. Eep. 238.
22. Conditions relating to Authority of Agents
These conditions are designed to protect the company from Object and
responsibihty for the unauthorised acts of persons who but for ®^^^ °^^g^^_
such conditions might be held to be acting for and on behalf of tions.
(h) Curtis V. Home Insurance (1865), 1 Biss, 485; Thompson v. Phoenix

{i) Lynchburg Cotton Mills v. Travellers' Insttrance (1905), 140 Fed. Rep.
718.
the company and within the scope of their actual or apparent

authority. The substantial effect of the conditions is to make
it more difficult for the assured to prove that any act, or waiver
of a condition, upon which he rehes was done or made by an
agent of the company and within the scope of his authority as
such agent. The conditions relate either to the question whether
any particular person is an agent of the company at all, that
is to say they lay down a test upon which the question of agency
orno agency is to be determined, or to the question of the extent
ofany particular agent's authority. In cases where the company
have in no way recognised any irregularity on the part of an
agent the conditions prove a valuable protection (/<;), but their
weakness lies in the fact that the company cannot by any
conceivable form of condition contract itself out of the right to
waive any condition in the policy or prevent the application of
the rules of estoppel which will prevent the company relying upon
any particular condition when its conduct has been such as to
render it inequitable that it should do so (l). Thus where a
company has consistently dealt with some person on the footing
that such person was its agent it cannot afterwards disavow his
acts by mere reliance on the condition that no person shall be
deemed an agent unless authorised in writing (?)i). And where
an agent has, with the knowledge and acquiescence of the
company, assumed authority to waive forfeitures, and grant
privileges in a manner not authorised by the conditions of the
policy, the company may be estopped from relying on such
conditions as against the assured (n) The knowledge or conduct of
.
the company in this connexion means the knowledge or conduct

of the directors acting within their powers as defined in the
memorandum and articles, deed of settlement or other instrument
constituting the company. The acts however of the responsible
officials such as the secretary and actuary at the head office
must be deemed to have been done with the consent of the
directors unless it is shown that there was an express limitation
upon their authority contained in the conditions of the policy, or
otherwise known to the assured, and it is proved that the
directors did not in fact know of or consent to the particular
acts (o).
Sowden v. Standard Fire (1880), 5 Out. A. E. 290; Northern Assur-

(k)
ance Grand View (1901), 183 U. S. 308; Scottish National Insurance v.
V.
Encampment Smelting Co. (1908), 166 Fed. Eep. 231; Commercial Union
Assurance v. Margeson (1899), 29 Can. S. 0. 601 St. Paul Fire, etc. v. Pen-
;
man (1907), 151 Fed. Rep. 961.

(I) Aetna Life v. Frierson (1902), 114 Fed. Eep. 56 ; Northern Assurance
V. Grand Vieiu (1900), 101 Fed. Eep. 77 BlaTce v. Exchange Mutual (1882),
;
78 Mass. 265 ; Caldivell v. Stradacona Fire (1883), 11 Can. S. C. 112.

(m) McElroy v. British American Assurance (1899), 94 Fed. Eep.
990.
(to) Caldwell v. Stradacona Fire (1883), 11 Can. S. C. 112.
(o) Aetna Life v. Frierson (1902), 114 Fed. Eep. 56.
;
FIEE POLICIES 917
It is part of this contract that any person other than the assured who may Person pro-
have procured the insurance to be taken by this company shall be deemed to be curing policy
the agent of the assured nam.ed in this policy and not of the company under any to be agent
circumstances whatever or in any transactions relating to this insurance. of assured,
Grace v. American Central Insurance (1883), 109 U. S. 278.
In any matter relating to this insurance no person unless duly authorised in Agent to be
writing shall be deemed an agent of this company. authorised in
M'Elroy v. British American Assurance (1899), 94 Fed. Kep. 990. writing.
If the agent of the company fills up the application he shall in that case be Agent filling
the agent of the applicant and not of the company. up applica-
Hastings Mutual Fire v. Shannon (1878), 2 Can. S. 0. 394 Sowden v. Standard
; tion.
Fire (1880), 5 Ont. A. B. 290.
But the company wUl be responsible for aU surveys made by their agents
personally.
Hastings Mutual Fire v. Shannon (1878), 2 Oan. S. 0. 394.
This policy is made and accepted subject to the foregoing stipulations and No agent or
conditions together with such other provisions agreements or conditions as may oificer of
be indorsed hereon or added hereto and no officer agent or other representative company to
of this company shall have power to waive any provision or condition of the policy alter contract
except such as by the terms of this policy may be the subject of agreement or waive
indorsed hereon or added thereto and as to such provisions and conditions no condition
officer agent or representative shall have such power or be deemed or held to have otherwise
waived such provisions or conditions unless such waiver if any shall be written than in
upon or attached hereto nor shall any privilege or permission affecting the manner
insurance under this policy exist or be claimed by the assured unless so written specified.
or attached.
Northern Assurance v. Grand View (1901), 188 U. S. 308 Hartford Fire v. ;
Small (1895), 66 Eed. Eep. 490; Scottish National Insurance v. Encamp-

ment Sinelting Co. (1908), 166 Fed. Bep. 231; Becker v. Exchange Mutual
Fire (1908), 165 Fed. Eep. 816; Mulrooney.Y. lioyal Insurance (1908), 163
Fed. Bep. 833 St. Paul Fire, etc. v. Penman (1907), 151 Fed. Bep. 961
;
Atlas Reduction v. New Zealand Co. (1905), 138 Fed. Eep. 497; Aetna Life
Insurance v. Frierson (1902), 114 Fed. Eep. 56.
It is agreed and declared by the parties aforesaid that no condition stipulation
covenant or clause hereinbefore contained shall be altered annulled or waived or
any clause added to these presents except by writing endorsed hereon or annexed
hereto by the president or secretary with their signatures affixed thereto.
Blake v. Exchange Mutual (1882), 78 Mass. 265; Caldwell v. Stradacona Fire
(1883), 11 Can. S. 0. 112; Commercial Union Assurance v. Margeson (1899),
29 Can. S. C. 601 Logan v. Commercial Union (1886), 13 Oan. S. C. 270.
;
No condition of the policy either in whole or in part shall be deemed to have

been waived by the company unless the waiver is iclearly expressed in writing
signed by an agent of the company.
Statutory Condition, Bevised Statutes of Ontario, 1897, o. 203, s. 168 (20).
An agent of the company who assumes on behalf of the company to
oflicer or
enter into any written agreement relating to any matter connected with the
insurance shall be deemed jorimd facie to be the agent of the company for the
purpose.
Statutory Condition, Bevised Statutes of Ontario, 1897, o. 209, s. 168 (21).
23. Conditions relating to Re-insurance

This re-insurance is subject to the same specifications terms and conditions as To follow
policy No. of the X. Co. which it re-insures it being well understood that the
; terms and
X. Co. do not retain any sum or risk on the property covered by this policy but conditions of
retain an amount equal at least thereto on other parts of the same property. risk re-
Canada Fire v. Northern Insurance (1878), 2 Ont. A. E. 373. insured.
This policy is subject to and same risks conditions valuations
liable for the
privileges mode of settlement indorsement and assignments as are or may be
assumed or adopted by the Home Insurance Co. and covers such property as may
he protected by the said company and tbe loss if any is payable ten days after
presentation of proofs of payment.
Victoria Montreal Fire v. Home Insitrance (1904), 35 Can. S. C. 208 Imperial
;
Fire v. Home Insurance (1895), 68 Fed. Eep. 698.

Each entry under this compact unless otherwise provided in this compaot
shall be subject to the same conditions stipulations risks and valuation as may
be assumed by the said re-insured company under its original contracts hereunder
re-insured and losses if any shall be payable pro rata with in the same manner
and upon the same terms and conditions as paid by the said re-insured company
under its contracts hereunder re-insured and in no event shall this company be
liable for an amount in excess of a rateable proportion of the sum actually paid to
the assured or re-insured by the said re-insured company under its original con-
tracts hereunder re-insured after deducting therefrom any and all liability of
other re-insurers of said contracts or any part thereof.
AUemannia Fire v. Firemen's Insurance (1907), 209 U. S. 826.
24. Condition relating to Form of Notice

Notice by Any written notice to a company for any purpose of the statutory conditions
registered where the mode thereof is not expressly provided may be by letter delivered at the
post, head of&oe of the company in Ontario or by registered post letter addressed to the
company, its manager or agent, at such head office or by such written notice given
in any other manner to an authorised agent of the company.
Statutory Condition, Revised Statutes of Ontario, 1897, c. 203, s. 168 (23).
Section IV. —Accident Policies
1. Clauses defining Injury caused by Accidental Means

Bodily Insurance companies have experienced great difficulty in
injury defining the risk in an accident policy so as to exclude injuries
caused by
violent acci-
and death resulting from what are generally known as natural
dental causes. The word "accidental," as applied to death or injury, is
external very vague, because in a sense every death or injury, unless
means.
intentionally inflicted by the assured upon himself is accidental,
that is to say the time, manner, and cause of it is unforeseen and
unexpected. Insurers have, therefore, been compelled to define
the risk much more narrowly, with the result that the modern
accident policy bristles with limitations and qualifications. The
general risk is now usually defined in British policies as " bodily
injury caused by violent accidental, external, and visible means."
This definition postulates not merely an " accidental injury " or
an "injury caused by accident," but an "injury caused by
accidental means." The distinction is of considerable import-
ance because, although the injury or death may be accidental in
the sense that it was the unforeseen and unexpected result of
some act of the assured, the means may not have been acci-
dental, because externally nothing may have been done by or
happened to the assured, except what he deliberately planned to
do precisely in the time and manner in which he did it. The
unforeseen and unexpected result is brought about by the fact that
the physical condition of the insured was not equal to the strain
which he put upon himself either because unknown to him his
organs had been weakened by disease, or because he miscalcu-
lated the capacity of his organs or the extent of the strain to
which he was subjecting them.
ACCIDENT POLICIES 919
Where the injury

is due to the fact that the assured had some Pre-existing
pre-existing weakness or anatomical defect, the existence or latent
weakness or
extent of which was unknown to him, and his physical structure defect.
gave way under an effort voluntarily undertaken, there is no
" injury caused by accidental means." Thus a claim under an
accident policy failed where the assured, who was proved to have
been suffering from fatty degeneration of the heart, attempted to
eject a drunken man from his office, and the effort and excite-
ment operating upon the defective condition of the heart caused
dilatationand subsequently death (r). In a Scottish case (s) the
assured had stooped down to put on his stocking and, owing
to the attitude voluntarily assumed by him combined with the
peculiar structure of his intestines, the colon slipped in front of
his liver and became strangulated, causing death. Here again
there was no accident. And so in an American case {t), where
the assured took a long bicycle ride and the natural action of the
psoas muscle rubbing against certain abnormal concretions in
the appendix set up inflammation and caused death, the death
was due to natural and not accidental means. In all these eases
the only accidental element was that the assured was unaware of
his own condition or of the natural consequence which would
ensue from the voluntary effort which he made. Neither of the
combined causes operating to cause the injury was accidental.
A somewhat more difficult class of case is that where the Where
assured is free from any weakness or defect, but exerts himself assured
exerts himself
beyond his natural strength either because he miscalculates his beyond his
own strength or the extent of the strain to which he is voluntarily natural
strengtli
subjecting himself.
In the case of Fenton v. Thorley (m), a workman was operating
a machine for pressing cattle cakes. The machine jammed and
the workman in his effort to move it ruptured himself. There
was no previous weakness, and there was no evidence of any slip
or unintentional movement on the part of the workman. This
was held to be an " injury caused by accident " within the mean-
ing of the Workmen's Compensation Act, 1897. The accidental
element was considered to be either the jamming of the machine
or the miscalculation by the workman of his own strength and
the effort required to remove the obstruction. The case, how-
ever, was distinguished from some of the accident insurance
cases, and it is submitted that a similar injury would not be
covered under the ordinary accident policy (x) In so far as the
.
accidental element lay in the miscalculation by the workman of

his own strength that would apply equally to the case of a man
suffering from an unknown weakness or defect and although;
the injury was accidental, and therefore might be deemed to be
(r) 8oa/rr v. Oeneral Accident Assurance, [1905J 1 K. B. 387 ; Shauberg

V. Fidelity and Casualty (1907), 158 Fed. Eep. 1.
(«) Clidero v. Scottish Accident (1892), 19 E. 355.
(t) Appel Aetna Life (1903), 86 Him. App. 83.
V.
(w) [1903] Boa/rdman v. Scott, [1902] 1 K. B.
A. 0. 443 ;
43.
(x) But see Martin v. Travellers' (1859), 1 F. & F. 505.
an " injury caused by accident," it was not an " injury caused by

accidental means," because tbe means were not accidental and
the injury resulted from an effort voluntarily and deliberately
applied. In so far as the accidental element lay in the jamming
of the machine, the answer to a claim on a policy of insurance
would be that although that was undoubtedly an accidental
cause or means contributing to the injury it was not the imme-
diate but a remote cause, and in ascertaining the cause of loss in
an insurance policy the immediate cause alone is to be con-
sidered, whereas the scope of the Workmen's Compensation Act
permits a construction much more favourable to the claimant.
There are several American cases where the assured having
no previous weakness has been injured by a voluntary effort, and
the decisions are somewhat conflicting {y) but the law is pro- ;
bably most accurately stated in Southard v. Railway Passengers {z)

and Fcderv. loiva State TraveUinf/ Men's (a). In the former case
the assured jumped off a car and ran to catch a train, and was
subsequently found to be ruptured from the effort. There was
no previous weakness and no evidence of any slip, twist, fall, or
unintentional movement, and the Court held it was not an
" injury caused by accidental means."
Evidence Where therefore the assured, whether sound or weakened
must show by disease, is injured in consequence of some violent effort on his
some unin-
tentional act part, he must show that his action was not purely voluntary but
or movement. that he made some movement which he had not intended or
that something unexpected happened externally to himself which
interfered with his voluntary action. Thus, where the assured
stooped down to pick up a marble, and the evidence showed that
he did it awkwardly, and thereby got into a position which he had
not intended and dislocated his knee joint, the injury was caused
by accidental means (h). Where the assured jumped from a high
platform and injured bis duodenum, which became strictured,
the Supreme Court in America held that if there was any in-
voluntary movement or twist in taking the jump the risk was
covered, and that evidence that the jump was clumsy and awkward
was sufficient to go to the jury and to support a finding that the
injury was caused by accidental means (c).
Disease not The definition of the risk is so framed as to exclude all cases
an accident. where disease is the sole and immediate cause of the injury or
death. In one sense disease is an accidental means of injury or
death, and particularly in the case of infectious or contagious
disease where the exposure to the infection or contagion is
(y) Globe Accident v. Gerisch (1896), 136 111. 625 ; North American Life,
etc. V. Burroughs (1871), 69 Pa. 43.
(z) (1868), 34 Conn. 574.
(a) (1899), 107 Iowa, 538 ; MoGa/rthy v. Travellers' (1878), 8 Biss. 862 ;
Fidelity and Casualty v. Stacey (1906), 143 Fed. Bep. 271.

(6) Hamlyn v. Crown Accidental, [1893] 1 Q. B. 750.
(c) Mutual Accident v. Barry (1888), 131 U. S. 100; Standard Life v.
Schmaltz (1899), 66 Ark. 588 Horsfall v. Pacific Mutual Life (1903), 32
;
Wash. 132 Modey v. Travellers' (1886), 9 Pac. Bep. 848.

;
unknown to the assuredand therefore wholly involuntary. But

injury or death engendered by what is ordinarily known as
disease would never be referred to in ordinary parlance as an
injury or death from accident, and insurance simply against
injury or death caused by accident would not cover consequences
resulting solely from disease. Thus in Sinclair v. Maritime
Passengers (d) it was held that death from sunstroke resulting
from exposure to the heat on board ship was not covered by a
policy insuring against " injury caused by accident." There is
a suggestion in that case that if the exposure itself had been due
to accidental circumstances, the risk might have been covered.
If, for instance, a man insured against injury or death caused by
accidental means were to lose his way upon a mountain or be

unable to retrace his steps owing to his retreat being cut off by
an avalanche or heavy snowfall, and death result from consequent
exposure to the cold, the assured's representatives might be
entitled to recover.
Where disease is caused by some definite germ or bacillus Disease
caused by
alighting on the person or introduced internally with food or accidental
drink, there is clearly an accidental element in the fact that the alighting of
assured came in contact with the particular germ which caused definite
germ.
the mischief.
In Brintons v. Tiirvey (e) the House of Lords held, by a Brintons v.
Turvey.
majority, that where a workman engaged in sorting wool became
infected by anthrax owing to the bacillus from the wool alighting
on the tender membrane of the eye, it was an "injury caused by
accident " within the Workmen's Compensation Act, 1897. There
was no evidence of any abrasion or wound, and the only accidental
element was the alighting of the bacillus on the most susceptible
part of the body.
In Steel v. Cammell, Laird, & Co. (/), the Court of Appeal, Steel V.
very shortly after the decision of the House of Lords in Cammell

Laird.
Brintons v. Turvey, held that lead poisoning resulting from
gradual absorption into the system of a workman employed in
working with lead was not an injury caused by accident, since
the injury was the result of a gradual process and not of any
definite accidental event of which notice could be given.
It is submitted that no disease of the nature of anthrax or Above
oases not
lead poisoning would be covered by an accident policy, even if
applicable
the insurance were simply against injury caused by accident to claim on
without any further definition of the risk. In Sinelair v. accident
policy.
Maritime Passengers' (g), Cockburn, C.J., said that the term
" accident " as used in an accident policy necessarily involved some
violence, casualty, or vis major. But, however this may be, the
consequences of disease of all kinds are clearly excluded where
the insurance is restricted to " injuries caused by violent acci-
dental external and visible means," except where such disease
supervenes upon or gives rise to some distinct accidental injury
(d) 3 El. & El. 478. [e) [1905] A. C. 230.

(/) [1905] 2 K.. B. 202. (g) (1861), 3 El. & El. 478.
•within themeaning of the definition. In America an injury

from a malignant pustule, caused by the introduction of bacilli
by contact with putrid matter or carried by insects, was held
not to be an injury caused by external violent or accidental
means (/i).
Disease There are many cases where disease supervenes upon an

supervening accidental injury such as a wound (i). This class of case, however,
will be considered under the clause dealing, not with the cause,
but the consequence of the injury (j).
Accident Where disease is the cause of a violent accident, and the
on'diseas™^
accident results in injury, the rule applies that the immediate
and not the remote cause must be considered, and the injury is
therefore caused by accidental means and not by disease. Thus,
where the assured was seized by a fit while crossing a stream,
and consequently fell in and was drowned, the injury and death
were due to accidental external and visible means (k).
Death or Most policies contain express exceptions excluding death or
injury from injury resulting from taking poison or inhaling gas, etc., but
or i™haimg°'^
where there is no such express exception the question arises
gas. whether such occurrences are within the general risk. Where
the assured took an overdose of morphia, it was held that if he
believed it to be a proper dose there was no accidental cause,
but merely ignorance of the natural effect of a voluntary and
deliberate act, but that if he mistook the measure and poured
out and drank a larger dose than he intended to take, there was
an accidental cause, and as the evidence was equally consistent
with either inference, the claimant's case was not proved (Z). In
New York it was held in some cases that, although the taking of
poison was an accidental cause of injury, the means were not
violent, and therefore there was no injury caused by external
violent and accidental means but these cases have been over-
;
ruled (m), and the action of the poison upon the intestines is
now held to afford a sufficient element of violence to satisfy the
definition (7i). Where the assured is accidentally suffocated by
(h) Bacon v. U. 8. Mutual Accident (1890), 123 N. Y. 304. Where a

policy issued to a dentist was endorsed to cover "blood poisoning sustained
by physicians or surgeons resulting from septic matter introduced into the
system through wounds suffered in professional operations," and while the
dentist was operating the patient coughed and septic matter entered the
dentist's eye through the mucous membrane, causing blood poisoning, it
was held that the injury was not covered Fidelity and Casualty v.
:
Thompson (1907), 154 Fed. Eep. 484.

(i) Isitt V. Badlway Passengers' (1899), 22 Q. B. D. 504; Baily v. Interstate
Casualty (1896), 8 App. Div. 127.
{j) Vide infra, p. 932.
[h) Winspea/r v. Accident (1880), 6 Q. B. D. 42; Wicks v. Dowell, [1905]
2 K. B. 225.; Lawrence v. Accidental (1881), 7 Q. B. D. 216; Reynolds v.
Accidental (1870), 22 L. T. 820.
(l) Carnes v. Iowa States Travelling Men's (1898), 106 Iowa, 281.
(m) PomIv. Travellers' (1889), 112 N. Y. 472.

(n) Dezell v. Fidelity and Casualty (1903), 176 Mo. 253; Mutual
Accident v. Tuggle (1891), 39 111. App. 509; Henley \. Mutual Accident
(1890), 133 111. 556.
.
coal gas or other poisonous fumes, the operation of the gas in

arresting the action of the lungs is held to be violent (o).
Death caused by choking owing to some particle of food Death by
blocking the windpipe has been held to be death caused by choking, etc.
external violent and accidental means (p), and so was death
caused by perforation of the stomach owing to some hard
particles of food having been passed into an intestine weakened
by disease (</).
Intentional injuries inflicted by another are accidental from Intentional
injuries
the point of view of the assured, and are therefore covered unless
inflicted by
they were invited or provoked by the assured (;•). third person.
The fact that an accident arises from the negligence Negligence of
of the assured does not disentitle him to recover on the assured.
policy (s).
In Piigh V.London, Brighton, and South- Coast Railway {t), Injury

caused
injury was caused from nervous shock, and not from any physical by shock
contact with the cause of injury. The assured was a signalman, without
and noticed some defect in a passing train which might have physical
contact.
caused an immediate accident. He leaned out of his box and
waved violently to the driver to stop. The excitement caused
severe nervous shock, and it was held that the assured was
"incapacitated through accident," and probably he could also
have recovered on a policy insuring against " injury caused by
violent accidental external and
means."
visible
Where death by exposure to the ordinary Death or
or injury is caused
course of the elements such as sun or rain, wind or snow there injury
caused by
is no accidental means, although as has been pointed out where
direct action
the exposure is unintentional and has been brought about by of the
accidental means the case may be different (m) Where death or elements.
.
injury is caused by some sudden and unexpected action of the

elements taking a man unawares it is caused by accidental
means as where a man is struck by lightning (x)
Death caused by drowning where the assured has accidentally Drowning.
fallen into the water, or being voluntarily in the water has mis-
calculated the depth of the water or strength of the tide or
(o) Pichett V. Pacific Mutual (1891), 144 Pa. 79; Paul v. Travellers'
(1889), 112 N. Y. 472.
{p) American Accident v. Beizart (1893), 94 Ky. 547.
(2) v. Fidelity and Casualty (1899), 97 Fed. Eep. 836.
Miller
(r) Robinson v. TJ. 8. Mutual Accident (1895), 68 Ped.Eep. 825 Supreme ;
Council V. Garrigas (1885), 104 Ind. 133 Railway Officials' Accident v.

;
Drummond (1898), 56 Neb. 235 American Accident v. Carson (1896), 99

;
Ky. 441 Hutchcraft v. Travellers' (1888), 87 Ky. 300 Union Casualty v.

; ;
Haroll (1897), 98 Term. 591 ; Taliaferro v. Travellers' Protective (1897),

80 Fed. Eep. 868 Lovelace v. Travellers' Protective (1894), 126 Mo. 104
; ;
Richards -v. Travellers' (1891), 89 Col. 170; Accident Insurance v. Bennett

(1891), 90 Tex. 256.
(«) ChoMipUn V. Railway Passengers' (1872), 6 Lans. 71.
it) [1896] 2 Q. B. 248.
(u) Supra, p. 921; Sinclair v. Maritime Passengers' (1861), 3 El. &, El.
478 Bozier v. Fidelity and Casualty (1891), 46 Fed. Eep. 446
;
Warner v.;
Couchman (1911), The Times, Nov. 11.

(x) And/rew v. Failsworth, [1904] 2 K. B. 32.
. ;
924 _
CLAUSES AND CONDITIONS
currents, is death caused by violent accidental external and visible

means (jj)

Injury caused by aooident.
Isitt V. Railway Passengers' (1889), 22 Q. B. D. 504 Sinclair v. Maritime ;
Passengers' (1861), 3 El. & El. 478 Pugh v. London, Brighton, and South ;
Coast Railway Co., [1896] 2 Q. B. 248 Penwick v. Schmaltz (1868), L. E.. ;
3 G. P. 313 Brintons v. Turvey, [1905] A. C. 280 Steel v. Cammell Laird

; ;
S Co., [1905] 2 K. B. 232 Fenton v. Thorley, [1903] A. 0. 443 Wicks v. ; ;
Lowell, [1905] 2 K. B. 225 Boardman v. Scott, [1902] 1 K. B. 43 Andrew ; ;
V. Failsworth, [1904] 2 K. B. 32 Robin v. Clay (1898), 27 U. 0. Q. B. 438 ; ;
American Accident v. Carson (1896), 99 Kz. 441 Railway Officials' Accident ;
V. Drummond (1898), 56 Neb. 235 Supreme Council v. Oarrigas (1885), 104 ;
Md. 133 Lovelace v. Travellers' Protective (1894), 126 Mo. 104

; Union ;
Casualty v. Harroll (1897), 98 Tsnn. 591; Taliaferro v. Travellers' Pro-

tective (1897), 80 Fed. Eep. 368; Robinson v. U. S. Mutual Accident (1895),
68 Fed. Eep. 825 Globe Accident v. Gerisch (1896), 163 111. 625
; North ;
American Life and Accident v. Burroughs (1871), 69 Pa. St. 43 Peele v. ;
Provident Fund (1897), 147 Md. 543 Carnes v. Iowa State Travelling (1898), ;
106 Iowa, 281 Bender v. Owners of SS. Zent, [1909] 2 K. B. 41 Marshall

; ;
V. Owners of SS. Wild Rose, [1909] 2 K. B. 46.
„ ,., , ( caused by
ôaily j
injury 1
\ sustained through > violent and accidental means.
Personal/ -^
( arising from )
Southard Y. Railway Passengers'

34 Conn. 574; Shauberg v. Fidelity (1868),
and Casualty Eep. 1; Fidelity and Casualty v. Stacey's
(1907), 158 Fed.
Executors (1906), 143 Fed. Eep. 271; Taliaferro v. Travellers' Protective
(1897), 80 Fed. Eep. 368.
. . . external violent and accidental means.

Mutual Accident v. Barry (1888), 131 U. S. 100; M'Cartly v. Travellers'
(1878), 8 Biss. 362 Feder v. Iowa State Travelling Men's (1899), 107 Iowa,
;
538 Standard Life v. Schmaltz (1899), Ark. 588

; Appel v. Aetna Life ;
(1903), 86 Hun. App. 83 Horsfall v. Pacific Mutual Life (1903), 32 Wash.

;
132 Bayless v. The Travellers' (1877), 14 Blatchf 143 Hill v. Hartford

; . ;
(1880), 22 Hun. 187 Pickett v. Pacijio Mutual (1891), 144 Pa. 79 Paul v.
; ;
Travellers' (1889), 112 N. Y. 472; Dezell v. Fidelity and Casualty {1903),

176 Mo. 253 Mutual Accident v. Tuggle (1891), 39 ni. App. 509 Henley v.
; ;
Mtitual Accident (1890), 133 111. 556 ; Bacon y.U.S. Mutual Accident (1890),
123 N. Y. 304; American Accident v. Reimrt (1893), 94 Kz. 547; MilUr
v. Fidelity Casualty (1899), 97 Fed. Eep. 836 Baily v. Interstate Casualty ;
(1896), 8 App. Div. 127 ; Bodey v. Travellers' (1886), 9 Pao. R. 348; Dozier v.
Fidelity and Casualty (1891), 46 Fed. Eep. 446 Wehle v. U. 8. Mutual ;
Accident (1897), 153 N. Y. 116 XJ. S. Mutual Accident v. Huhbell (1897), 56 ;
Ohio St. 516; Hutchcraft v. Travellers' (1888), 87 Kz. 300; Richards v.

Travellers' (1891), 89 Col. 170; Accident Insurance Co. v. Bennett (1891), 90
Ten. 256.
. . .accidental external and visible means.
Winspear v. Accident (1880), 6 Q. B. D. 42.
. . . violent accidental external and visible means.
Hamlyn v. Crown Accidental, [1893] 1 Q. B. 730 Clidero v. Scottish Accident ;
(1892), 19 E. 355 ; Scarr v. General Accident Assurance, [1905] 1 K. B. 387.

accidental and external violence
. . . payment only in case of injuries . . .
accidentally occurring from material and external causes operating upon the
person of the assured.
Lawrence v. Accidental (1881), 7 Q. B. D. 216.
Winspear v. Accident (1880), 6 Q. B. D. 42 Reynolds v. Accidental

iy) ;
22 L. T. 820 ; Trew v. Railway Passengers' (1861), 6 H. & N. 889

(1870),
MacdonaU v. Refuge (1890), 17 E. 955 Ballantyne v. Employers' (1891), 21 ;
B. 305 Harvey v. Ocean Accident (1905), 2 Ir. E. 1 Wehle v. TJ. S. Mutual

; ;
Accident (1897), 153 N. Y. 116 V. 8. Mutual Accident v. Hubbell (1897), ;
56 Ohio, 516 Peele v. Provident Fund (1897), 147 Md. 543.

;
. .accident or violence
. occasioned by some external and material
. . .
cause operating upon the person of the assured.

Martin v. Travellers' (1859), 1 F. &. F. 505 Beijnoldsy. Accidental (1870),
;
^
22 L. T. 820. '
. . . accident or violence ... no claim unless the injury shall be caused by

some outward and visible means.
Treio v. Railway Passengers' (1861), 6 H. & N. 839.
Outward external and visible cause.
Harvey v. Ocean Accident (1905), 2 Ir. R. 1.
2. Clauses limiting the Risk to Accidents happening in

a Particular Place or Manner
Insurance against the risks of transit on a railway or -other Accidents
pubHc conveyance are frequently contained on a very incomplete happening
while
form of policy or insurance ticket. In Theobald v. Railway Pas- travelling
sengers' {z) the insurance was against " injury by reason of a by railway or
otherwise.
railway accident " and the assured slipped and injured himself
whilst alighting from a train. The insurers on the one hand con-
tended that the risk was confined to accidents happening to the
train in which the assured was travelling while the assured on the
other hand contended that the insurance extended to all accidents
which might happen to him while in the prosecution of a railway
journey. The assured was held entitled to recover on the ground
that the risk at any rate included all accidents which were
incidental to the journey and attributable to the fact that the
assured was travelling as a passenger on a railway. The Court
did not completely indorse the argument of the assured, although
one of the judges appeared to be inclined to take that view, and
it is doubtful if an accident wholly unconnected with the journey,
for instance if the assured whilst sitting in the carriage had cut
his finger with a penknife, would have been covered. As a result
of this case most of the railway insurances insure only against
"injury by reason of an accident to the passenger train in
which the assured is travelling" thereby eliminating a large
percentage of the risks of railway travelling.
The risk is frequently confined to accidents happening Travelling as
"whilst the assured is travelling as a passenger." This would a passenger.
appear to exclude (1) cases where the assured is travelling on

duty as a servant of the railway company or other carrier (a) and
(2) cases where the assured, although a passenger, is travelling
on a part of the vehicle not intended for the conveyance of
passengers (h). The risks of alighting from and boarding the
vehicle in a proper manner are however covered (c). Where the
(«) Ex. 45.

(1854), 10
(a) Insurance v. Austin (1902), 116 Ga. 264; Wood v.
Travellers'
General Accident (1908), 160 Fed. Kep. 926.
(6) Van BoMelen v. Travellers' (1901), 167 N. Y. 590 Aetna Life v. ;
Vandecar (1898), 86 Fed. Kep. 282; Berliner v. Travellers' (1898), 121

Cal. 458.
(c) Champlin v. Bailway Passengfers' (1872), 6 Lans. 71 ; Powis v.
Ontario Accident (1901), 1 Ont. L. E. 54 ; King v. Travellers' (1897), 101
Ga. 64.
risk insured was " whilst travelling by public or private con-

veyances " a passenger walking from a wharf to a railway station
in prosecution of a continuous journey by steamer and rail was
held to be covered (<^). But if the assured deviates from the
journey he is not covered, as where a passenger having arrived
at the station which was his destination crossed the platform
of one of the carriages to speak to an acquaintance in another
train (e). A deviation rendered necessary by temporary illness
is covered as where the assured being ill went on to the platform
of the train to vomit (/).
Public or Unless the risk is limited to travelling by public conveyance
private provided by a common carrier it may include all sorts of private
conyeyanoe.
conveyances (g), and the risk may thus be extended far beyond
the limits contemplated by the insurers (h). It has been held,
however, that a person riding a bicycle is not travelling in a
vehicle as an ordinary passenger (t).
•
In compli- If the risk is limited to travelling in a public conveyance in
ance with compliance with the rules and regulations of the railway company
carriers'
rules and
or other carrier then any accident happening when the assured
regulations. is contravening such rules, as where he is riding on an open
platform or leaving the train while in motion, will be excluded (k).
Bisk limited Where the risk was limited to accidents happening in the
to United United Kingdom it was held nevertheless to cover an accident
Kingdom.
which happened in Jersey (l).
Clauses which home been judicially construed.
Injury by reason of a railway accident whilst travelling in any class carriage

on any line of railway.
Theobald v. BaAVway Passengers' (1854), 10 Ex. 45.
Accident whilst riding as a passenger in a public conveyance.
Fowis V. Onta/rio Accident (1901), 1 Ont. L. B. 54 Preferred Accident v. Mui/r
;
(1904), 126 Fed. Bep. 926; Travellers' Insurances. Austin (1902), 116 Ga.
264.
By anyaccident to the passenger train, passenger steamer, omnibus, tramoar,
dog-cart, wagonette, coach, carriage or other vehicle in which the deceased was
travelling as an ordinary passenger.
Shanks v. Sun Life (1896), 4 S. L. T. 66 ; M'Millan v. Sun Life (1896),
4 S. L. T. 66.
. Whilst traveUiug by public or private conveyances provided for the
. .
transportation of passengers.
Northrup v. Railway Passengers' (1869), 2 Lans. 166 ChampUn v. Railway ;
Passengers' (1872), 6 Lans. 71.

. Whilst travelling as a passenger in a public conveyance provided by a
. .
common carrier and in compliance with the rules and regulations of such carrier.
Hendrick v. Employers' Liability (1894), 62 Fed. Bep. 893 Box v. Railway ;
Passengers' (1881), 56 Iowa, 664; Wood v. General Accident (1908), 160

Fed. Bep. 926.
(d) Northrup Bailway Passengers' (1869), 2 Lans. 168.

v.
\e) HendHcTt Employers' Liability (1894), 62 Fed. Rep. 893.
v.
(/) Preferred Accident v. Muir (1904), 126 Fed. Rep. 926.
\g) Shanks v. Sun Life (1896), 4 S. L. T. 66.
(h) Aetna Life v. Frierson (1902), 114 Fed. Rep. 56.
(i) M'Millan v. Sun Life (1896), 4 S. L. T. 66.
. (k) Box v. BaAlway Passengers' (1881), 56 Iowa, 664.
{I) Stoneham v. Ocean Bailway, etc. (1887), 19 Q. B. D. 237.
Injuries sustained whilst riding as a passenger in any passenger conveyance
using steam cable or electricity as a motive power.
Van Bokkelen (1898), 34 App. Div. 393 (1901), 167 N. Y. 590;
v. Travellers'
Aetna Life v. Vandecar
(1898), 86 Fed. Eep. 282 :Berliner v. Travellers'
(1898), 121 Gal. 458; King iv. Travellers' (1897), 101 Ga. 64: Aetna Life v.
Frierson (1902), 114 Fed. Bep. 56,
Accident within the United Kingdom.
Stomham v. Ocean Railway and General Accident (1887), 19 Q. B, D. 237.
While in a passenger elevator.
Depue V. Travellers' Insurance (1909), 166 Fed. Rep. 183.
3. Clauses excluding Injuries of which there is no External

Mark upon the Body
Such clauses are common in American but not in British Such clauses
policies. The original object of the clause was no doubt to very strictly
"""^ "^^^ '
exclude proof of injury depending entirely on the testimony of

the assured and so to exclude many fraudulent claims. When
an accidental injury can be satisfactorily proved by independent
evidence the further requirement that there shall be some
external and visible mark upon the body is no longer a proper
protection to the insurance company against fraud but becomes
merely a possible means of escape from an otherwise clear
liability. The American Courts have accordingly construed these
clauses very strictly limiting them as far as possible to their
original object as a protection against simulated injuries and
being astute to prevent their unfair use where the claimant's
case is otherwise clearly proved (m)-
Where the clause does not expressly postulate external marks visible sign.
upon the body but merely some " symptom or visible sign " or
"external and visible marks " of the accident and injury it may
be satisfied by the evidence of a post mortem examination or
even by the mere production of the dead body of the assured (;;).
Even where the clause demands an external and visible mark Dead body.
on the body it has been held that it is satisfied where the injury
results in death, the body itself being then a sufficient external
and visible mark (o).
clauses expressly state that " the body itself shall not Pallid
Some
be deemed such a mark " ; but even where that is so any complexion.
symptom appearing on the body either before or after death will
be sufficient as where after the alleged accident the assured
became pallid in his complexion and showed signs of pain {p).
(in) Lewis, J., Oale v. Mutual Aid and Accident (1893), 66 Hun. 600,
602; Peters, O.J., M'GUnchey v. FideUty and Casualty (1888), 80 Mo. 251,
257 ; Spring, J., Boot v. London Guarantee and Accident (1904), 02
App. Div. 578; Pike, J., Thayer v. Standard Life and Accident (1896), 68
N. H. 577, 578.
(n) Freeman v. Mercamtile Accident (1892), 156 Mass. 351 Memieilcy ;
V. Employers' Liability (1896), 148 N. Y. 596.

(o) M'Qlinchey v. Fidelity and Casualty (1888), 80 Mc. 251 Eggen- ;
berger v. Guarantee Mutual Accident (1889), 41 Fed. Eep. 172 Union ;
Casualty v. Mondy (1903), 71 Pac. Bep. 677.

{p) Horsfall v. Pacific Mutual Life (1903), 32 Wash. 132 Boot v. ;
London Guarantee, etc. (1904), 92 App. D. N. Y. 578.

Discolor- Even although there is no mark at the time of the accident

ation of skin.
subsequent discoloration of the skin owing to a strain of the
muscle is sufficient (g), and in one case it was held that even
although there was nothing visible to the eye yet if upon pressure
a physician could detect a rigidity of the muscle there was " an
external and visible sign upon the body " within the meaning of
the clause (r).
Not to extend to injuries of wMch there is no visible mark on the body.

Thayer v. Standard Life and Accident (1896), 68 N. H. 577 Bernays v.
;
U. S. Mutual Accident (1891), 45 Fed. Rep. 455 Eggenberger v. Gua/rantee

;
Mutual Accident (1889), 41 Fed. Rep. 172; TJmon Casualty v. Mondy

(1903), 71 Pao. Rep. 677.
... of which there shall be no external and visible mark upon the body.
Pennington v. Pacific Mutual Life (1892), 85 Iowa, 468.
... of which there shall be no external and visible sign upon the body.
Mutual Accident v. Barry (1888), 131 TJ. S. 100 Qale v. Mutual Accident
;
(1893), 66 Hun. 600; Paul v. Travellers' (1889), 112 N. Y. 472 M'GUnchey

;
V. Fidelity and Casualty (1888), 80 Me. 251.
... of which there is no visible external mark upon the body (the body itself
not being considered such mark) produced at the time of and by the accident.
Horsfall v. Pacifi,c Mutual Life (1903), 32 Wash. 182.
... of which there is no visible mark on the body (the body itself in case of
death not being deemed such a mark).
Boot V. London Guarantee and Accident (1904), 92 App. D. N. Y. 578.
Not to extend to any case in which there should be no symptom or visible sign
of bodily injury.
Freeman v. Mercantile Accident (1892), 156 Mass. 351.
Does not insure against death or disablement from accidents that shall bear
no external and visible marks.
Menneiley y. -Employers' Liability (1896), 148 N. Y.-596.
4. Conditions relating to Proof of Claim
Direct and The clause requiring direct and positive proof of the accident
positive proof or of the nature, cause or manner of the injury has been con-
includes
sidered in several American cases, with the result that the Courts
circum-
stantial have refused to permit the parties to restrict by their contract
evidence. the ordinary methods of proof in a court of law (s). The require-
ment of direct and positive proof of certain matters does not
make it necessary to establish the facts by persons who were
present and can give their testimony as eye witnesses, but the
facts may be proved by circumstantial evidence, and inferences
maybe drawn according to the ordinary rules of law(^). The
clause therefore, in America at any rate, is of practically no value,
and it is submitted that the Courts in this country would interpret
it in the same sense.
(2) Thayer v. Standard Life, etc. (1896), 68 N. H. 577 Pennington v.

;
Pacific Mutual Life (1892), 85 Iowa, 468.

(r) Gale v. Mtotual Accident (1898), 66 Hun. 600.
(8) Harlan, J., Travellers' v. McConhey (1887), 127 U. S. 661 Morse, J.,
;
Utter V. Travellers' (1887), 65 Mich. 545.

{t) Hagarty, C.J., Wright v. Sun Mutual (1878), 29 U. C. G. P. 221, 233 ;
Insurance Co. v. Bennett (1891), 90 Tenn. 256.

ACOTBENT POLICIES 929
Where the assured has died from the effects of an injury the Admissi-
claimant is frequently placed in a difficulty as to proof of an bility of
statements
accident of which there were no independent witnesses. Hearsay made by
evidence is admissible to prove what the assured said to his deceased with
medical attendant or friends as to his state of health before or regard to
alleged
after the alleged accident, but hearsay evidence is not generally accident.
admissible to prove what the assured said as to the manner in
which he received certain injuries {tt). Statements however made
by him at or about the time of the alleged accident may be
admitted to show the nature of an act proved by independent
evidence but ambiguous in its nature. It was apparently under
this exception that the United States Supreme Court held that,
where a man was found at night by his son lying at the foot of
the stairs, evidence was admissible to prove that he then stated to
his son that he had fallen downstairs, and that on returning
to his room he repeated the same statement to his wife (m). On
the other hand, a statement made by a man on returning from
a walk that when out he had fallen over a heap of stones {x), and
a statement made by a man to his friend three hours after the
event that he had accidentally fallen in the street, were clearly
inadmissible {y).
Certain injuries afford by themselves prima facie proof of Nature of
accidental means. If a man is found with a pistol shot in his injury may
be primd
heart (z), or if his body is found in the water bearing symptoms facie proof of
of death by drowning (a), or if he is found with marks of violence accidental
on his back (b) or with a fractured arm {<:) or cut to pieces on a cause.
railway (rf), or if he fell out of a railway train (e), there is direct

evidence of injury by violence, and the law will presume that the
violence was accidental (/) rather than that it was intentionally
self-inflicted, and therefore in the absence of other evidence there
is proof of injury by violent and accidental means. On the other
hand, if the facts proved point to suicide as the only reasonable
conclusion, the fact that there is some possible explanation con^
Sistent with accidental death will not justify a finding of accidental
death (g).
Where the evidence is equally consistent with an accidental Evidence
equally con-
(tt) Amys V. Barton (1911), 46 Law Journal 683. sistent with
(m) Insurance Company v. Mosley (1869), 8 Wall. 397. accidental
(x) Keefer v. Pacific Mutual Life (1902), 201 Pa. St. 448 88 Am. S. E. 822.
;
and non-
accidental
ly) National Masonic Accident v. Shryock (1896), 36 U. S. App. 658.
(0) Travellers' v. M'Conley (1887), 127 U. S. 661; Insurance Co. v.
Bennett (1891), 90 Term. 256.
(a) Macdonald v. Befuge (1890), 17 E. 965, 957 ; Ballantyne v. Employers'
(1893), 21 E. 305 ; Mallory v. Travellers' (1871), 47 N. Y. 52.
(6) CronJcMte v. Travellers' (1889), 75 Wis. 116 ; 17 Am. S. R. 184.
(c) Peck V. Equitable Accident (1889), 52 Him. 255.
{d) Meadows V. Pacific Mutual Life (1895), 50 Am. S. R. 427.
(e) Standard Life amd Accident v. Thornton (1900), 100 Fed. Rep. 582.
(/) Lyon, J., Cronkhite v. Travellers' (1889), 75 Wis. 116; Macdonald,

L.J.C., Macdonald v. Befuge, 17 E. 955, 957; Farwell, L.J., Bender v.
Owners of S8. Zent, [1909] 2 K. B. 41 but see Fowlie v. Oeea/n Accident,
;
[1901] 4 Ont. L. E. 146 ; 33 Can. S. C. E. 253.

(g) Williams v. TJ. S. Mutual Accident (1892), 133 N.
Y. 366.
I.L, 59
;
and a non- accidental cause of death, not involving suicide or breach

of the law, there is no presumption in favour of accidental death,
as for instance where the question is between death by accident
and death from natural causes (h). Thus where the assured died
from an overdose of opium and the facts proved were equally
consistent with the assured having taken more than he intended
and with his having taken exactly what he intended, erroneously
believing it to be a proper dose, the Court held that the first
alternative would entitle the claimant to recover and the second
would not, and that as the evidence was equally consistent with
either view the claimant was not entitled to recover (i). But the
evidence, although consistent with either an accidental or a non-
accidental cause, may be such that there is a distinct balance of
probability in favour of an accidental cause, and when that is the
case there is evidence on which a finding of death by accident
may be supported. Thus where the body of the assured was
found in the water but was so far decomposed as to afford no
direct proof of actual death by drowning and the facts proved
were entirely consistent with the assured having died from
natural causes such as heart failure while bathing, it was held
that there was evidence upon which the jury might properly find
a verdict of death by accidental drowning (fe). And so where a
man fell from a buggy whilst driving it and was picked up dead, it
was left to the jury upon the medical evidence to say whether the
immediate cause of death M'as apoplexy or the fall from the
buggy (l).
Proof satis- The policy frequently stipulates that there shall be no claim
factory to the unless the injury shall be caused by some outward and visible
directors.
means of which proof satisfactory to the directors can be furnished.
This is an attempt to make the directors judges in their own case,
and as it would be manifestly unfair to permit the company to
resist a claim merely on the ground that the directors were not
satisfied with the proof, the Courts have held that if on the
evidence before the Court the directors ought to have been
satisfied the claim must be allowed and that evidence which
satisfies a jury is evidence which ought to have satisfied the
directors (m). This renders the clause practically ineffective
except on a question of costs where the preliminary proofs are
insufficient and leave the matter in so much doubt that the
insurers are reasonably entitled to have the matter investigated
in a Court of law.
Power of The further requirement that the claimant shall furnish all
directors to
call for all (h) Bender v. Owner of SS. Zent, [1909] 2 K. B. 41 ; Marshall v. Owner
reasonable of SS. Wild Rose, [1909] 2 K. B. 46.
information {i) Oarnes v. Iowa State Travelling Men's (1898), 106 Iowa, 281; see
and evidence. WaTcelin v. L. and S.W. By. (1886), 12 A. 0. 41.
(h) Trew v. Bailway Passengers' (1861), 6 H. & N. 839.
(Z) M'CormacTc v. Illinois Commercial, etc. (1907), 159 Fed. Rep. 114.
(to) Trew v. Bailway Passengers' (1861), 6 H. & N. 839 ;6 Jur. N. S. 759

Winspear v. Accident (1880), 6 Q. B. D. 42 Macdonald v. Befuge (1890),
;
17 R. 955 ; North American Life, etc. v. Burroughs (1871), 69 Pa. 48

Preferred Accident v. BarTcer (1899), 93 Fed. Rep. 158.
such information and evidence as the directors may require from

time to time is a much more valuable one to the company. It is
clear under this clause that the directors may ask for evidence
and information which may not be absolutely necessary to prove
the claimant's case. That is to say, the claimant may have
furnished such evidence as would satisfy a jury if no further
evidence was adduced, but the directors have nevertheless the
right to call for further evidence to corroborate or test the
evidence before them (n). The evidence or information asked
for however must not be unreasonably required (h). In a
Scottish case the judges of the Inner House differed in opinion
on the question whether a request for a post mortem examination
was a reasonable requirement (o). The demand for evidence
must be made directly on the claimant or some person or persons
who have been acting for him in the matter of the claim (o). It
"
is submitted that if the claimant is merely required to " furnish
evidence or information the evidence or information asked for
must be such as is in the possession of the claimant, and that he
cannot be required to procure evidence or information from other
persons unless the clause expressly requires him to do so.
Where a clause is inserted to the effect that the company's Power o£
medical adviser shall be permitted to examine the person of the directors to
assured in respect of any alleged injury or cause of death this examination
does not entitle the company to call for an exhumation after of body,
burial if they have had an opportunity of examining the body
before burial but did not do so (p). In one case even although
notice of the accident was not given to the company until after
burial it was held that they had no right under this clause to call
for an exhumation (q).
No claim unless the injury shall be caused by some outward and visible
means which proof satisfactory to the directors can be furnished.
of
Winspear v. Accident (1880), 6 Q. B. D. 42.
... of which satisfactory proof can be furnished to the directors.
Trew V. Railway Passengers' (1861), 6 H. & N. 839 6 Jur. N. S. 759. ;
Sufficient proof shall be furnished of accidental injury and that death was
caused solely by such injury.
North American Life, etc. v. Burroughs (1871), 69 Pa. 43.
The claimant shall establish affirmatively that the injury or death resulted
from actual accident.
Meadows v. Pacific Mutual Life (1895), 50 Am. S. E. 427.
The policy not to extend to any death or personal Injury unless the claimant
shall establish by direct and positive proof that the said death or injury was
caused by violent and accidental means.
Utter V. Travellers' (1887), 65 Mich. 545; Travellers' v. McConêy (1881),
127 U. S. 661 ; Peek v. Equitable Accident (1889), 52 Hun. 255.
(«) Ballantyne v. Employers' (1893), 21 E. 305; A. B. v. Northern

Accident (1896), 24 E. 258.
(o) Ballantyne v. Employers' (1893), 21 E. 305.
American Employers' Liability v. Barr (1895), 68 Fed, Eep. 873
{p) ;
Wehle V. TJ. S. Mutual Accident (1897), 153 N. Y,. 116 Boot v. London ;
Guarantee, etc. (1904), 92 App. D. N. Y. 578.

(q) Ewing v. Commercial Travellers' (1900), 55 App. D. N. Y. 241.
... To any case of death the nature cause or manner of which is unknown
or incapable of direct and positive proof.
Wright v. Sun Mutual (1878), 29 U. C. C. P. 221; Insurance Company v.
Bennett (1891), 90 Tenn. 256.
No claim unless the claimant shall transmit to the company's manager
satisfactory evidence of the accident.
Maedonald v. Befuge (1890), 17 B. 955.
. Unless it shall have been proved to the satisfaction of the directors .
. . . .
in case of death the legal representatives shall furnish all such other information
and evidence aa the directors may require from time to time or may consider
necessary or proper to elucidate the case.
Ballantyne v. Employers' (1893), 21 R. 305.
No compensation shall be payable unless such evidence as the directors may
from time to time require shall at the expense of the assured be furnished.
A. B. V. Northern Accident (1896), 2i R. 258.
Noclaim shall be payable unless any medical adviser of the association shall
be allowed to examine the person of the member in respect of any alleged injury
or cause of death then and so often as may he necessary or reasonably required
on behalf of the association.
American Employers' Liability v. Barr (1895), 68 Fed. Rep. 873; Wehle v.
U. S. Mutual Accident (1897), 153 N. Y. 116 Boot v. London Guarantee and
;
Accident (1904), 92 App. D. N. Y. 578; Swing v. Commerical Travellers'

(1900), 55 App. D. N. Y. 241.
5. Clauses defining the necessary Relation between the

Injury and the consequent Disability or Death
Is injury the When an injury has been sustained which comes within the
cause of general definition of injury caused by violent and accidental
death or
disability ? means it still remains for the claimant to prove that the injury
has caused the disability or death in the manner provided by the
policy. Where the policy provides for compensation " if this
assured shall die from the effects of the injury " it is not
necessary for the claimant to show that the injury was the
immediate or proximate cause of death in the strictest sense. It
is sufficient if the death has resulted as the natural consequence
of the injury without the intervention of any extraordinary
independent cause (?•). Thus a man having dislocated his
shoulder is confined to bed and has his general system
weakened. He catches cold to which he has become more
susceptible and dies of pneumonia. That is a death from the
effects of the injury (s). On the other hand if a man having
received an injury to his leg was run over by an omnibus and
killed because he could not so readily get out of the way there
would be an intervention of an extraordinary and independent
cause and the death could not be said to be due to the effects of
the original accidental injury to his leg {t). Where the condition
is that the injury shall be the sole cause of disability or death that
does not operate to exclude cases where the disability or death
is due to disease following as a natural consequence upon the
(r) Isitt V. BaAlway Passengers' 22 Q. D. B. 504 Western Com-

(1889), ;
mercial Travellers' 85 Fed. Eep. 401.

v. STrdiii (1898),
(g) Isitt V. Bailway Passengers' (1889), 22 Q. B. D. 504.
(<) Isitt V. Eadhvay Passengers' (1889), 22 Q. B. D. 504, 512 Insurance
;
V. Tweed (1868), 7 WaU. 44, 52.

injury as in the case of tetanus, erysipelas, blood poisoning and

similar maladies. Even where tetanus caused mental derange-
ment and death was self-inflicted the original wound was held
to be the sole cause of death («).
The fact that the disease arises from exposure, infection or
contagion, subsequent to the date of the injury, does not prevent
the original wound from being the sole cause of death if such
disease was a natural and probable consequence of the injury
and the surrounding circumstances.
If the condition is that the injury must be not only the sole Is injury the
direct cause
but also the direct or proximate cause of disability or death this of death or
would appear to exclude the consequences of disease arising from disability ?
subsequent exposure, infection or contagion (x), although it covers
all cases where the disease follows as an immediate result of
the injury as in the case of erysipelas (y) or blood poisoning where
the poison is communicated at the time the injury is inflicted (z).
Where the assured is suffering from some disease contracted Is injury the
sole cause of
independently that is to say not arising as a natural consequence death or
of an accidental injury it is often extremely difiicult to determine disability ?
whether or not the injury is the sole cause of death or disability.
Death or disabihty may be partly the consequence of disease
either because (1) disease was a contributory cause of the
accidental violence which caused the injury (2) disease had
;
weakened the body so as to render it less capable of resisting the

accidental violence which caused the injury (3) disease operating
;
together with the injury caused death or disability ; or (4) disease

was aggravated by accidental violence which caused no distinct
injury.
The first class of case is that where accident arises in
consequence of disease as where the assured had a fit while
crossing a stream and fell into the water and was drowned (a).
Here the disease was a cause contributing to the violent and
accidental means that is the fall into the water and also to the
resulting injury that is to say asphyxia because but for the
continuance of the fit the assured might have risen before he was
drowned but asphyxia was the sole proximate cause of death
;
and therefore an injury caused by violent and accidental means

was the sole cause of death.
The second class of case is that where disease and accidental
means arising independently of one another co-operate to
produce an injury for instance where the assured's kidney was in
a cancerous condition and consequently more liable to rupture
(u) Travellers' v. Bobbins (1894), 27 U. S. App. 547.

(x) Smith y. Accident (1870), L. E. 5 Ex. 302; Martin -v. Manufacturers'
(1896), 151 N. Y. 94
iy) Accident Insurance of North America v. Young (1891), 20 Can.
S. C. 280.
(z) Uardorfy. Accident, [1903] 1 K. B. 584 Martin v. Equitable (1891),
;
61 Hun. 467 Peck v. Equitable Accident (1889), 52 Hun. 255.

;
(a) Winspear v. Accident (1880), 6 Q. B. D. 42 Lawrence v. Accidental

;
(1881), 7 Q. B. D. 216.
;
than a healthy kidney would be and the assured fell against the
edge of a table and ruptured his kidney causing hemorrhage and
death (b), A healthy kidney might not have ruptured yet the
rupture was clearly caused by violent and accidental means and
the rupture was the sole proximate cause of death. The disease was
a cause contributing to the injury, but once the injury was caused
it was not a contributing cause of death unless it could be shown
that a healthy kidney would have recuperated from the rupture.

The third class of case is where disease operates as a
proximate cause of death or disability and not merely as a remote
cause contributing to the injury. If the disease is an inde-
pendent disease, that is to say not arising as a natural conse-
quence of the injury, it is immaterial whether it arose before or
after the accident. If it operates as a proximate cause of disa-
bility or death the accidental injury cannot be the sole cause of
disability or death. An instance would be that of an assured
suffering from fatty degeneration of the heart. Some fall or
other accidental cause places an extraordinary stress upon the
functions of the heart and the valves dilate but the dilatation
;
does not cause immediate death, and the heart would recuperate
if it were in a healthy condition. The heart does not recuperate
because it is diseased, and death ultimately ensues. Here the
injury is not the sole cause of death, because the diseased con-
dition of the muscular tissue is a contributory cause operating
jointly with the injury to cause death (c).
The fourth class of case is that where there is previous
disease and the assured meets with an accident \shich results in
no separate and distinct injury but merely aggravates the com-
plaint from which the assured is already suffering and death or
where the assured was suffering from inflam-
disability results, as
mation of the liver, and a fall resulted in acute inflammation of
which he died (d) and in another case where the assured was
;
suffering from a reducible hernia and an accidental lurch of a

railway train aggravated the hernia and caused it to become
strangulated resulting in death (e). In these cases the proximate
cause of death was disease which was aggravated by accidental
means, and therefore an injury caused by violent and accidental
means was not the sole cause of death. On the other hand, if
there was merely a predisposition to disease and the disease was
brought on by accidental means the case might be covered (d).
No recovery As upon the above construction of the word " immediate " an
for disability accidental injury might be the immediate cause of disability
after^speomed occurring years afterwards, it is common to provide that there
time. shall be no recovery unless disability supervenes within a specified
(b) Fetter v. Fidelity and Casualty (1903), 174 Mo. 256 97 Am. S. E.
;
560. See also Miller v. Fidelity and Casualty (1899), 97 Fed. Eep. 836
Thornton v. Travellers' (1902), 116 Ga. 124; 94 Am. S. B. 99.
(c) McCa/rthy v. Travellers' (1878), 8 Biss. 362; National Masonic
Accidents. Shryoch (1896), 36 U. S. 658.
{d) Freeman v. Mercantile Accident (1892), 156 Mass. 351.
(e) Thornton v. Travellers' (1902), 116 Ga. 121
; 94 Am. S. B. 99.
;
time after the accidental injury (/). For the same reason
the right to compensation may be limited to cases where the
disability is continuous (g).
The may be due to the
disability or continuation of disability Disability
caused by
assured's negligence. The doing of some careless act which aggra-
assured's
vates the injury may be an independent cause of disability, and negligence.
might therefore be held to exclude recovery for disability on the
ground that the injury was not the sole and direct cause. On
the other hand, the mere neglect of the assured to take reasonable
precaution or to apply proper remedies will not prevent recovery
in the absence of some express clause to that effect (h).
Where death results instantaneously from an accidental cause Death
and there is no intervening external injury, for example in the caused by
accidental
case of accidental drowning, the case is covered by the policy means
notwithstanding that on the literal reading of the clauses the without
policy postulates an injury caused by accidental means and death intervening
injury.
resulting from such injury (h).
Where the policy covers disability which is the " immediate " When dis-
result of accidental injury the word "immediate" is usually ability is
deemed to be
construed as equivalent to proximate and not as an adjective of immediate.
time. Thus a man may go about his business for a day or two
after an accidental injury and yet his subsequent liability may
be the " immediate " consequence of the injury (i).

If the assured shall die from the efiects of such injury.
Isitt V. Railway Passengers' (1889), 2 Q. B. D. 504; Trew v. Railway Passengers'
(1861), 6 H. & N. 839 ;Western, etc. v. Smith (1898), 85 Fed. Rep. 401.
In case of death produced by bodily injuries effected by . accidental means.
. .
Western Commercial Travellers' v. Smith (1898), 85 Fed. Hep. 401.

In case of death resulting solely from bodily injuries effected by . . . accidental
means.
National Masonic Accident v. Shryock (1896), 36 U. S. App. 658.
Provided death should result from such injuries independent of all other
causes.
Miller v. Fidelityand Casualty (1899), 97 Fed. Rep. 836 Fetter v. Fidelity and
;
Casualty (1903), 174 Mo. 256 97 Am. S. R. 560

; Travellers' v. Bobbins
;
(1894), 27 U. S. App. 847 New Amsterdam Casualty v. Shields (1907), 155

;
Fed. Rep. 54; National Association v. Scott (1907), 155 Fed. Rep. 92;
Travellers' Insurance v. Melick (1894), 65 Fed. Rep. 178.
Where such accidental injury is the direct and sole cause of death. •
Mardorf v. Accident Insurance, [1903] 1 K. B. 584 Smith v. Accident (1870),

;
L. R. 5 Ex. 302.
Not to extend to any case except where the injury was the proximate and sole
cause of the disability or death.
Accident Insurance of North America v. 7oung (1891), 20 Can. S. C. 280 Martin ;
V. Manufacturers' (1896) 151 N. Y. 94; Martin v. Equitable (1891), 61 Hun.
(/) Trew V. Railway Passengers' (1861), 6 H. & N. 839.

Ig) Brenden v. Traders' and Travellers' (1903), 84 App. Div. 530 Holm ;
V. Interstate Casualty (1897), 115 Mich. 79 Sherav. Ocean Accident (1900), '
;
32 Ont. E. 411 Ritter v. Preferred Masonic Mutual (1898), 185 Pa. 90

;
Borich v. Railway Officials, etc., Accident (1902), 119 Fed. Eep. 63.
(h) Maryland Casualty v. Gehrniann (1903), 96 Md. 634.
(i) Hagadorn v. Masonic Accident (1901), 59 App, Div. 321.
App. 467 Peek v. Eqtiitable Accident (1889), 52 Hun. 255 Freeman v.

; ;
Mercantile Accident (1892), 154 Mass. 351; McCarthy v. Travellers' (1878),

8 Biss. 362; Hubbardv. Mutual Accident (1897), 98'eei.'ReT^. 930; National
Masonic v. Shryock (1896), 73 Fed. Eep. 774.
Which shall independently of all other causes immediately and wholly disable.
Brmdon v. Traders' and Travellers' (1903), 84 App. Div. 530 Holm v. Interstate
;
Casualty (1897), 115 Mich. 79; Shevav. Ocean Accident (1900), 32 Ont. B.
411; Bitter v. Preferred Masonic Mutual (1898), 185 Pa. 90; Thornton v.
Travellers' (1902), 116 Ga. 121 94 Am. S. B. 99 Borick v. BaMway Officials
; ;
and Employees' Accident (1902), 119 Fed. Bep. 63.

Continuously and wholly disabling and preventing the assured from perform-
ing it.
Maryland Casualty v. Oehrmann (1903), 96 Ind. 634.
No compensation unless the disability shall accrue within thirty days.
. . .
Hagadorn v. Masonic Accident (1901), 59 App. Div. 821.
Where death [or incapacity] results from injury.

(Workmen's Compensation Act, 1906, Sch. I.)
Shirt V. Calico Printers' Association, [1909] 2 K. B. 51 Wa^neken v. B. More-
;
land <& Son, [1909] 2 K. B. 51 Tutton v. Owners of SS. iMajestic, [1909] 2

;
K. B. 54.
Besulting in disability or death.
Borick v. Bailway Officials' Accident (1902), 119 Fed. Bep. 63.
6. Clauses defining Total or Partial Disability
Total
These clauses must receive a reasonable construction in
iocapacity relation to their object. Total incapacity of the assured from
for usual following his usual business and pursuits should be construed
business.
so as to give full effect to the word " usual " (A;). If a solicitor is
so disabled that he cannot go about his business substantially
in the usual way he is entitled to recover. As Pollock, C.B., put
it, if a man cannot follow his usual business and pursuits he is
wholly incapable of doing it. His usual pursuit is not to do a

little his usual pursuit embraces the whole scope and compass
;
of his mode of getting his livelihood [1).

For any and Some policies require that the assured must be disabled from
every kind of performing any and every kind of business. Even this does not
business.
mean that the assured must be physically or mentally incapable
of performing any piece of business whatsoever. Such a con-
struction would reduce the clause to an absurdity, and the
company would never be liable except in so far as the assured
might become or remain unconscious (m). It is held therefore
to be sufficient to satisfy such a clause to prove that the assured's
injuries were of such a character that common care and prudence
required him to desist from the transaction of any business {n).
The mere fact that he might be able, with due regard to his
health, occasionally to perform some single and trivial act
connected with his business would not render the disability
partial instead of total provided that prudence demanded that he
(k) Hooper v. Accidental Death (1860), 5 H. & N. 546, 556.

[l) Hooper v. Accidental Death (1860), 5 H. & N. 546, 556.
(m) Thayer v. Standard Life, etc. (1896), 68 N. H. 577, 578.
(n) Young v. Travellers' (1888), 80 Me. 244, 248.
. .
should not transact business to any substantial extent (o) Again,

.
a man who is not really fit to do any business does not forfeit
his claim to an allowance for^ total disability because under the
stress of some emergency he actually does some work or
business (p).
Under this form of clause there is no total incapacity if a man,
although unable to carry on the entire work or business in
which he was employed, is nevertheless competent to carry on
some part of it or some other substantial work or business (g).
Total disability may be expressly defined in the policy as the Disability
period of time during which the assured is confined to bed or to may be
expressly
his house or is attended by a physician (r). Such tests however defined.
are obviously unsatisfactory (r)
Sometimes total and partial disability are defined so as to Disability
confine them to specific injuries, such as the loss of sight, hands defined as
meaning loss
or feet. Such a limitation however must be expressed in the of sight, hand
most absolutely unambiguous language, and where the proviso or foot.
was that partial disablement " implies " the loss of sight, etc. it
was held in the Court of Session that the definition was not
exhaustive but merely explanatory, and that there might be
partial disablement within the meaning of the policy although
the insured had suffered none of the specified injuries (s). Loss
of hand or foot would probably not be construed as necessarily
involving a loss by severance unless so expressed (i). Loss
means the loss of the member as one of practical utility (»)
Where loss is confined to loss by severance it is not necessary
that the whole member should be severed provided there is a
partial severance and a total loss of practical utility (x).
Where a man who had only one eye at the time he effected Insurance of
the insurance lost his other eye during the currency of the policy, one-eyed
man.
it was held that he was entitled to recover as for " complete and
irrecoverable loss of sight in both eyes " (y).
(o) Lohdill V. Labouring Men's (1897), 69 Mimi. 14; 65 Am. S. E. 642;

Wolcott V. United Life, eta. (1889), 55 Hun. 98, 100; Thayer v. Standard
Life, etc. (1890), 68 N. H. 577.
(p) Brenden v. Traders' and Travellers' (1903), 84 App. Div. N. Y. 530 ;
Neill V. Order of United Friends (1896), 149 N. Y. 430.

(g) Lyon v. Bailway Passengers' (1877), 46 Iowa, 631 ; Neil v. Order of
United Friends (1896), 149 N. Y. 430 Enapp v. Preferred Mutual Accident
;
(1889), 53 Hun. 84 ;Ford v. U. S. Mutual Accident (1889), 148 Mass. 153 ;
Young v. Travellers' (1888), 80 Me. 244 Savelandv. Fidelity and Casualty

;
(1886), 67 "Wis. 174 58 Am. Eep. 863

; U. S. Mutual Accident v. Millard
;
(1892), 43 111. App. 148; Btjlow S Union Casualty (1900), 72 Vt. 325;
M'Einley v. Bankers' Accident (1898), 106 Iowa, 81 Bean v. Travellers'
;
(1892), 94 Cal. 581 Baltimore v. Ohio Employees' Belief (1888), 122 Pa. 579.
;
(r) Liston v. Neiv YorJc Casualty (1897), 58 N. Y. Supp. 1090.

(s) Scott V. Scottish Accident (1889), 16 E. 630.
(<) Lord V. American Mutual Accident (1894), 89 Wis. 19; Shearman v.

Pacijic Mutual (1890), 77 Wis. 618 20 Am. S. E. 151.
;
(u) Supreme Court v. Turner (1901), 99 111. App. 310 ; Stevens v.

People's Mutual Accident (1892), 150 Pa. 131.
{x) SnecJc v. Travellers' (1895), 88 Hun. 94.
(y) Bawden v. London and Edinburgh, [1892] 2 Q. B. 534.
In case of bodily injury of so serious a nature as wholly to disable him from

following his usual business occupation and pursuits.
Hooper v. Accidental (1860), 5 H. & N. 546.
If disabled from following his usual or some other occupation.
Neil V. Order of United Friends (1896), 149 N. Y. 430.
As shall continuously and wholly disable the insured from performing any
and every kind of business.
Brendon v. Traders' and Travellers' (1903), 84 App. Div. 530.
Which totally disabled and prevented him from the transaction of aU kinds of
business.
Lyon V. Railway Passengers' (1877), 46 Iowa, 631.
Which wholly and prevent him from the prosecution of any and every
disable
kind of business pertaining to the occupation under which he is insured.
Enapp V. Preferred Mutual Accident (1889), 53 Hun. 84 Ford v. U. S. Mutual ;
Accident (1889), 148 Mass. 153; Young v. Travellers' (1888), 80 M. 244;

Saveland v. Fidelity and Casualty (1886), 67 Wis. 174 58 Am. Bep. 863. ;
Which shaU wholly and continuously disable him from the transaction of any
and every kind of duty pertaining to his occupation.
D. S. Mutual Accident v. Millard (1892), 43 111. App. 148.
Which wholly disable the assured from transacting any and every kind of
business pertaining to his occupation.
Lohdill V. Labouring Men's Mutual (1897), 69 Minn. 14; 65 Am. S. B. 542;
Thayer v. Standard Life and Accident (1890), 68 N. H. 577.
Which wholly and continuously disable him from performing any and every
kind of duty pertaining to his occupation.
Bylow V. Union Casualty (1900), 72 Vt. 325.
Wholly and continuously disabling him from transacting any of the duties
pertaining to his occupation.
M'Kinley v. Bankers' Accident (1898), 106 Iowa, 81.
In case of total disability to transact any business pertaining to the occupation
as above stated.
Bean v. Travellers' (1892), 94 Gal. 581.
For the immediate continuous and total loss of such business time as may
resultfrom such injuries.
Permington v. Pacific Mutual Life (1892), 85 Iowa, 468.
Totally disabled and unable to earn a livelihood.
McMahon v. Supreme Council (1893), 54 Mo. App. 468.
Totally unable to labour.
Baltimore v. Ohio Employees' Belief (1888), 122 Pa. 579.
Total disability.
Walcott V. United Life and Accident (1889), 55 Hun. 98.
No disability constitutes a claim when the assured is able to leave his bed or
house nor while convalescent nor when the attendance of
a physician is not
required every second day at the bedside.
Liston V. New York Casualty (1897), 58 N. Y. Supp. 1090.
£500 on permanent total disablement and £250 on permanent partial disable-
ment. . Permanent total disablement means
. . complete and irrecoverable
, . .
loss of sight in both eyes permanent partial disablement means

; complete . . .
and irrecoverable loss of sight in one eye.

Bawden v. London and Edinburgh, [1892] 2 Q. B. 534.
Permanent partial disablement implies the loss of one hand the loss of one
foot or the complete and irrecoverable loss of sight.
Scott Y. Scottish Accident (1889), 16 B. 630.
Loss of one hand or foot or both eyes.

Stevers v. People's Mutual Accident (1892), 150 Pa. 132; Supreme Court v.
Ttirner (1901), 99 111. App. 310.
Loss of one or both hands or feet causing an immediate continuous and total
disability.
Lord V. American Mutual Accident (1894), 89 Wis. 19.
Loss of two entire feet.
Sheanon v. Pacific Mutual (1890), 77 Wis. 618 ; 20 Am. S. E. 151.
Loss by severance of one entire hand or foot.
Sneck v. Travellers' (1895), 88 Hun. 94.
7. Clauses defining the Compensation payable to the

Assured
In modern accident policies the compensation payable is Compensa-
almost invariably a fixed sum usually a lump sum in the case of tio'n in
modern
death and a smaller lump sum in the case of permanent disability policies
and a weekly payment in case of temporary disability. Some- usually a
times as an inducement to the assured to continue his insurance fixed sum.
instead of transferring it to another company a 5 or 10 per cent,
addition to the sum assured is made annually for a specified
period (2).
InTheobald v. Railway Passengers' (a) the policy insured

" £1000in the event of death and a proportionate part of the
f 1000 in the event of personal injury." The assured was
injured and claimed £34 19s. as medical expenses and £1000 for
loss of time and profit from business. It was held that he was
entitled to damages within the ordinary rule as to remoteness
up to £1000, and that he was therefore entitled to the amount
claimed for medical expenses but that the claim for loss of time
and profit was too remote.
Clauses which have been judiciously construed.

$10 per week for a period not exceeding 30 consecutive weeks.
Crenshaw v. Pacific Mutual (1895), 63 Mo. App. 678.
A sum not exceeding $25 per week for the period of continuous disability
immediately following the accident and injuries not exceeding 52 consecutive
weeks.
Kentucky Law and Accident v. Franklin (1897), 19 Ky. L. E. 1573.
In no case shall the weekly indemnity exceed the weekly salary of the
assured.
Denisonv. Masonic Accident (1901), 59 App. Div. N. Y. 294.
Compensation not to exceed the money value of the time of the assured.
Bean v. Travellers' (1892), 94 Oal. 581.
Weekly payment for disablement payment for loss of foot
. . . payment . . .
on death provided that the total amount paid in one year shall not exceed
. . .
the mortuary benefit.

Hart V. National Masonic Accident (1898), 105 Iowa, 717.
8. Clauses excepting Injuries intentionally inflicted by the

Assured or some other Person
In so far as this exception relates to injuries intentionally Exception of
by the assured upon himself it is not really an exception self-inflicted
inflicted
injuries.
because it is not accidental and therefore would not fall within
the general risk. Where however the injury is inflicted under
(«) Dupue V. Travellers' Insurance (1909), 166 Fed. Kep. 183.

(a) (1854), 10 Ex. 45.
the influence of insanity or drink the injury is within the general

risk and not within the exception at any rate where the assured
was so insane or drunk as to be incapable of appreciating the
nature or quality of the act which he was committing (6). Such
acts must be expressly excluded from the risk by the addition to
the exception of the words " sane or insane " or words to that
effect.
When suicide But even where the consequences of suicide sane or insane
follows as
are excepted from the risk the exception does not apply where
consequence
of injury. insanity supervenes as the direct result of an accidental injury
as in a case where tetanus produced deHrium and the assured
under the influence of the delirium destroyed himself (c). The
exception must be read as excluding suicide or attempted suicide
only when it is an independent cause of death or injury and not
when it is merely a link in the natural consequences of an
accidental injury.
Exception of It has been argued in several cases that the exception of
intentional
injuries
intentional injuries inflicted by some other person than the
inflicted by assured should be confined to injuries inflicted with the consent
third person. of the assured such as surgical operations or injuries naturally
resulting from a fight voluntarily engaged in by the assured.
This argument however has usually failed and cases of wilful
wounding or murder have been held to fall within the exception (d).
Cleaning of The injury must be intentional in this sense (1) that it was
" inten-
directed against the assured (e), and (2) that the person inflicting
tional."
the injury intended to inflict the actual injury which he did
inflict (J) or at any rate that such injury was the natural and
probable consequence of his wilful act. Thus where the assured
was murdered for the purpose of highway robbery it was held
that there was no intentional injury within the meaning of the
exception because no act was directed against the assured as an
individual but merely as a member of the public whom it was
the intention of the assailant to rob without respect of persons (g).
And so where the assailant intending to kill some other person
killed the assured by mistake (h). The suggestion that an injury
is not intentional because it is not the precise injury which the
assailant intended to inflict must not be carried too far. If a man
(6) Corley v. Trcmellers' Protective (1900), 105 Fed. Rep. 854 ; Accident
Insurance v. Crandal (1886), 120 U. S. 527.
(c) Travellers' v. Bobbins (1894), 27 U. S. 547 Travellers' v. Melich
;
(1894), 65 Fed. Eep. 178.

{d) Travellers' v. M'Conhey (1887), 127 U. S. 661 Ja/rnagin v. Travellers'
;
Protective (1904), 133 Fed. Eep. 892 ; Travellers' Protective v. LanghoU

(1898), 86 Fed. Bep. 60; Travellers' v. McCarthy (1890), 15 Col. 851 ;22
Am. S. E. 410; De Graiv v. National Accident (1889),- 51 Hun, 142 Butero;
V. Travellers' {1%91), 96 Wis. 536; Brown v. TJ. 8. Casualty (1898), 88

Fed. Eep. 38 American Accident v. Carson (1896), 99 Ky. 441 59 Am. S. E.
; ;
473.
(e) HutchcraftY. Travellers' (1888), 87 Kent. 300; 12 Am. S. E. 484,487.
(/) Utter V. Travellers' (1887), 65 Mich. 545 8 Am. S. R. 913, 919.
;
(g) Hutchcraft v. Travellers' (1888), supra.

(li) Utter V. Travellers' (1887), supra.
;;
aims a blow at another's head and the latter wards it off with his
arm and gets his arm broken the injury is clearly intentional as
the assailant intended to inflict some serious injury (i). But if a
man merely intends to inflict some trifling injury on the assured
such as tripping to cause a fall and the assured in falling hits his
head against a stone and is fatally injured the fatal injury is not
intentional within the meaning of the exception (k). An injury
inflicted by a third person who is so insane or drunk that he does
not know the value or quality of the act he is committing is not
within the exception (Z).

No claim shall be made where the death or injury may have been caused . . .
by uitentional injuries by the insured or any other person.

Travellers' v. McOonkey 127 TJ. S. 661; Travellers' Protective v.
(1887),
Langholz Eep. 60; Travellers' y. McCarthy (1890), 15 Ool. 351
(1898), 86 Fed.
22 Am. S. R. 410 De Graw v. National Accident (1889), 51 Hun. App. 142
; ;
Hutchcraft v. Travellers' (1888), 87 Ky. 300 12 Am. S. R. 484 Matson v.

; ;
Travellers' (1900), 93 Me. 469; Butero v. Travellers' (1897), 96 Wis. 536 65 ;
Am. S. R. 61 Corley v. Travellers' Protective (1900), 105 Fed. Rep. 854

;
Berger v. Pacific Mutual (1898), 88 Fed. Rep. 241 North-Western Benevolent ;
V. DudUy (1901), 27 Ind. App. 327.
Intentional injuries inflicted by any person.

Brown v. TJ. S. Casualty (1898), 88 Fed. Rep. 38 ; American Accident y. Carson
(1896), 99 Ky. 441 59 Am. S. R. 473.
;
And the said death or personal injury was riot the result of design either on
the part of the insured or any other person.
Utter V. Travellers' (1887), 65 Mich. 545, 8 Am. S. R. 913 Richards v.
: ;
Travellers' (1891), 89 Oal. 170; 23 Am. S. R. 455.

Does not extend to cover death or injury caused by suicide or self-inflicted
injuries.
Accident Insurance v. Crandal (1886), 120 U. S. 527.
. . . Caused by suicide or attempted suicide (felonious or otherwise sane or
insane).
Travellers' v. Bobbins (1894), 27 U. S. App. 547.
9. Clauses excepting Injuries received in consequence of

any Breach of Law
Where the insurers rely upon this exception they must prove There must
a wilful violation of the law by the assured but in the case of a ^^^ viiitai
public law they do not require to show that the assured knew
that his act was a violation of law because every person is pre-
sumed to know the public law of the land. Thus where the
assured having a claim against another took his horse which was
standing in the public road and the owner of the horse shot him
it was held that there was a violation of the law within the
meaning of the exception if he knew that the horse did not

belong to him but thought the law justified him in taking it to
satisfy his debt, but there was no violation of the law if he
(i) Matson v. Travellers' (1900), 93 Me. 469.

(*) Bicha/rds v. Tra/uellers' (1891), 89 Cal. 170 23 Am. S. E. 465. ;
(l) Corley v. Travellers' Protective (1900), 105 Fed. Rep. 854 Berger ; v.
Pacific Mutual (1898), 88 Fed. Rep. 241 North- Western Benevolent

; v. Dudley
(1901), 27 Ind. App. 327.
thought the horse was his and that he was only taking his own
property (to).
In violation Violation of the law means violation of the criminal law and
of the not merely an infringement of some private right giving rise only
criminal law.
to a civil action (??)).
Violation of Where
the exception extends to violation of the rules of a
by-laws. corporation such as a railway company the insurers must prove
that the assured wilfully violated the rule in the sense that he
knew of the existence of the rule because unless the rules have
been given the effect of public law there is no presumption that
the assured knew of their existence (n). So also if the rule has
been allowed to fall into desuetude and is systematically ignored
by the servants of the corporation and the public there is no
wilful violation of the rule (o).
Natural and The exception against violating the law or rules of a corpora-
probable tion is sometimes worded so as, if read literally, to exclude not
consequence
of violation only injuries happening in consequence of the violation but
alone all injuries happening while violating the law or rule. The
excepted. American Courts however have refused to read this absolutely
literally and have held that some causal connexion must be
shown between the unlawful act and the injury (p), and they
have also held that at least where the exception is confined to
the consequences of an illegal act these must be such as might
naturally be expected to follow from the act done by the assured
and not merely the remote and wholly unexpected consequences (q).
Clmcses which have been judicially construed.

Not to extend to injuries received in consequence of any breach of the law.
Insurance Company v. Seaver (1873), 19 Wall, 531.
. . . while violating the law.
Lehman v. Great Eastern Casualty (1896), 7 App. D. N. Y. 424 (aff. 158 N. Y.
689) Jones v. U. S. Mutual Accident (1894), 92 Iowa, 652.
;
. . . while engaged in or in consequence of any unlawful act.

Accident Insurance v. Bennett (1891), 90 Tenn. 256; 25 Am. S. B. 685; Utter
V. Travellers' (1887), 65 Mich. 545 8 Am. S. R. 913.
;
. . . resulting wholly or partly directly or indirectly from violating the law.

Cornwall v. Fraternal Accident (1896), 6 N. D. 201 ; 66 Am. S. B. 601.
... in consequence of any violation of or attempt to violate any criminal law.
Wells V. New England Mutual Life (1899), 101 Pa. 207.
. . . through violation of the rules of any railroad company.
Marx V. Travellers' (1889), 39 Fed. Rep. 821.
. . . through violating the rules of a corporation.

Travellers' v. Eandolph (1897), 78 Fed. Bep. 754.
v. New England Mutual (1899), 101 Pa. 207.

(m) Wells
Trwvellers' v. Eandolph (1897), 78 Fed. Eep. 754.
(n)
(o) Marx v. Travellers' (1889), 39 Fed. Rep. 321; Lehman v. Great
Eastern Casualty (1896), 158 N. Y. 689.
{p) Accident Insu/rance v. Bennett (1891), 25 Am. S. E. 685 Jones v. ;
U. S. Mutual Accident (1894), 92 Iowa, 652; Utter v. Travellers' (1887), 65

Mich. 545; 8 Am. S. E. 913; Cornwall v. Fraternal Accident (1896), 6
N. D. 201 ; 66 Am. S. B. 601.
(n) Accident Insurance v. Bennett (1891), 25 Am. S. R. 685, 690 ; Insur-
ance V. Seaver (1873), 19 Wall. 531, 542.
10. Clauses excepting Injuries resulting from Fighting

or Quarrelling or Drinking
Such a provision must have a reasonable construction. It
cannot be held to mean that every frivolous controversy which
might in some sense be termed a quarrel, although it was not a
dispute or quarrel from which the assured might reasonably
have expected anger to be provoked or injury to result, is within
the meaning of the term used in the policy (r). The injury in
order to be excepted must be such as might naturally result from
a fight or quarrel of the kind in which the assured voluntarily
engaged and so where the assured consented to fight with fists
and his opponent afterwards drew a revolver and shot him it was
held that the injury was not within the exception (s). The
exception only applies to fighting and quarrelling for which the
assured is in some way to blame either as a volunteer or as a
rash speaker or wrong doer. It cannot be construed as depriving
the assured of the right of self-defence by the use of force (0-
If the assured is obliged to use force in the performance of his
duty or in the lawful vindication of his rights as in ejecting
a trespasser the consequent struggle would probably not be
deemed to be fighting or quarrelling within the meaning, of the
exception (u).
Not
to cover injuries resulting from fighting wrestling scuffling altercations
feud quarrel or assault.
Coles V. New York Casualty (1903), 87 App. Div. 41.
. . . from assault provoked by quarrelling.
Accident Insurance Company v. Bermett (1891), 90 Tenn. 256 ; 25 Am. S. R.
685.
. . caused by fighting.
.
Qresham v. Eguitahle Accident (1891), 87 Ga. 497 27 Am. S. R. 263.

;
Not to extend to any death or injury happening while the assured ia under
the influence of intoxicating liquor.
Mair v. Bailway Passengers' (1877), 37 L. T. N. S. 356; MacEobbie v. Accident
(1886), 23 S. L. R. 391.
11. Clauses excepting Injuries caused by Exposure to

Unnecessary Danger
These exceptions are framed by different companies in a great Exceptions
variety of phrases, and if literally construed they would in many ^°^ *° ^^
read too
cases defeat altogether the main object of the policy. No man literally.
travels by land or sea without wilfully exposing himself to danger
and if he travels for pleasure, and not because he must, the danger
may be said to be unnecessary (x). A man who crosses an
(r) Accident Insurance v. Bennett (1891), 25 Am. S. R. 685, 690.

Qresham, v. Equitable Accident (1891), 27 Am. S. R. 263.
(s)
{t) Qresham v. Equitable Accident (1891), 27 Am. S. R. 263, 264 ; Coles

V. New York Casualty (1903), 87 App. Div. N. Y. 41.
{u) Coles Y.New York Casualty (1908), 87 App. Div. N. Y. 41.
(x) Sangster's Trustees y. General Accident (1896), 24 R. 56, 57.
ordinary crowded street exposed to obvious risk of injury. A

is
literal interpretation is therefore as a ruleinadmissible and some
qualification must be put on the words used {y).
Conduct of a The exception is not to be read as excluding recovery where
reasonably
the conduct of the assured is that of a reasonably prudent
prudent man
is the test. man {z). Even an occasional lapse from extreme prudence
will not bring the case within the exception. The ordinary
prudent man is occasionally careless or thoughtless and there-
fore mere negligence such as might give rise to an action against
the assured if his act caused injury to others will not necessarily
prevent him from recovering on the policy {a). The act must
be one of gross or wanton negligence with regard to his own
security {h). The danger must be a substantial danger (c) and
not merely one of those trivial dangers which are incidental to
the everyday conduct of life. This is expressed by the words
"unnecessary danger" and will be implied even although the
word " unnecessary " is not used. Crossing a railway track {d),
boarding a moving train (e), climbing a fence with a loaded
gun (/), going too near the edge of a cliff in search of wild
flowers {()) have all been held to be unnecessary exposure to
danger within the meaning of the exception.
Does not The ordinary pleasures of a healthy man such as swimming,
include riding, bicycling, motoring, are not unnecessary dangers if in-
ordinary
pursuits dulged in in an ordinarily prudent manner Qi). Where however
of life a man fell over the cliffs at Dover while picking wild orchids on
a windy day it was held that by going too near the edge of the
cliffs he was running a risk which no ordinary prudent man
would have run and that the accident happened by the wilful
or negligent exposure of the assured to unnecessary danger
or peril (i). The dangers and risks incidental to a man's ordinary
occupation or means of livelihood are not unnecessary (j). A
(y) Cornish v. Accident (1889), 23 Q. B. D. 453, 455.

(z) Cornwall v. Fraternal Accident (1896), 66 Am. S. E. 601, 603.
(a) Schneider v. Provident Life (1869), 1 Am. E. 157, 161 ; Cornish v.
Accident (1889), 23 Q. B. D. 453, 455 Thomas v. Mason's Fraternal Accident
;
(1901), 64 App. Div. N. Y. 22, 23 ; Keene v. Neiu England Accident (1894),

161 Mass. 149.
(6) Johnson v. London Ouarantee (1897), 69 Am. S. E. 549, 550;
Songster's Trustees v. General Accident (1896), 24 E. 56, 57 ;Traders'
and Travellers' v.Wagley (1896), 74 Fed. Eep. 457; Berliner v. Travellers'
(1898), 121 Gal. 458; 66 Am. S. E. 49.
(c) Travellers' v. Randolph (1897), 78 Fed. Eep. 754, 762.
(d) Cornish v. Accident (1889), 23 Q. B. D. 453; Glass v. Masons'
Fraternal Accident (l^Ql) 112 Fed. Eep. 495 Neill v. Travellers' (1888), 12
, ;
Can. S. 0. 55.
(e) Small v. Travellers' (1903), 118 Ga. 900 ;Schneider v. Provident Life
(1869), 24 Wis. 28; 1 Am. E. 157.
(/) Sargent v. Central Accident (1901), 112 Wis. 29 88 Am. S. E. 946.
;
Q) Walker y.Badhvay Passengers' Assurance (1910), 129 L. T. 64.

(h) Sangster's Trustees v. General Accident (1896), 24 E. 56; Insurance
Co. -v. Seaver (1873), 19 WaU. 531; Keiffe v. National Accident (1896), 4
App. Div. N. Y. 892.
(i) Walker V. Badlway Passengers' Assurance (1910), 129 L. T. 64.
Ij) Pacific
Mutual Life v. Snowden (1893), 58 Fed. Eep. 342, 346.
;
ACCIDENT POLICIES §45
farmer must tend his cattle even although one of them is a

dangerous bull (k), and a railway employee must couple waggons
and do other more or less dangerous things (0. The only
question is whether he performed his duty in a reasonably
prudent manner or whether he went beyond it and did some-
thing reckless and foolish (m).
Neither are the ordinary duties of humanity unnecessary and or exposure
a man may incur danger in voluntarily helping another (»), he £° ^* motives
may run the most extreme danger in order to save life (o) and of humanity,
yet it will not be unnecessary danger. The test is was the risk
run reasonably appropriate to the end to be attained '?
If a danger is a hidden danger there can be no voluntary Hidden
exposure to it because the word "voluntarily" implies that the danger.
man recognised the dangerous character of the situation but
nevertheless intentionally and consciously assumed the risk (p).
With regard to this a distinction has been drawn between
two differently worded forms of the exception. Where the policy
excepted injuries " happening by exposure of the assured to
obvious risk of injury " it was held that this excluded two classes
of accidents (1) accidents which arise from an exposure by the
:
insured to risk of injury which risk is obvious to him at the time

he exposes himself to it (2) accidents which arise from an ex-
;
posure of the assured to risk of injury which risk would be

obvious to him at the time if he was paying reasonable attention
to what he was doing (q).
Where man
crossed a railway line where there was nothing
a
to intercept his view of passing trains, and he was knocked down
by a train in crossing, it was held that the accident was excluded
from the risk under one or other of the above categories under ;
(1) if he saw the train coming and attempted to pass in front of

it under (2) if he crossed the line without looking whether the
;
line was clear (r). On the other hand, in an American case

where the policy excepted injuries " caused by voluntary exposure
to unnecessary danger, hazard or perilous adventure " the Court
held that class (1) alone fell within the exception and that the
insurers had to prove that the actual danger which caused the
injury was present to the mind of the assured when he exposed
himself to it (s). In the case before the Court the assured was
Johnson v. London Guarantee (1897), 15 Mich. 86 69 Am. S. B. 549.
(K) ;
Canadian Badliuay Accident v. M'Nevin (1902), 32 Can. S. C. 194

(1) ;
BeLoy v. Travellers' (1894), 50 Am. S. R. 787 Providence Life v. Martin

;
(1869), 32 Ind. 310.

(m) Ashenfelter v. Employers' Liability (1898), 87 Fed. Rep. 682.
Canadian Railway Accident -v. M'Nevin (1902), 32 Can. S. 0. 194.
(n)
(o) Mutual Benefit (1888), 50 Hun. 60.
TucTter \.
(p) Ashmfelten v. Employers' Liability (1898), 87 Fed. Rep. 682
Travellers' Insurance v. Clarh (1900), 22 Ky. 902; Union Casualty v.
Ha/rroll (1897), 98 Tenn. 591 ; 60 Am. S. R. 873 ; BucJchard v. Travellers'
(1883), 102 Pa. 262.
Corrdsh v. Accident (1889), 23 Q. B. D. 453, 455.
(2)
Cornish v. Accident (1889), 23 Q. B. D. 453, 455 Lovell v. Accident
(r) ;
(1876), cited 29 U. C. C. P. 231, 232.

(s) Lehman v. Great Eastern Casualty (1896), 7 App. Div. N. Y. 424.
i.L. 60
;
crossing a railway track and he saw a train coming one way

and while his attention was directed to observing and avoiding
that train a train coining the other way which he did not see
knocked him down. The Court held that the accident was not
excepted because as the assured was not aware of this particular
danger there was no voluntary exposure to it but they thought
that if the words had been the same as in the English case cited
above the accident would have been excepted because there was
a risk which would have been obvious to the assured if he had
exercised ordinary prudence and looked both up and down the
line (t).
Contributory If the assured exposes himself to obvious danger and the
negligence
of third precise accident happens to him which there was reason to fear,
parties. the accident is none the less within the exception because it is
immediately due to the contributory negligence of another.
Thus in the case of the assured walking along a railway track
in the dark the fact that the driver of the locomotive might have
avoided an accident by blowing his whistle or applying his brakes
does not take the case out of the exception (ii).
Burden of Difficult questions may arise as to how far the burden of
proof.
proof with regard to this exception lies on the insurer or the
assured. Being an exception from the risk the rule applies that
once the assured has proved that the case conies within the
general risk it lies with the insurers to prove that it comes within
an exception. But where the exception as in the case of
" voluntary exposure to unnecessary danger " involves an inquiry
into the state of mind of the assured and the motives from which
he acted this burden of proof may not be easily discharged. It
has been suggested that where the insurers prove nothing but
that the assured exposed himself to danger and there is no
evidence to show why he did so they do not succeed in establish-
ing their case within the exception because they must prove
further that it was voluntary and unnecessary (v). The answer
to this seems to be that the Court will presume that a man acted
voluntarily and that where he does an apparently dangerous and
foolish thing they will presume that it was unnecessary until the
contrary be shown (x). The onus therefore does practically fall
upon the claimant to explain the conduct of the assured where
he has without apparent reason exposed himself to an obvious
danger (y).
(t) Lehman v. Great Eastern Casualty (1896), 7 App. Div. N. Y.

424, 429.
(u) Tuttle V. Travellers' (1883), 45 Am. E. 316.
(v) Williams v. U. S. Mutual Accident (1894), 82 Hun. 268 ; Meadoius v.
Pacific Mutual (1895), 50 Am. S. E. 427; Freeman v. Travellers' (1887),
144 Mass. 572.
(x) Neill V. Travellers' (1885), 12 Can. S. C. E. 55, Strong, J., at p. 63
Fowlie V. Ocean Accident (1901), 4 Ont. L. E. 146.
(y) Walker v. Baihuay Passengers' Assurance (1910), 129 L. T. 64.
Clauses which have heen judicially construed.
shall use all due diligence for his personal safety ,,and protection
The assured
. . . does not extend to cover death or injury whilst wilfully wantonly or
negligently exposing himself to any unnecessary danger.
Sangster's Trustees v. General Accident {189&), îB,. 56; Walker v. Railway
Passengers' Assurance (1910), 129 L. T. 64.
Not to cover injuries or death resulting from or caused by . , , voluntary

exposure to unnecessary danger or hazard or perilous adventure, . . nor to
.
extend to negligence contributing to the injury or death.

Traders' and Travellers' v. Wagley (1896), 74 Fed. Kep. 457. >
No claim where death or injury may have happened in consequence of any

voluntary exposure to unnecessary danger hazard or perilous adventure the . . .
assured is required to use all due diligence for personal safety and protection.
Keene v. New England Accident (1894), 161 Mass. 149; Meadows v. Pacific
Mutual (1895), 50 Am. S. B. 427.
Happening by exposure of the assured to obvious risk of injury.
Cornish v. Accident (1889), 23 Q. B. D. 453 Lovell v. Accident (1876), cited
;
29 Can. Com. PI. 231 Small v. Travellers' (1903), 118 Ga. 900.
;
By unnecessary or negligent exposure to obvious danger.

Preferred Accident v. Muir (1904), 126 Fed. Eep. 926.
Neglecting to use due diligence for self-protection.

Box V. Railway Passengers' (1881), 56 Iowa, 664 41 Am. E. 127 Pacific ; ;
Mutual V. Snowden (1893), 58 Fed. Rep. 342 Freeman v. Travellers' (1887),;
144 Mass. 572.
, . . resulting from unnecessary exposure to danger.

Sargent v. Central Accident (1901), 112 Wis. 29 88 ; Am. S. E. 946.
Caused by the wilful act of the assured exposing himself to any unnecessary
danger or peril.
Trew V. Railway Passengers' (1861), 6 H. & N. 839.
Voluntary exposure to unnecessary danger, hazard or perilous adventure.
Class V. Masons' Fraternal Accident (1901), 112 Fed. Rep. 495 Neill v. ;
Travellers' (1882), 7 Ont. A. R. 570; (1885), 12 Can. S. C. 55; Lehman v.

Great Eastern Casualty (1896), 7 App. Div. N. Y. 424 158 N. Y. 689 Marn^ ; ;
V. Travellers' (1889), 39 Fed. Rep. 321 Travellers' v. Randolph (1897), 78

;
Fed. Rep. 754; Berliner v. Travellers' (1898), 121 Cal. 458; 66 Am. S. R.
49 Badenfeld v. Massachusetts Mutual Accident (1891), 154 Mass. 77
; ;
Travellers' v. Jones (1888), 80 Ga. 541 12 Am. S. E. 270 Thomas v. Masons'

; ;
Fraternal Accident (1901), 64 App. Div. N. Y. 22; Cornwell v. Fraternal

Accident (1896), 6 N. D. 201 66 Am. S. E. 601 Bailey v. Interstate Casualty
; ;
(1896), 8 Hun. App. 127; Insurance Co. v. Seaver (1373), 19 Wall. 531;
Johnson v. London Guarantee (1897), 115 Mich. 86; 69 Am. S. E. 549;
Tucker v. Mutual Benefit (1888), 50 Hun. 50 De Loy v. Travellers' (1894), ;
50 Am. S. E. 787 Providence Life v. Martin (1869), 32 Md. 310 Canadian

; ;
Railway Accident v. M'Nevin (1902), 32 Can. S. 0. E. 194 Ashenfelter v. ;
Employers' Liability (1898), 87 Fed. Eep. 682 Travellers' Insurance v. Clark ;
(1900), 22 Ky. 902 Union Casualty v. Harroll (1897), 98 Tenn. 591 60 Am.
; ;
S. E. 873 Buckhard v. Travellers' (1883), 102 Pa. 262 Manufacturers' v.

; ;
Dorgan (1893), 58 Fed. Rep. 945.

Voluntary or unnecessary exposure to danger.
Coles V. New York Casualty (1903), 87 App. Div. N. Y. 41.
Voluntary or unnecessary exposure to danger or to obvious risk of injury.

Eeiffe v. National Accident (1896), 4 App. Div. N. Y. 392.
Exposure to any obvious or unnecessary danger.

Tuttle V. Travellers' (1888), 134 Mass. 175 45 Am. E. 316. ;
Happening by reason of his wilfully and wantonly exposing himself to any

unnecessary danger or peril.
Schneider v. Provident Life (1869), 24 Wis. 28 1 Am, E. 157. ;
In consequence of exposure to unnecessary hazard or perilous adventure,

Samtelle v. The BaJlVway Passengers (1878), 15 Blatohf. 216.
;
12. Clauses excepting Injuries caused by Exposure to

certain Specified Hazards
Construction These exceptions of which there is a great variety in the

of such
forms of policies in common use must be confined to conscious
clauses.
and voluntary acts (z) and as excluding only such injuries as
might naturally be expected to result from the particular nature
of the hazard (a). As a rule they will not be construed as
extending to such acts as are ordinarily incidental to the occupa-
tion of the assured where his occupation is specifically described
in the policy (b).
This policy does" not extend to cover injuries from over exertion, wrestling,
lifting.
Standard Life and Accident v. Schmalts (1899), 66 Ark. 588 ; 74 Am. S. B. 112.
Unnecessary lifting and voluntary over exertion.

Bustin V. Standard Life and Accident (1899), 58 Nebr. 792 ; 72 Am. S. R. 136.
Voluntary over exertion.
Keiffe v. National Accident (1896), 4 App. Div. N. Y. 392.
Through walking or being on a railroad bridge or road bed.
Wvmschenh v. Aetna Life (1903), 188 Mass. 812 Keene v. New England ;
Mutual (1895), 164^ Mass. 170; Traders' and Travellers' v. Wagley (1896), 74
Fed. Hep. 457 Piper v. Mercantile Mutual Accident (1894), 161 Mass. 589
;
Meadows v. Pacific Mutual Life (1895), 50 Am. S. B. 427; De Lay v.

Travellers' (1894), 50 Am. S. E. 787 Yancey v. Aetna Life (1899), 108 Ga.
;
349 Buckhard v. Tra/oellers' (1883), 102 Pa. 262.

;
Through standing or riding or being upon the platform of moving railway cars.
Shindene v. Travellers' (1888), 58 Wis. 13 46 Am. S. B. 618 Sawtelle
; ; v.
Railway Passengers' (1878), 15 Blatohf. 216.
While riding on the platform or steps of any railway car.
Standard Life and Accident v. Thornton (1900), 100 Fed. Bep. 582 ; Traders'
and Travellers' v. Wagley (1896), 74 Fed. Bep. 457.
From entering or attempting to enter a moving conveyance.
Terwiliizer v. National Masonic Accident (1902), 197 111. 9.
Being in or on any steam conveyance not provided for transportation of
Berliner V. TravelUrs' (1898), 121 Cal. 458; 66 Am. S. B. 49; Travellers' y.

Bamdolph (1897), 78 Fed. Bep. 754.
While the assured is employed in the manufacture ... or handling firearms.

Thomas v. Masonic Fraternal Accident (1901), 64 App. Div. N. Y. 22.
While engaged in adventures into wild and uninhabited regions.
Aetna Life v. Frierson (1902), 114 Fed. Bep. 56.
While employed in wrecking . . .
Tucker v. Mutual Benefit (1888), 50 Hun. 50.
(z) Bustin V. Standa/rd Life and Accident (1899), 58 Nebr. 792; 72

Am. S. E. Keiffe v. National Accident (1896), 4 App. Div. N. Y. 392 ;
136 ;
Shreiderer v. Travellers' (1883), 58 Wis. 13 46 Am. E. 618. ;
(a) Buckhard v. Travellers' (1888), 102 Pa. 262.

(6) Standard Life and Accident v. Schmaltz (1899), 66 Ark. 688; 74
Am. S..B. 112; De Lay v. Travellers' (1894), 50 Am. S. E. 787 Zancey v. ;
Aetna Life (1899), 108 Ga. 349.

;
13. Clauses limiting or excluding the Right of the Assured

when engaged in an Occupation more Hazardous than
that under which he is Insured
The word " occupation " in such clauses has reference to the Meaning of
vocation profession trade or calling in which the assured is ''.ooo]ipa-
engaged'for hire or profit, and does not preclude him from the
performance of acts and duties which are simply incidents
connected with the daily life of men in any or all occupations (c).
Occasional acts do not amount to an occupation and even
although they are acts which are ordinarily incidental to some
other occupation they are not acts pertaining to that occupation
unless the assured has temporarily or permanently engaged in such
occupation as a means of livelihood (rf). "When the acts are done
merely by way of recreation or to give temporary assistance
to another they are acts pertaining to the daily life of any one
whatever his occupation may be and not acts pertaining to any
particular occupation (e).
Whether the assured's occupation is or is not that which is
described in the policy (/) and whether or not the particular
act giving rise to the accident did pertain to the occupation as
described (r/) are questions of fact to be determined by the jury.
When the company's agent who negotiated the insurance was
fully informed of the facts the company may be bound by the
description of the occupation as selected by the agent Qi).
Provided that if the assured is injured in any occupation or exposure classed

by the company as more hazardous than that here given his insurance shall only
be for such sum as the premium paid by him will purchase at the rates fixed for
such hazard.
Canadian Railway Accident v. M'Nevin (1902), 32 Can. S. 0. 194; Berliner -v.
Travellers' (1898), 121 Gal. 458 66 Am. S. R. 49 Hoffman v. Standard
; ;
Life and Accident (1900), 127 N. C. 337; Yancey v. Aetna Life (1899), 108
Ga. 349; Aetna Life v. Dunn (1905), 138 Fed. Eep. 629; Employers'
Liability v. Back (1900), 102 Fed. Kep. 229; Aetna Life v. Frierson (1902),
114 Fed. Bep. 56.
While engaged temporarily or otherwise in any act or occupation classed as

more hazardous.
Union Mutual Accident v. Frohard (1890), 134 111. 228; 23 Am. S. B. 664;
Wilsley Casualty v. Sheppard (1900), 61 Kan. 851 Stamford v. Imperial
;
Guarantee, <£c. (1908), 18 Ont. L. E. 562.
(c) Union Mutual v. Frohard (1890), 134 111. 288 23 Am. S. E. 664, 668
;
BerUner v. Travellers' (1898), 121 Cal. 458; 66 Am. S. E. 49, 55.

(d) Camadian Badlway Accident v. M'Nevin (1902), 32 Can. S. C. 194;
HoUdwy V. Americam, Mutual Accident (1897), 103 Iowa, 178; Johnson v.
London Guarantee (1897), 115 Mich. 86; 69 Am. S. E. 549.
(e) EoUday v. American Mutual Accident
(1897), 103 Iowa, 178, 182.
(/) Wilder v. Continental Casualty (1907), 150 Fed. Eep. 92.
Q) Pacific Mutual v. SnowtZm (1893), 58 Fed. Eep. 342.
(h) New York Accident v. Clayton (1893), 59 Fed. Eep. 559 Pacific
;
Mutual V. Snowden (1893), 58 Fed. Eep. 342.

;
While engaged in an employment more hazardous than the one stated.

Aldnch V. Mercantile Mutual Accident (1899), 149 Mass. 457; Loesch v.
Vmon Casualty (1903), 176 Mo. 654.
While engaged in any work or duty classed as more hazardous.
Johnson v. Lmdon Guarantee (1897), 115 Mioh. 86'; 69 Am. S. E. 549.
While doing or performing any act or thing pertaining to an oooupation classed

as more hazardous.
Holiday v. American Mutual Accident (1897), 103 Iowa, 178; Thomas v.
Mason's Fraternal Accident (1901), 64 App. Div. 22 Eggenberger v. Guarantee
;
Mutual Accident (1889), 41 Fed. Eep. 172.

The policy shall be void as to all accidents occurring in any occupation
profession or employment or exposure not named or incident to the occupation
under which he receives membership.
Ena^ V. Preferred Mutual Accident (1889), 53 Hun. 84.
14. Exceptions excluding Death or Disability caused

by Disease
Disease Where the exception excludes disability or death " caused by
must be or arising from disease " the insurers must show that the
proximate
cause. disease was a proximate and not merely a remote cause of tbe
disability or death (i). Thus where disease is merely the cause
of the accident and does not operate as an immediate cause of
disability or death the case is not within the exception, as where
the assured fainted or had a fit and fell into water and was
drowned (k) or fell into a railway track in front of a train (l).
But need The disease need not be the sole cause of disability or death
not be if it is a proximate cause the case is within the exception even
sole cause
although there are other proximate causes contributing to the
result (m). Thus where the assured had a diseased heart and
slipped and fell the case was within the exception because death
resulted from the combined operation of two proximate causes,
the accidental fall and the diseased condition of the heart (n).
When Disease is not deemed to be a proximate cause of disability
disease may or death if merely contributes thereto by having weakened
it
be deemed a
proximate the system of the assured so that he has become more vul-
cause. nerable from accidental causes (o). Thus where the assured
having previously suffered from inflammation of the liver had
a predisposition to a recurrence and an accidental fall brought
on inflammation which resulted in death it was held that the
case was not within the exception if there was no existing disease
at the time of the accident but that it was within the exception
if the disease was then existing and the accident merely aggra-
(i) Lavyrence v. Accidental (1881), 7 Q. B. D. 216, 221 ; Winspear v.

Accident (1880), 42 L. T. 900, 903 ; Accident Insurance y. Crandal (1886), 120
U. S. 527.
(Jc) Winspea/r v. Accident (1880), 6 Q. B. D. 42.
(i) LoMrence v. Accidental (1881), 7 Q. B. D. 216.
(to) Commercial Travellers' Mutual Accident v. Fulton (1897), 79
Fed. Eep. 423.

(n) National Masonic Accident v. Shryooh (1896), 36 TJ. S. 658 Cawley ;
V National Employers' Accident and General (1885), 1 Cab. & El. 597.
(o) Thornton v. Travellers' (1902), 94 Am. S. B. 99, 106.
vated it (p). Where persons who have diseased organs over-

exert themselves and thereby aggravate the disease and cause
death or injury the result is due to disease and not to accidental
means (q).
The exception is if possible to be construed as including only Disease
such diseases as arise independently of the accidental cause and arising in
consequence
therefore where disease follows as the natural and probable con- of accident.
sequence of an injury caused by accidental means it is not to
be deemed within the exception unless the policy has been so
framed as to admit of no other construction (r). Thus where
the policy " did not insure in case of death or disability arising
from hernia ... or any other disease arising within the
. . .
system of the insured " and the assured fell and ruptured him-
self and died from strangulated hernia the case was not within
the exception (s). And so under a similar exception where blood
poisoning or erysipelas ensued as a direct result from an acci-
dental wound the assured was held entitled to recover (?).
The exception may be so expressed as to exclude recovery Exception
where the disease is a remote cause of the disability or death, excluding all
(1)
consequences
(2) where the disease is the direct consequence of an accidental of disease.
injury. In America if the policy provides that it shall not
extend to disability or death " caused directly or indirectly by or
'
in consequence of fits vertigo or disease the Courts hold that the '
use of the word "indirectly" brings within the exception all

cases where disease is the substantial cause of the accident and
therefore indirectly the cause of the disability or death. The
particular wording of the clause displaces the rule of law that
the proximate cause alone is to be considered, and on this ground
the case is distinguished from the English decisions in Win spear
V. Accident and Lawrence v. Accidental (u). Where the policy
excluded recovery in the case of " death or disability arising
from erysipelas or any other disease or secondary cause or
. . .
causes arising within the system of the assured," the Court held
that even although erysipelas followed as a direct consequence
of an accidental wound the case was within the exception because
the express mention of secondary causes showed that disease
could not be construed as including only diseases arising inde-
pendently of the accident (x).
(p) Freeman v. Mercantile Accident (1892), 156 Mass. 351 ; McKechnie's

Trust V. Scottish Accident (1893), 17 E. 6, 9.
(g) Travellers' Insurance v. Shelden (1897), 78 Fed. Eep. 285.
(r) Etherington v. Lancashire and Yorkshire Accident (1909), 25 T. L. B
987 ; McGarthey v. Travellers' (1878),
8 Biss. 362, 366.
(«) Fitton V. Accidental Death (1864), 17 C. B. N. S. 122 Atlanta ;
Accident v. Alexander (1898), 104 Ga. 709; Thornton v. Travellers' (1902),

116 Ga. 121 94 Am. S. R. 99 Travellers' v. Murray (1891), 25 Am. S. R. 267.
; ;
(Q Accident Insurance Y.Young (1891), 20 Can. S. C, 280; Martin v

Equitable Accident (1891), 61 App. Div. N. Y. 467.
(u) \. Dorgan (1893), 58 Fed. Eep. 945, 955;
Manufacturers' Accident ,
Cave V. Mutual (1903), 100 Mo. App. 602 Sharpe v. Commercial

Pacific ;
Truvellers' Mutual (1893), 139 Ind. 92.

(ic) Smith V. Accident (1870), L. E. 5 Ex. 302, 306.
"Disease" The meaning of " disease " may be defined in the policy and,
defined in
policy.
even where the definition was obviously inserted for another
purpose, i.e. to define the cases for which compensation for disa-
Jbility caused by disease would be given, the restricted definition
including only some half-dozen diseases was held equally appli-
cable to the exception and where the assured died from blood
poisoning (which was not one of the specified diseases) resulting
from an accidental wound his representatives were held entitled to
recover, notwithstanding an exception against death " caused by
disease or other intervening cause even although the disease or
other intervening cause may either directly or otherwise be
brought on as a result from accident " (y).
Meaning of In America the Courts have refused to construe the word
in absence of
"disease " in these exceptions as including every slight or temporary
definition.
disorder (z). A fainting spell produced by indigestion or lack
of proper food for a number of hours or from any other cause
which would not indicate any disease in the body but would
show a mere temporary disturbance or enfeeblement would pro-
bably not come within the meaning of the words " disease or
bodily infirmity " as used in these policies (a). Contact with
infectious or putrid substances giving rise to a diseased state of
the body is in a sense accidental but the injury caused thereby
is an injury caused by disease and not by accident within the
meaning of an ordinary accident policy (b).
Exceptions which have been judicially construed.
This policy only insures against death when accident within the
. . .
meaning of the policy is the direct or proximate cause thereof, but not when the
direct or proximate cause thereof is disease or other intervening cause even
although the disease or other intervening cause may itself have been aggravated
by such accident or have been due to weakness or exhaustion consequent thereon
or the death accelerated thereby.
Etherington v. Lancashire and Yorkshire (1909), 25 T. L. R. 987.
This policy does not insure in case of death or disability arising from fits . . .
or any disease whatsoever arising before or at the time or following such

accidental injury (whether consequent upon such accidental injury or not and
whether causing such death directly or jointly with such accidental injury).
Lawrence v. Accidental (1881), 7 Q. B. D. 216 Travellers' Insurance v. Melick
;
(l894), 65 Fed. Eep. 178; McCormack v. Illinois Commercial (1907), 159

Fed. Eep. 114.
. . arising from rheumatism gout hernia erysipelas or any 'other disease
.
or cause arising within the system of the insured before or at the time of or
following such accidental injury (whether causing death or disability directly
or jointly with such accidental injury).
Fittoji V. Accidental Death (1864), 17 C. B. N. S. 122.
. .arising from rheumatism gout hernia erysipelas or any other disease or

.
secondary cause or causes arising within the system of the assured before or at
the time of or following such accidental injury (whether causing death or
disability direetly or jointly with such accidental injury).
Smith V. Accident (1870), L. B. 5 Ex. 302.
(y) Mm-dorf\. Accident, [1903] 1 K. B. 584.

{z) Meyer v. Fidelity and Casualty (1895), 59 Am.
S. R. 374, 378; Pre-
ferred Accident v. Mmr
(1904), 126 Fed. Bep. 926.
(a) Manufacturers' Accident v. Dorgan (1893), 58 Fed. Eep. 945, 955.
(b) Bacon v. U. 8. MutiMl Accident (1890), 123 N. Y. 804.
caused by or arising wholly or in part from diseaae or other intervening
. . .
cause even although the disease or other intervening cause may either directly or
otherwise be brought on as a result from accident.
Mardorf v. Accident, [1903] 1 K. B. 584.
Not to extend to any case in which death or disability occurs in consequence
of disease.
Freeman v. Mercantile Accident (1892), 156 Mass. 351.
Not to extend to any death or disability which may have been caused wholly
or in part by bodUy infirmities or disease.
Accident Insurance v. Orandal (1886), 120 U. S. 527 Bacon v. U. S. Mutual ;
Accident (1890), 123 N. Y. 304.

Not to cover accident nor death nor disability resulting wholly or in part
directly or indirectly from disease or bodily infirmity.
National Masonic Accident v. Shryock (1896), 36 U. S. App. 658 Hubbard v. ;
Travellers' (1897), 98 Fed. Rep. 930 Travellers' Insurance v. Selden (1897),

;
78 Fed. Rep. 285.

Not to cover accident nor injuries nor disability nor death resulting wholly or
partly directly or indirectly from hernia . . .
Atlanta Accident v. Alexander (1898), 104 Ga, 709 Thornton v. Travellers' ;
(1902), 116 Ga. 121 94 Am. S. R. 99 ; Travellers' v. Murray (1891), 25

;
Am. S. R. 267.
Not to cover accident or death occurring while the insured was affected with
disease.
Aetna Life v. Hicks (1900), 23 Ten. Oiv. App. 74.
Not
to cover accidental injuries or death resulting from or caused directly or
indirectly wholly or in part by or in consequence of fits vertigo ... or any disease.
Manufacturers' Accident v. Dorgan (1893), 58 Fed. Rep. 945.
Does not insure against death . accelerated or promoted by any disease or
. .
bodily infirmity or any natural cause arising within the system of the assured
whether accelerated by accident or not.
Cawley v. National Employers' Ace. and Oen. (1885), 1 Cab. and El. 597.
Shall not extend to death or injury arising from natural disease or weakness
although accelerated by accident.
M'Eichniss Trs. v. Scottish Accident (1889), 17 B. 6 Clidero v. Scottish ;
Accident (1890), 19 B. 355 Hamlyn v. Crown Accidental, [18931 1

;
Q. B. 750.
Shall not extend to death or injury resulting from or caused directly or in-
directly wholly or in part by disease or bodily infirmity.
Commerical Travellers' Mutual Accident v. Fulton (1897), 79 Fed. Rep. 423.
Shall not extend to death or injury resulting wholly or partly directly or in-
directly . . from disease in any form either as cause or efiect.
.
Preferred Accident v. Muir (1904), 126 Fed. Rep. 926.

Not to cover injuries fatal or otherwise resulting directly or indirectly from
. . . vertigo or any disease or bodily infirmity.
Meyer v. Fidelity and Casualty (1895), 96 Iowa, 878 ; 59 Am. S. R. 374.
Shall not extend to any injury caused by or arising from natural disease or
weakness or exhaustion consequent upon disease . although such death may . .
have been accelerated by accident.

Winspea/r v. Accident (1880), 6 Q. B. D. 42.
Not to extend to any bodily injury happening directly or indirectly in
consequence of any disease nor to any death or disability caused wholly or in
part by bodily infirmities or disease existing prior or subsequent to the issuance
of the policy.
Martin Equitable Accident (1891), 61 Hun. App. 467 Accident Insurance v.
v. ;
Young 20 Can. S. 0. 280 Sharpe v. Commercial Travellers' Mutual

(1891), ;
(1893), 139 Md. 92.

Not to cover injuries received which under the influence of or resulting
directly or indirectly from any disease or bodily infirmity.
Carr v. Pacific Mutual (1903), 100 Mo. App. 602.
Not to extend to any injury happening directly or indirectly in consequence
of disease.
McCarthy Y. Travellers' (1878), 8 Biss. 362 Baily v. Interstate Casualty
> (1896),
;
v
8 App. Div. N. Y. 127. ;.
15. Exceptions excluding Death or Disability resulting from

Poison, inhaling Gas, or Medical Treatment
How far There has been much difference of opinion in America as
these excep-
tions imply a
to the meaning of some of these exceptions. The words
conscious act. " taking poison " " inhaling gas " have been held to imply a
conscious and voluntary act done with knowledge of the nature
of the substance taken or inhaled (c), but this view has been dis-
approved in the Federal Court (d). If the exception is against
death resulting "from poison" the conscious or voluntary
element which may be implied from the word " taking " is
eliminated and therefore death from poison taken by mistake is
a death " from poison " although it may not be a death " from
taking poison " (e). Probably however the exception against
death from poison .does not prevent recovery where there is an
accidental wound and blood poisoning supervenes as a direct
result of the original injury (/).
Surgical or Death or disability from medical or surgical treatment does
medical not necessarily imply unskilful treatment (g), but when the
treatment.
assured has met with an accidental injury and a surgical ope-
ration is thereby rendered necessary the case is not within the
exception if the operation was skilfully performed and the
assured nevertheless dies even although the death was directly
due to the operation and not to the original injury (A). Where
the assured's physician prescribed opium as a remedy for nervous
excitement and the assured died from taking more than the
prescribed dose it was held that the death was caused by medical
treatment and was within the exception (i).
Exceptions which have been judicially construed.

Does not cover death nor injury resulting wholly or partly directly or indi-
rectly from poison.
. . .
M'Olother v. Provident Mutual Accident (1898), 89 Fed. Rep. 685 32 C. C. A. ;
318 Early v. Standard Life and Accident (189Y), 113 Mich. 58 67 Am.
; ;
S. B. 445; Omhergy. U. S. Mutual Accident (1897), 101 Ky. 308 72 Am. ;
S. R. 413.
Not to cover death or injuries resulting from taking poison.
Travellers' \. Dunlop (1896), 160 lU. 642 52 Am. S. B. 355 Pollock v. U. S.
; ;
Mutual Accident (1883), 102 Pa. St. 230 48 Am. S. R. 204 ; Hill v. Hart-
;
ford (1880), 22 Hun. 187 (overruled in Paul v. Travellers' (1889), 112 N. Y.

472).
Not to cover injuries from poison or anything accidentally or otherwise taken

administered or inhaled.
Kasten v. Interstate Casualty (1898), 99 Wis. 73 Richardson v. Travellers'
;
(1891), 46 Fed. Rep. 843 Fidelity v. Waterman (1896), 161 111. 635.
;
(c) Travellers' v. Dunlop (1896), 160 111. 642; Menneiley v. Employers'

Liability (1896), 148 N. Y. 596.
McGlotherY. Provident Mutual Accident (1898), 89 Fed. Eep. 685.
(d)
M'Olother v. Provident Mutual Accident (1898), 89 Fed. Rep. 685.
(e)
(/) Hill V. Hartford (1880), 22 Hun. 187, 192 Omberg v. U. 8. Mutual ;
Accident (1897), 72 Am. S. E. 413.

(g) Westmoreland v. Preferred Accident (1896), 75 Fed. Eep. 244.
(h) Travellers' v. Murray (1891), 25 Am. S. E. 267.
(i) Bayless v. Travellers' (1877), 14 Blatchf. 143.
;
Prom anything accidentally or otherwise taken administered absorbed or

inhaled.
Fidelity and Casualty v. Lowenstein (1899), 97 Fed. Eep. 17 ; Menneiley v.
Employers' Liability (1896), 148 N. Y. 596 Paul v. ; Travellers' (1889), 112
N. Y. 472 Pichett v. Pacific Mutual (1891), 144 Pa.
; 79 27 Am.
; S. B. 618
Miller v. Fidelity and Casualty (1899), 97 Fed. Eep. 836 Dezell
; v. Fidelity
and Casualty (1903), 176 Mo. 253.
Not to cover death or disability caused wholly or in part by medical or
surgical treatment.
Westmoreland v. Preferred Accident (1896), 75 Fed. Eep. 244; Bayliss v.
Travellers' (1877), 14 Blatchf. 143 Travellers' v. Murray (1891), 25 Am.
;
S. E. 267.
Eesulting wholly or in part from poison accidentally or otherwise taken nor
directly or indirectly from the use of anaesthetics or narcotics voluntarily
administered.
Bailey v. Interstate Casualty (1896), 8 App. Div. N. Y. 127.
This policy does not cover death nor disability resulting from mineral animal
vegetable gaseous or any other kind of poisoning excepted as hereinafter stated ;
but subject to its conditions covers death or disability resulting from septicsemia.
freezing, sunstroke, drowning, hydrophobia, choking in swallowing and death only
as a result of anaesthetic while actually undergoing a surgical operation at the
hands of a duly qualified regular physician.
Herdie v. Maryland Casualty (1906), 149 Fed. Eep. 198.
16. Conditions requiring Notice of an Accident within

a Specified Time
Conditions requiring the assured or his representatives to Construction
give notice to the insurers of any accident are of the utmost im- °^
^^?^
''°^ '°"^'
portance to the insurers. They have a much better opportunity '
of testing the genuineness of the claim when the events are

recent than they would have after a substantial lapse of time
involving probably the loss of important evidence. They can
also protect their interests by ensuring proper medical attendance
and so perhaps prevent a trifling injury developing into some-
thing more serious through the assured's neglect or ignorance.
These considerations seem not infrequently to be lost sight of
by the Court or arbitrator when the defence of insufficient
notice is set up by an insurance company and the clause is
accordingly treated as imposing a mere formality which the
tribunal does its best to evade and sometimes does so only by
a forced and unnatural construction of the words used in the
policy. As an American judge has put it, " In] determining the
liability of the insurer he is entitled to the benefit of his con-
tract fairly construed and can stand upon all of its stipulations.
But when his liability has become fixed by the capital fact of a
loss within the range of the responsibility assumed in the con-
tract Courts are reluctant to deprive the assured of the benefit
of that liabilityby any narrow or technical construction of the
conditions and stipulations which prescribe the formal requisites
by means of which this accrued right is to be made available
for his indemnification" (fc). But there is no reason why the
same rules of construction should not be applied to conditions
{7c} M'Nally v. The Phoenix (1893), 137 N. Y. 389.

requiring notice as to other conditions in the policy. They are

not inserted for the purpose of enahling the insurers to escape
Habihty but rather to give them a reasonable opportunity of
investigating the claim under the most favourable circumstances
and thereby of detecting and rejecting fraudulent or exaggerated
demands. The condition ought to be construed fairly to give
effect to this object but at the same time so as to protect the
assured against being trapped by obscure or ambiguous
phraseology.
Howfar Whether or not these conditions are to be construed as
conditions precedent is always a question of construction of the
preêdeSf
policy taken as a whole (Z). No express words are necessary to
create a condition precedent, and probably the presumption
ought to be in favour of their being construed as such. In a case
in the Supreme Court of Canada (m), Tascherau, J., said, with
reference to such a condition, " To say that it is not a condition
precedent is to leave it without any effect whatsoever. The
intention of the parties which is the guide in the interpretation
of contracts must necessarily have been that this notice should be
a condition precedent to any right of action upon the policy,
otherwise the stipulation is vain, frivolous, and means nothing.
It was not necessary to say it was to be a condition precedent.
It is so by its nature. It is not a condition at all if it is not a
condition precedent." This is perhaps carrying the argument
too far in favour of the insurers, but at any rate it may safely be
said that it is not to be lightly assumed that insurers intended to
have only a counter-claim for damages if the notice was out of
time. Some conditions, however, are so carelessly framed that
side by side with conditions which are expressed as involving
forfeiture are other conditions to which no such sanction is
attached. It is then difficult to avoid giving effect to the abrupt
change of expression. It was on this ground that a Divisional
Court (Ma.thew and Cave, J.J.) held (?i) that a condition requiring
notice was not a condition precedent. " It may be," said
Cave, J., " that the company may incur extra expenses in
consequence of the absence of notice within the stipulated time,
and that expense the representatives of the insured must make
good. But the absence of notice does not make the policy
void" (o). In an insurance against employers' liability it was
provided that " the observance and performance by the employer
of the times and terms above set out so far as they contain any-
thing to be done by the employer are of the essence of the
contract " (p). Bray, J., held that this did not make the
condition requiring notice a condition precedent and that
(Z) Stoneham v. The Ocean Bailway and General Accident (1887), 19

Q. B. D. 237, 239.
(m) Employers' Liability v. Taylor (1898), 29 Can. S. 0. B. 104.
(re) Stoneham v. Ocean Bailway amd General Accident (1887), 19 Q. B. D.
237, and see Bradley v. Essex and Suffolk Accident (1911), 27 T. L. B. 455.
(o) 85 W. B. 716, 717.
(jp) Coleman's Depositaries v. Life and Health, [1907] 2 K. B. 798.

breach by the assured only involved a counter-claim for

damages. In the Court of Appeal the majority did not dissent
from this view, but Fletcher Moulton, L.J., expressed his dis-
approval of any such construction, and held that any condition
which was expressed to be of the essence of the contract was a
condition precedent. Where the condition was expressed to be
" a condition precedent to the right of the assured to recover " it
was held that this applied equally to the right of the assured's
representatives to recover in the event of his death (q).
The general rule of law is that where a party to a contract where giving
undertakes to do something which afterwards turns out to be notice is
impossible he is not thereby excused, but where from the nature ™thhi\ime
of the subject matter the performance of a promise is only limited.
possible under certain circumstances the parties may be deemed
to have impliedly confined the obhgation to cases where these
circumstances exist and to have excluded all other cases (r).
Thus the obligation to give notice of an accident may be not
unreasonably confined to cases where the claimant himself has
knowledge of the accident. On this principle it has been held
that where the assured was drowned, but his fate was not
discovered by the claimant until six months afterwards, there
was no breach if notice was given immediately after the
discovery (s), and again where the assured died, but the accidental
cause of death was not apparent until after a post-mortem
examination, that notice given immediately after the discovery
of the facts upon which the claim was based was sufficient (f).
Where the accident has caused the immediate mental derange-
ment of the assured strict compliance with the condition has
not been enforced («)• But where the assured has been instan-
taneously killed by an accident the claimant is not to be excused
because he was ignorant of the existence of an insurance or
because, being unable to find the policy, he was ignorant of its
conditions (x). Such failure to give notice is attributable not to
any impossibihty of performance but to the neglect of the
assured in not apprising some of his family or friends of the
policy or of the strict conditions contained in it (y). In an
American case where the condition was that the claimant
should give notice within seven days of the accident it was
held to be inapplicable to the case of instantaneous death
(q) Cowley v. National Employers' Accident and General ^1885), 1

Cab. & El. 597.
(r) Holcomb, J., in Wood/>nen's Accidental v. Pratt (1901), 89 Am. S. E.
777, 788.
(«) Kentzler v. American Mutual Accident (1894), 88 Wis. 589; 43
Am. S. E. 934.
(t) Trippe v. Provident Fund (1893), 37 Am. S. E. 529, 531.
(u) Woodmen's Accidental v. Pratt (1901), 62 Neb. 673 89 Am. S. E.

;
777 Hagadorn v. Masonic Accident (1901), 59 App. Div. N. Y. 321.

;
(«) Gamble v. Accident Insurance (1869), 4 Ir. E. C. L. 204 Accident ;
Insurance v. Young (1891), 20 Can. S. 0. E. 280, See, however, Konrad v.

Union Casualty (1895), 49 La. Ann. 636.
(2/) 4 Ir. E. C. L. 215.
;
because there was no claim in existence until the assured's

representatives had completed their title by probate (z). But
"
where the condition was that " the assured or his representatives
should give notice this was held to apply to those acting for
the assured after his death although they had not completed
their title as legal representatives (a).
Where serious A more difficult classcase is that where the assured
of
nature oJ meets with an accident and no injury, or a very trivial injury,
accident is
is apparent at the time, and no notice is given because the
not at first
apparent. assured never contemplates that it will give rise to any claim
under the policy. Much will depend on the precise wording of
the policy. If the obligation is absolute to give notice within a
specified number of days after the accident the Court will
probably give effect to the condition notwithstanding the apparent
hardship to the assured (b), but the context may justify the
inference that the time is not to run from the date of the
accident unless such accident has resulted in immediate death or
disability. Where the condition is that notice must be given
within so many days of " an accident causing disability or
death," the American Courts have held that until disability or
death has supervened the event of which notice is to be given
has not occurred because although there is an accident there
is no accident causing disability or death. In some cases it
has been held that the time runs from the date when disability
or death supervened (c), but in one case where disability
supervened after the prescribed number of days from the date
of the accident it was held that the clause had no application at
all and that it was sufficient if, after a claim for indemnity had
arisen, notice was given within a reasonable time (d).
Meaning of Where the condition requires notice to be given " immediately"
"immediate or " forthwith," the American Courts have repeatedly held that
notice."
this means within a reasonable time under all the circumstances
of the case and that such facts as that the injury was at first of
an apparently trifling nature or that full information of the
circumstances had not come to the knowledge of the assured are
to be taken into consideration in determining whether the delay
was or was not reasonable (e). It is, however, open to question
whether this view gives sufficient effect to the somewhat forcible
nature of the words "immediately" or "forthwith." In a licensing
case, where the statute provided that an appellant should im-
mediately after giving notice of appeal enter into a recognisance,
Globe Accident v. Gerisch (1896), 163 111. 625 54 Am. S. E. 486.

(z) ;
Paiton v. Employers' LiahiUty (1887), 20 L. B. Ir. 93.

(a)
(6) Cassely. Lancashire and Yorkshire Accident (1885), 1 T. L. E. 495.
(c) BoricTe v. Bailway Officials' wnd Employers' Accidental (1902), 119
Fed. Eep. 63 Hagadorn v. Masonic Accident (1901), 59 App. Div. N. Y. 321
;
Western, etc. v. Smith (1898), 85 Fed. Eep. 401.

(d) Odd Fellows' Fraternal Accident v. Earl (1895), 70 Fed. Eep. 16.
(e) Ewing v. Commercial Travellers' (1900), 55 Hun. App. 241 ; People's
Accident v. Smith (1889), 126 Pa. 317, Paxson, C.J., at p. 324; Kentzler v.
American Mutual (1894), 88 "Wis. 587; 43 Am. S. E. 934 Shera v. Ocean
;
Accident (1900), 32 Ont. E. 411.

the Court of Queen'sBench held that 4 days' unexplained delay

was not a compliance with the statute (/), and Cockburn, C.J.,
said, " It is
impossible to lay down any hard-and-fast rule as to
what is meaning of the word immediately in all cases.
the '
'
The words 'forthwith' and 'immediately' have the same

meaning. They are stronger than the expression 'within a
reasonable time and imply prompt vigorous action without
'
any delay and whether there has been such action is a question
of fact having regard to the circumstances of the particular
case" (Vy).
"Where the condition requires " notice of an accident " it is not Contents of
^°^^°^-
sufficient to give notice of an injury. Notice must be given of
the accidental cause alleged (/i)- Where the condition requires
full, particulars to be stated the claimant must give the best
particulars available at the time but he is not precluded from

amending his particulars when fuller or more accurate informa-
tion comes to hand (i).
The condition as to notice may be waived by the conduct of Waiver of
the company. This may be done before or after there has been conditions as
a breach of the condition, before, by conduct inducing the

claimant to rely on informal notice or to delay giving formal
notice, after, by conduct inducing the claimant to incur further
trouble or expense in the prosecution of his claim in the belief
that the forfeiture on the ground of defective notice would not be
inforced. If before the time for giving notice has expired the
insurers receive an informal or otherwise insufficient notice it is
their duty, if the defect is apparent on the face of the notice, to
inform the claimant and give him an opportunity of remedying
the defect while there is yet time, and if they do not do so their
silence will be taken as a waiver of the defect (k). A fortiori
there is a waiver if without requiring the defect to be remedied
they act upon an informal notice, as where the condition required
written notice and the insurers on receiving oral notice sent
their medical officer to investigate the case (l).
If the insurers receive no notice of any kind until the time
for giving notice has expired mere silence on the part of the
insurers can no longer operate as a waiver, and even an in-
vestigation of the claim, without repudiation on the ground of no
notice, is not to be regarded as a waiver unless the claimant is
required to incur trouble or expense (m).
It has been held in America that if the insurers without
(/) E.v. Justices of BerTcsMre (1878), 4 Q. B. D. 469.

(g) Cockburn, C.J., 4 Q. B. D. at p. 471.
(7t) Simons v. Iowa State Travelling Men's
(1897), 102 Iowa, 267.
(i) Boot V. London Chia/rantee and Accident
(1904), 92 Hun. App. 578;
Mwrtin v. Manufacturers' Accident (1896), 151 N. Y. 94.
(Jc) Underwood v. Farmers' Joint Stock (1874), 57 N. Y. 500, 505 Patrick
;
V. Farmers' Insuram.ce (1862), 43 N. H. 621, 623 ; Walsh v. London Assur-

ance (1892), 151 Pa. 607 31 Am. S. E. 786, 789.
;
(Z) Ma/rtin v. Equitable Accident (1891), 61 App.

Div. N. Y. 467.
(to) Hey wood v. Accident (1893), 85 Me. 289.
taking objection to the notice furnish the claimant with blank

forms and require him to fill them up and furnish evidence they
waive the defence of defective notice (n). The Supreme Court in
Canada, however, held that where the notice was out of time the
insurers did not waive the defect merely by receiving proofs of
loss and investigating the claim and denying liability upon the
merits (o). No party is required to name all his reasons at once
or any reason at all and the assignment of one reason for a
refusal to pay cannot be a waiver of any other existing reason
unless the other is one which could have been remedied or
obviated and the adversary was so far misled or lulled into
security by the silence as to such reason that to enforce it would
be unfair or unjust. The whole doctrine of waiver depends on
estoppel and the essential feature of it is loss or injury to the
other party by the act of the party to be estopped (p).
In practice insurers who intend to take advantage of the
notice being out of time should immediately repudiate liability
on that ground. They may then ask for proofs and evidence. This
request should be made expressly "without prejudice," but
even although this precaution is omitted the request for
information after the defence of no notice has been formally
taken cannot readily be construed as implying a waiver of that
defence [q).
How far If after the defence of no notice has been taken the insurers
proofs and
do not ask for proofs or information the claimant is not bound to
information
can be supply them and is released from further performance of the
demanded conditions of the policy in that respect (r) ; but if the insurers
after
ask for proofs and information without prejudice it would seem
repudiation
of liability. that the claimant is bound to supply them according to the
conditions because the insurers are not bound to stake their
defence solely on the ground of no notice but are entitled to a
full opportunity of investigating the claim upon its merits.
It is clear that a request for proofs or other information can
under no circumstances amount to a waiver of a breach of the
condition as to notice unless the insurers were at the time aware
of the insufficiency of the notice (s).
Notice to Where the condition requires notice to be given to the head
agent. office informal notice to a local agent cannot be relied on by the
claimant unless he can show that the information was com-
municated to the head office (t). But, on the other hand, where
the agent undertook to fill up the notice and transmit it to the
(n) Trippe v. Provident Fund (1893), 140 N. Y. 23 37 Am. S. E. 529

; ;
Moore V.Wildey Casualty (1900), 176 Mass. 418.

(o) Accident Insurance of North America v. Young (1891), 20 Can, S. C.
280.
(2>) Welsh V. London Assurance (1892), 151 Pa. 607 ; 31 Am. S. B. 786,
789 ; Travellers' v. Nax (1905), 142 Fed. Eep. 653.
(g) Hagadorn v. Masonic Accident (1901), 59 Hun. App. 321.
Coleman's Depositaries v. Life and Health Insurance, [1907] 2
(r)
K. B. 798.
(s) Hagadorn v. Masonic Accident (1901), 69 Hun. App. 321.
{t) American Accident v. Carol (1896), 13 OMo 0. C. 154.

.
head office it was held that the company could not rely upon an
error made by the agent in filling up the form (it)
It is not necessary for a claimant to prove notice as part of
his case {x). Absence of proper notice must be pleaded and
proved ia defence.
Notice of accident shall be given as soon thereafter as possible with fall

particulars.
Providence Life v. Martin (1869), 32 Md. 310.
Provided that in the event of any accident or injury for which any claim
^^L } be made ... or in case of death resulting^ therefrom immediate notice
shall be given in writing to the manager with full particulars.
Accident Insurance 'v. Young' {1&^\), 20 Can. S. C. 280; Western Commercial
Travellers' v. Smith (1898), 85 Fed. Eep. 401 Ewing v. Commercial ;
Travellers' (1900), 55 App. Div. 241; People's Accident v. Smith (1889),

126 Pa. 317 ; Boot v. London Guarantee and Accident (1904), 92 App. Div.
578 Young
; v. TravelUrs' (1888), 80 Me. 244.
Notice must be given with full particulars of the accident and injury immedi-
ately after the accident occurs.
Kentzler v. American Mutual Accident (1894), 88 Wis. 589 ; 43 Am. S. R. 934.
Written notice of accident must be given immediately to the manager.
Shera v. Ocean Accident (1900), 82 Ont. R. 411.
Immediate notice of accident or injury with full particulars.
Johnston v. Dominion, dc, Insurance (1908), 17 Ont. L. R. 462 Konrad v. ;
XJnion Casualty (1895), 49 La. Ann. 636; Horsfall v. Pacific Mutual Life
(1903), 32 Wash. 132 98 Am. S. R. 846 Lijon v. Railway Passengers' (1877),
; ;
46 Iowa, 631 ; Travellers' v. Nax (1905), 142 Fed. Rep. 653.

Immediate notice stating the full particulars as to when where and how it
occurred and failure to give such immediate notice within 10 days from
. . .
the happening of such accident shall invalidate all claim under this certificate.
Martin v. Manufacturers' Accident (1896), 151 N. Y. 94.
Written notice shall be given . . . within 10 days of the date of the accident
and injury for which claim to indemnity or benefit is made.
Woodmen's Accident v. Pratt (1901), 62 Neb. 673, 89 Am. S. R. 777 ; Odd
Fellows' Fraternal Accident v. Earl (1895), 70 Fed. Rep. 16.
Notice of the accident within 15 days from the date of the accident
. . .
causing the disability or death.

Rorick v. Railway Officials' and Employers' Accident (1902), 119 Fed. Rep. 63 ;
Siinons v. Iowa State Travelling Men's (1897), 102 Iowa, 267 Pennington ;
V. Pacific Mutual Life{1892), 85 Iowa, 468.
In case of injury from accident assured should give notice of the occurrence
of the accident and also within 14 days of the accident should forward medical
certificate.
Cassel V. Lancashire and Yorkshire Accident (1885), 1 T. L. R. 495.
Written notice shall be given within 10 days of the date of the accident and
injury.
Hagadorn v. Masonic Accident (1901), 59 App. Div. N. Y. 321.
Notice in writing of any accident must be given to the association within
7 days of its occurrence.
Cawley v. National Employers' Accident and General (1885), 1 Cab. & E. 597.
Notice of any accidental injury shall be given in writing with full particulars
of the accident and injury, and failure to give notice within 10 days of either
injury or death shall invalidate any claim.
Trippe v. Provident Fund (1893), 140 N. Y. 23 ; 37 Am. S. R. 529.
(u) Young v. Travellers' (1888), 80 Me. 244.

(x) Coburn v. Travellers' (1887), 145 Mass. 227.
I.L. 01
Unless claimant gives within 7 days written notice stating causes of injury
. . . aU claims shaU be forfeited.
Globe Accident v. Gerisch (1896), 163 lU. 625 54 Am. S. K. 486.
;
In the event of any accident assured or his representatives shall give notice
thereof in writing within 10 days of its occurrence.
Patton V. Employers' LiaUlUy (1887), 20 L. B. I. 93.
Notice of accident whether fatal or not must be delivered to the company at

their chief office within 7 days.
Gamble v. Accident (1869), 4 Ir. E. C. L. 204.
17. Conditions requiring Proof to be furnished within

a Specified Time
Construction Much of what has been said with respect to the conditions
ofsuch requiring notice applies equally to conditions requiring proof.
conditions.
They may or may not be conditions precedent according to
construction and the condition is not to be deemed to apply to
circumstances where it is impossible to comply with the con-
dition (y).
Statements in The claimant is not irrevocably bound by the statement
proof may be made in his proofs of loss, although of course they are evidence
amended.
which may be used against him at the hearing. He may amend
his proofs at will provided the amended proofs are furnished so
as to meet the requirements of the policy (2), and even at the
hearing he may amend his case if fresh facts are discovered after
the proofs have been furnished (a).
When If the insurers on receiving notice of the accident repudiate
insurers all liability and do not ask for proofs the claimant is not bound
repudiate all
liability. to furnish them (&), but probably the claimant is bound to furnish
proofs if asked to do so without prejudice to the defence.
Blank forms There is usually no obligation on the insurers to furnish
for proof.
forms of proof, but if they lead the claimant to believe that
they will furnish him with forms and do not do so they cannot
complain of the claimant's neglect in not sending the proofs (c).
Acceptance of The insurers by accepting proofs of loss do not in any sense
proofis no
admit the case put forward by the claimant and the proofs are
admission of
claim. therefore not even pi-imd facie evidence in the claimant's favour
at the hearing (d).
If on the face of them the proofs are insufficient the com-
pany should immediately notify the claimant to that effect. If
there is still time to remedy the defect, but the company allow
the time for delivering proofs to expire without taking any
(y) Americcm Mutual Accident (1894), 88 Wis. 589 43

Kentder v. ;
Am. S. E. 934; Konrad

v. Union Casualty (1895), 49 La. Ann. 636.
(^) McMaster v. North America (1873), 55 N. Y. 222, 228.
la) North American Life and Accident v. Burroughs (1871), 69 Pa. 43.
(6) Coleman's Depositaries v. Life and Health Insii/rance, [1907] 2 K. B.
798 Thornton v. Travellers' (1902), 94 Am. S. E. 99, 110 Tv/mer v. Fidelity
; ;
and Casualty (1897), 112 Mich. 425 67 Am. S. B. 428.;
(c) Standa/rd Life and Accident v. Schmaltz (1899), 66 Ark. 508 74 ;
Am. S. E. 112.
[d) People's Accident v. Smith (1889), 126 Pa. 317.
.
BURGLARY POLICIES 963
objection to the proofs delivered, they cannot afterwards object

on the ground of their insufficiency (c)
Proof means the furnishing of statements by witnesses and
documents tending to support the truth of the claim. Unless
specifically required by the policy the statements need not be on
oath. The statements, however, must give a detailed narrative of
the_ fact. A mere notice that an accident has occurred and that
an injury has resulted is not proof (/).

Affirmative proof of death or disability within two months from death or ter-
mination of disability.
Konrad v. Union Casualty (1895), 49 La. Ann. 636.
Positive proof of death shallibe furnished to the association within six months
of the date of the accident.
Kentsler v. American Mutual Accident (1894), 88 Wis. 589; 43 Am. S. R.
934.
18. Conditions requiring Action to be brought within

a Specified Time
Like the conditions requiring notice and proof, this condition
requiring action to be brought within a specified time may be
waived by the conduct of the insurers (g).
Where the policy provided that suit might be brought within
three months after proof of loss and that no suit should be
brought unless within a year of the alleged accident and the
disability of the assured extended over nine months from the
date of the accident, it was held that condition was not applic-
able (h).
Section V. —Burglary Policies
The scope of these policies varies considerably. They may Scope of

cover losses consequent upon burglary, housebreaking, robbery policy-
or theft, or one or other of these causes.
To constitute the crime of burglary at Common Law there Burglary,
must be a breaking and entering of a dwelling-house or
church with intent to commit a felony therein, and both break-
ing and entering must be committed during the night time
although not necessarily both on the same night (a). The
breaking may be actual or constructive. Actual breaking in-
cludes the opening of any door or window although not locked
(e) Ocean Accident v. Fowlie (1902), 33 Can. S. C. 253.

(/) Johnston v. Dominion, etc., Insurance (1908), 17 Ont. L. R. 462.
(g) Turner v. Fidelity and Casualty (1897), 112 Mich. 425; 67
Am. S. R. 428.
(h) Benison v. Masons' Accident (1901), 59 App. Div. N. Y. 294.
(a) Eussell on Crimes, 7th Ed. p. 1066 Stephens' Digest of Criminal
;
Law, 5th Ed. p. 282. For the purposes of a burglary at Common Law the
night time means apparently the period from dusk to dawn, and is not
affected by the statutory definition of night time in the Larceny Act, 1861,
i.e. from 9 p.m. to 6 a.m.
or bolted. Constructive breaking means the obtaining of an

entry by threat or trick or by conspiring with some one within
the premises to leave a door or window open. Entry on the
premises means the entry of the body or any part thereof or of
any instrument. The premises broken into must constitute a
dwelling-house, that is premises in which some person or persons
habitually sleep. A house does not cease to be a dwelling-house
during the temporary absence of the occupier. Under the
Larceny Act, 1861, a person entering a dwelling-house with
intent to commit a felony or committing a felony in a dwelling-
house and breaking out of such dwelHng-house in the night time
is guilty of burglary (b).
Housebreak- The Larceny Act, 1861, specifies the various acts in the
ing. nature of housebreaking, that is breaking by day or night, which
are punishable as felonies (c). They include acts in relation to
any dwelling-house, church, chapel or meeting-house, or any
building within the curtilage thereof, or to any school-house,
shop, warehouse or counting-house. In each case the essence
of the offence is a "breaking" of the same character as is
required to complete the crime of burglary.
Robbery. Kobbery is the felonious taking of money or goods to any
value from the person of another or in his presence against his
will by violence or putting him in fear (d).
Theft or Theft or larceny is the taking or carrying away of an article
larceny. without any claim of right with the intention of permanently
converting it to the use of some person other than the owner (e).
Definition of If a policy covers losses consequent upon burglary, house-
terms in breaking, robbery or theft and these are not further defined the
policy ex-
cludes tech- words will probably be construed in their technical criminal
nical mean- sense. The policy, however, may provide its own definition of
ing. the words, and if it does so that definition must be followed to the
exclusion of the technical meaning.
George v. G-oldsmiths' and General Burglary, [1899] 1 Q. B. 595

! V. An insurance was effected upon property situate in jeweller's premises
Goldsmiths' described as a " shop, warehouse and dwelling." The insurance was " against
and General loss or damage by burglary or housebreaking as hereinafter defined," and
Burglary. the risk was expressed to be loss of property insured "by theft following
upon actual forcible and violent entry upon the premises." In the early
morning before business hours a thief obtained access by opening the door
of the shop which was not bolted and the only force used in entering was
in turning the handle of the door. Having obtained entry the thief broke
into a locked show case and abstracted the jewellery. The Court held that
the loss was not covered by the policy. Although there was a " breaking "
(&) 24 & 25 "Vict. c. 96, s. 51. For the purposes of this Act the night time
means between 9 p.m. and 6 a.m.
(c) 24 & 25 Vict. 0. 96, ss. 54, 55, 56, 57, 59.
(d) East, P. 0. 707; Eussell on Crimes, 7th Ed. p. 1127; Stephens'
Digest of Criminal Law, 5th Ed. p. 279.
(e) Eussell on Crimes, 7th Ed. p. 1177 Stephens' Digest of Criminal
;
Law, 5th Ed. p. 254.

BURGLARY POLICIES 965
sufficient to constitute the crime of housebreaking, there was no " forcible

and violent entry tipon the premises " within the meaning of the policy.
The object of these words in the policy was to confine the risk to an entry
effected by real violence as contradistinguished from an entry effected by
stealth without violence. The forcing of the show case was not an entry
upon the premises which was defined as the shop, warehouse and dwelling.
A common exception to the general risk is that excluding loss Exception

by theft, etc., by members of the assured's household. When excluding loss
by theft by
such loss is excluded nothing can be recovered in respect of a member of
loss where some member of the household is guilty of complicity assured's
household.
in the theft either as a principal or accessory before the fact (_/).
Where a servant in pursuance of a preconceived scheme unbolts
the doors or windows and lets in a thief he is guilty of the theft
as a principal (/). Where a loss is thus caused by the act of a
servant and others acting in concert with him the loss cannot be
apportioned, but the whole of it must be deemed to be a loss
caused by the theft of the servant and accordingly within the
exception {f).
Another common exception to the risk in such policies is that Exception
which excludes recovery when the premises have been unoccupied where
premises un-
for a specified number of consecutive days. In the case of a occupied for
dwelling-house it is deemed to be unoccupied within the meaning specified
of this clause unless there is some one inhabiting the house and number of
consecutive
sleeping on the premises. Where the occupier and his family days.
were from home and no servant was left in the house but it was
occasionally visited by a caretaker during the day the house was
held to be unoccupied (g).
The condition against false or fraudulent claims is common False or
to burglary policies and other insurances on property. Where fraudulent
claims.
the assured claimed £507 in respect of a loss and the jury found
that the claim should not have exceeded £150 judgment was
entered for the defendants under this condition (Ji).
Now if at any time after the date hereof,

therefore this policy witnesseth that Definition of
and during the continuance of this policy, the property above described or any ^\^\ covered,
part thereof, shall be lost by theft following upon actual forcible and violent
entry upon the premises wherein the same is herein stated to be situate then the
association shall pay or make good to the assured such loss to the extent of the
value of the property so lost but not exceeding in the whole the sum or sums of
money respectively insured thereon.
Oeorge v. Ooldsmiths and Oeneral Burglary, [1899] 1 Q. B. 595.
Loss by burglary theft or robbery.
Samuels v. Tompson (1910), The Times Newspaper, Nov. 12.
Provided always that there shall be no claim on this policy ... for loss by Theft by
theft, robbery or misappropriation by members of the assured's household business members of
staff or other inmates of the insured premises. assured's
Saqui and Lawrence v. Stearns, [1911] 1 K. B. 426. household.
(/) Sagui <& Lamrenee v. Stearns, [1911] 1 K. B. 426.

(g) Clements v. National General Insurance (1910), The
Times News-
paper, June 11.
(A) Hodgkins v. Wrightson (1910), The Times Newspaper, March 24.
:
Premises The policy shall not cover loss of or damage to gold or silver plate jewellery
unoccupied. personal ornaments watches or trinkets due to any such theft as aforesaid or to
any attempt thereat arising whilst the premises are unoccupied after they have
been unoccupied for 14 consecutive days, or for more than 7 consecutive days
when the premises are situate in London or within 50 miles thereof, or for
periods while not comprising 14 or 7 consecutive days (whichever period shall be
applicable to the case) exceed 56 days altogether in any one year of insurance.
Clements v. National General Insurance (1910), The Times Newspaper,
June 11.
Fraudulent I^ ^^^ assured shall make any claim knowing the same to be false or fraudu-
claim. Isiit 8,s regards amount or otherwise the policy shall become void and all claim
thereunder shall be forfeited.
Hodgkins v. Wrightson (1910), The Times Newspaper, March 24.
Reinstate- In case of loss the company may repair any damage to property and it naay
ment. replace any damaged article with one of like quality and value instead of paying
for same in money.
Bankers' Mutual v. Ooffs (1906), 150 Fed. Kep, 78.
Section VI. —Employers' Liability Policies

Contracts of Such policies are essentially contracts of indemnity and are
indemnity. governed by the general principles of insurance applicable to fire
and other indemnity policies (i).
Description The nature and scope of the employer's business must be
in policy of clearly defined in the policy, and workmen employed outside the
assured's
business.
scope of the assured's business as described in the policy will not
be covered. Where the employers were insured as " manu-
facturers and erectors of machinery show cases and office fixtures
and general woodwork," evidence was admitted as to the trade
meaning of " general woodwork," and the question whether an
injured workman was or was not employed upon work answering
to that description was submitted to the jury (j).
Inaccuracy Where the employer's business is inaccurately described in
of description
the policy, but the company's agent knows the real nature of his
in policy
knowledge business, the company may, under certain circumstances, be
of agent. deemed to have had the agent's knowledge, and to have insured
the employer in respect of his actual business as known to the
agent and not only in respect of the business described in the
policy.
Holdsworth v. Lancashire & Yorkshire (1907), 23 T. L. E. 521
Holdsworth The plaintiff effected an insurance with an insurance company through

V. Lancashire their local agent against liability to workmen under the Workmen's Com-
£ Yorkshire, pensation Act, 1907. The proposal form was filled up by the agent, and
although he knew that the plaintiff was a builder and joiner, he described
him as a joiner. The proposal form was not read over to, or read by, the
plaintiff. The risk was accepted by the head office of the company and a
policy issued which described the plaintiff as a joiner. The plaintiff at once
called the agent's attention to this and the agent said he would get it
altered. The agent thereupon communicated with the chief clerk in the
branch office for the district and the chief clerk authorised the agent to add
the words " and builder " to the descripton. The agent did so and returned
(j) Aetna v. Indemnity <t Crowe (1907),154 Fed. Eep. 545.

ij) Fidelity & Casualty v. Phanix (1900), 100 Fed. Eep. 604.
EMPLOYERS' LIABILITY POLICIES 967
the policy to the assured, who thereupon paid the first premium and
continued to pay the premiums when due. Afterwards an accident occurred
for which the assured was liable, but the company declined to pay on the
ground that they had never accepted the risk of a joiner and builder and
that the policy had been altered without the company's authority. It was
held that the company was liable on these grounds —
(1) the agent's know-
:
ledge was the company's knowledge, and as the company had received
premiums after the alteration of the policy they were estopped from deny-
ing that the agent had the necessary authority (2) the agent's knowledge
;
was the company's knowledge, and as the agent knew the actual business of
the plaintiff the company must be held to have insured him in respect of
that business and the misdescription in the policy was immaterial.
An employer's liability policy ought to protect the assured Where insur-

ance covered
against all claims, whether at common law, under the Employers'
statutory
Liability Act, 1880 (k), or the Workmen's Compensation Act, liability only.
1906 (kk) In a Scottish case, where the insurers agreed to pay in
.
respect of liability " under or by virtue of the Employers' Liability

Act, 1880," and an injured workman recovered damages against
the assured in a common law action, it was held that the assured
could not recover on his policy, even although there was a
liability under the Act, and the same damages might have been
recovered in an action brought under the Act (l).
The premium in respect of employers' liability policies is Wages book,
and adjust-
based upon the amount of wages paid by the assured to his ment of
employees during the year of insurance. At the commencement premium.
of the risk a premium is paid upon the estimated amount of
wages, and the policy provides that the assured shall keep a
proper wages book and render an account of the actual wages
paid so that at the end of the year the premium may be adjusted
and any balance due by or to the assured paid accordingly.
If an employer declines to render a proper account of wages Account of
wages may bo
at the expiration of the risk the office may enforce their right to enforced by
such account by bringing an action for an account and payment action.
of such balance of premium as may be found due. They are
not bound to show in the first instance that there will be any
balance in their favour nor are they bound to supply the assured
with a form upon which to make his return. At the hearing of
an action brought to enforce the rendering of an account the
Court will order an account to be delivered and the office will
have the costs of the action down to the date of the order,
subsequent costs being reserved (m).
Since the keeping of a proper wages book is a matter which Whether
keeping a
only affects the amount of premium payable upon the risk it has wages book is
been held that the condition requiring the assured to keep a a condition
book is not to be deemed a condition precedent to the insurer's precedent.
liability on the policy unless it is clearly and unequivocally stated
to be so (n).
(h) 43 & 44 Vict. c. 42.

{kJc) 6 Edw. 7, c. 58.
(Z) Morrison <& Mason
Scottish Employers' Liability (1888), 16 E. 212.
v.
(to) Bay (1905), 21 T. L. E. 88.
General Accident v.
In) Bradley v. Essex and Suffolk Accident (1911), 27 T. L. E. 455.
Risk covered. Shall pay to the employer all snms which such employer shall become liable
for under or by virtue of the Employers' Liability Act, 1880, as and for any
compensation for personal injury caused to any workman in their service while
engaged in the employer's work.
Morrison and Mason v. Scottish Employers' Liability (1888), 16 B. 212.
Against loss from common law or statutory liability for damages on account of
bodily injuries fatal or non-fatal accidentally suffered within the period of this
policy by any employ^ of the assured while on duty at the places and in the
occupations mentioned in the schedule hereinafter given and during the continua-
tion of the work described in the said schedule.
Chicago Coulterville v. Fidelity and Casualty (1904), 130 Fed. Bep. 957.
Exception This policy does not cover loss from liability for injuries occasioned by
. . .
assured's reason of the 'failure of the assured to observe any statute affecting the safety of
breach of persons.
statutory Chicago Coulterville v. Fidelity and Casualty (1904), 180 Fed. Bep. 957.
duty.
Warranted that no explosives shall be used on premises.
Warranty B. Both Tool Co. V. Neio Amsterdam Casualty (1908), 161 Fed. Bep. 709.
against use of
The first and all future premiums that may be accepted are to be regulated
explosives.
by the amount of wages and salaries paid to employes and sums paid to sub-
Wages book contractors by the employer during each year. The name of every direct employ^
and adjust- and of every subcontractor shall be entered each week in a proper wages book
ment of with the sums paid and no claim shall be covered by this policy unless the name of
premium. the injured employe' or of the subcontractor employing him shall be so entered and
every subcontractor shall so far as possible be required in bis turn to keep a
similar wages book so that a record may exist of such employes as are entitled to
call upon the employer for compensation but if the wages paid by any sub-
;
contractor cannot be ascertained then for the purpose of this policy they shall be
taken to be a sum equal to 60 per cent, of the sum agreed to be paid to such sub-
contractor for such work. The employer shall at all times allow the corporation
to inspect such wages book and wiU on request supply the corporation with a
correct account of all sums paid during any year of insurance and if the total
amount so paid shall differ from the amount on which premium has been paid
the difference in premium shall be met by a further proportionate payment to the
corporation or by a refund by the corporation as the case may be.
General Accident Assurance v. Day (1904), 21 T. L. B. 88 Bradley v. Essex ;
and Suffolk Accident (1911), 27 T. L. E, 455; Gilbane v. Fidelity and

Casualty (1908), 163 Fed. Bep. 673.
Immediate The employer shall give immediate notice to the association of any accident
notice of causing injury to a workman and the employer shall also forward to the assooia-
accident, tion every written or information as to any verbal notice of claim received within
three days after the receipt of such notice and shall give aU information and
assistance required by the association. . . .
The observance and performance by the employer of the times and terms
above set out, so far as they contain anything to be done by the employer are the
essence of the contract.
Coleman's Depositories v. Life and Health Assurance, [1907] 2 K. B. 798,
Upon the occurrence of any accident notice of it shall within three days of its
occurrence be given to the company. The fullest particulars of the cause of the
accident must be carefully preserved so that in the event of legal proceedings
such may be produced or be open to inspection. The failure to observe such
particulars has been an element against employers in the law courts. The
employer on receiving notice of a claim shall within three days send on the same
or a copy thereof to the company with such further certified information as to the
time at and circumstances under which the injury was caused and the nature
and extent thereof and the name and occupation of the claimant, and such other
information as the company may by their rules or otherwise require, and he shall
cause to be supplied to the company such further certified information as to and
such evidence of the circumstances connected with such claim as the company
may from time to time apply for.
Insurers' right On receiving from the employer notice of any claim the company may take
to settle upon themselves the settlement of the same and in that case the employer shall
claims and give them all necessary information and assistance for the purpose. The employer
.
THIKD PARTY RISK POLICIES 969
own cost pay or settle any claim without the consent of the defend pro-
shall not except at his
company but any proceedings be taken to enforce any claim in respect of which oeedings.
if
such notice shall be given the company shall have the absolute conduct and
control of the same throughout in the name and on behalf of the employer and
shall in any event indemnify the employer against all costs and expenses of
and incident upon any such proceedings and the employer shall at the cost of the
company render them every assistance in his power to enable them to resist any
claim whoUy or in part or to defend any such proceedings.
The company shall not be liable under this policy unless an action to enforce Limitation of
such be brought within 60 days from the date of the entry of a final action,
liability
judgment against the assured, after a trial on the merits in a suit duly instituted
within the period limited by the Statute of Limitations awarding damages on
account of a casualty covered hereby and then only provided that such action
against the company be brought by the assured personally for damages sustained
by the assured in paying and satisfying such final judgment. This clause shall
not in any way limit restrict or abridge the company's defence to any such
action.
Goddard v. Casualty Co. (1909), 167 Fed. Eep. 750; Lynchburg Cotton Mill
Co. V. Travellers' Insurance (1906), 149 Fed. Kep. 954.
Section VII. — Third Party Risk Policies

These protect the assured agamst liabiHty in respect of Limitation
of risk.
damage caused by him or his servants to the property or persons
of third parties. It is usual to Umit the risk to a total sum
specified in the policy and further in respect of liability for
personal injuries to limit the amount which can be recovered in
respect of an injury to any one person.
The most important questions arising on these policies are Company's
with regard to the conduct by the company of negotiations for conduct of
negotiations
settlement or defence of legal proceedings when any claim for and defence.
damages is made against the assured. The policy usually pro-
vides that all claims made or legal process served upon the
assured shall be immediately forwarded to the company (o) and
that the company shall have the right to settle all claims and
defend all actions made or brought against the assured.
If the company undertakes a defence it thereby admits Company
undertaking
liability on the policy and cannot afterwards repudiate liability defence
on the ground that the loss was one not covered by the policy {p) admits
Where, however, the company merely advise settlement, but at liability.
the same time deny liability on the policy the company's defence
is not thereby prejudiced (q).
The company may by the policy have an alternative (1) to Alternative
to company
pay the total sum insured in respect of any one accident or (2) to pay sum
to assume total responsibility for the settlement or defence of assured or
the claim and hold the assured absolutely indemnified in respect defend pro-
ceedings at
of damages recovered, taxed costs of the plaintiff and the own risk.
assured's solicitor and client costs (r). If the company settles the
(o) FranTc Parmelee Co. v. Aetna Life (1908), 166 Fed. Eep. 741.
ip) B. Roth Tool Co. Y.New Amsterdam Casualty (1908), 161 Fed. Eep.
709.
(q) Chicago CouUerville Coal v. Fidelity and Casualty (1904), 130 Fed.
Eep. 957.
(r) Maryland Casualty v. Omaha Electric (1907), 157 Fed. Eep. 514;
Cadahay Packing Co. v. New Amsterdam Casualty (1904), 132 Fed. Eep. 623.
claim for an amount larger than the sum assured it is liable for
the amount so settled (s).
Condition On the other hand the company may reserve the right to
that settle or defend a claim and at the same time provide that the
company's
total liability of the company either in respect of damages
liability
limited to recovered or costs, shall in no event exceed the sum or sums
sum assured stated in the policy. If the company intend to make this pro-
in any event.
vision it must be stated in the policy with absolute clearness and
freedom from ambiguity. It is a provision that may operate
very harshly against the assured if the company elect to defend
a doubtful case with the result that damages and costs are
recovered far in excess of the sum assured although in the
first instance the claim might have been settled for a sum
within the sum assured. It is obvious that the Court will,
if possible, find a meaning in the policy more equitable to
the assured. In one case the Court held that although the
limit of liability prevented the assured recovering in respect of
damages in excess of the limit the insurers were liable for the
whole costs of an action which they defended, and were bound to
pay such costs in addition to the sum assured (t). In any case,
if the company assumes conduct of a defence it owes a duty to
the assured to conduct the proceedings with reasonable care and

prudence, and if it fails in this duty the assured may recover
damages against it in an action for negligence, notwithstanding
the provision in the policy that the company shall not be liable
in any event for a larger sum than the amount insured (u).
Limitation of The company's liability as aforesaid arising from an accident resulting in

liability in injuries to or in the death of one person is limited to . . and subject to the
.
respect of same limit for each person the total liability arising from any one accident result-
injuries to ing in injuries to or in the death of any number of persons is limited to. . . .
person. New Amsterdam Casualty v. Cumberland Telephone Co. (1907), 152 Fed. Rep.
961.
Insurer's If thereafter any suit is brought against the assured to enforce a claim for
right to settle damages on account of an accident covered by this policy the assured shall
claims and immediately forward to the company every summons or other process as soon as
defend pro- the same shall have been served on him and the company will at its own cost
ceedings. defend against such proceeding in the name and on behalf of the assured or settle
the same unless it shall elect to pay to the assured the indemnity provided for.
Frank Parmelee Co. v. Aetna Life (1908), 166 Fed. Rep. 741,; Maryland
Casualty Co. v. Omaha Electric (1907), 157 Fed. Rep. 514 Gadahay Pack-
;
ing Co. V. New Amsterdam Casualty (1904), 132 Fed. Rep. 623 Employers';
Liability Assurance v. Chicago Coke Co. (1905), 141 Fed. Rep. 962 New ;
Amsterdam Co. v. East Tennessee, etc. (1905), 139 Fed. Rep. 602 Chicago ;
Coulterville Coal Co, v. Fidelity and Casualty (1904), 130 Fed. Rep 957 ;
Attleboro Co. v. Frankfort Insurance (1909), 171 Fed. Rep. 495.
(s) New Amsterdam v. East Tennessee, etc. (1905), 139 Fed. Kep. 602.
(t) New Amsterdam Casualty v. Cumberland Telephone (1907), 152 Fed.
Eep. 961.
(u) Attleboro Co. v. Frankfort Insurance (1909), 171 Fed. Rep. 495.
FIDELITY POLICIES 971
Section VIII. —Fidelity Policies

It has been said that the grantee of a fidehty bond is not Obligation to
bound to disclose to the grantor any knowledge which he may p^^^^^^g

have of previous defalcations on the part of the person whose defalcations.
fidelity is guaranteed (x) This, however, only applies where the
.
relationship of insurer and assured is not present. A fidelity

bond is not necessarily a contract of insurance as where a
father who has obtained employment for his son guarantees his
integrity by granting a fidelity bond to the employer. Where,
however, a company carries on the business of granting fidelity
bonds or policies to employers in respect of their employees the
relationship as a rule is that of insurer and assured, and the
employer must disclose any knowledge which he has respecting
previous defalcations on the part of the employee whose
integrity is insured (ij).
The responsibility of a partnership or corporation in respect Knowledge of
of non-disclosure of information known to some of its servants

ageiTtsâsTo
or agents but not to the partners or board of directors depends
upon principles already discussed (z).
When an employer requires an applicant for employment prospective
to procure a fidelity bond and the applicant goes to an insurance
pôurmg
company and they issue a policy in favour of the employer upon bond is not
the application of the applicant, the latter is not the agent of agent of
^^pioy^"^-
the employer for the purpose of procuring the insurance so as
to fix the employer with responsibility for non-disclosure of facts
known to the applicant but not known to the employer. The
applicant is, in fact, procuring the policy in his own interest
because he is desirous of obtaining employment and although
the policy insures the employer there is no relationship of
principal and agent in the transaction (a).
How far the answers to questions relating to the checks Howfarstate-
which will be used to test the employee's honesty, and to prevent ments in
as far as possible the commission of acts of dishonesty, con- ^âmntieT^

stitute continuing warranties that such checks will be constantly as to future
employed during the currency of the risk is a matter which has f °urse of
already been discussed (b).
Apart from a possible breach of warranty arising from the Negligence of
express terms of the policy, the fact that the assured has been assured
negligent in supervising the employee does constitute a defence
to an action on the policy (c).
(x) Bryne v. Muzio (1881), 8 L. E. Ir. 396.

(y) Supra, p. 300 Smith v. Bank of Scotland (1813), 1 Dow. 272.
;
(z) Supra, p. 348; and see American Surety v. Pauly (1896), 72 Fed.
Eep. 470; American Bonding Co. v. SpoTcan Building Society (1904), 180
Fed. Eep. 737 Aetna Indemnity Co. v. Farmers' National Bank (1909),
;
169 Fed. Eep. 737.

(a) Comptoire Nationale v. Law Car and General (1909), 0. A. June 10,
353.
(6)Supra, pp. 336-338.
(c)Shepherd v. Beecher (1725), 2 P. Wms. 288 ; Guardians of Mansfield
Union v. Wright (1882), 9 Q. B. D. 683.
A statement, in answer to a question in the application form,

that the employee's books had been examined and found correct
was held to be true the facts being that an examination was
;
made and the examiners believed that the books were correct,
but the books were not correct, and the errors had been over-
looked owing to the carelessness of the examination (d).
Every breach If during the currency of a fidelity insurance the employee
ofduty by is guilty of any breach of duty which would entitle the employer
employee
during cur- to dismiss him from the employment, the assured must give
rency of risk notice to the insurer even although the conduct of the employee
to be dis-
has given rise to no clairu upon the policy (c). If the assured
closed.
does not give notice the insurer is discharged from liability.
If the assured does give notice the insurer may call upon the
assured to dismiss the employee, and if the assured refuses or
neglects to do so the insurer is discharged. The employer is not
bound to communicate to the insurers mere suspicions (/). He
must have information which would justify a reasonable man in
making a definite charge against the employee. The employer
is not bound to be diligent to discover defalcations (g). All he
is bound to do is to disclose the facts when they come to his
knowledge.
Exceptions to Fidelity policies frequently contain a condition requiring the
rule.
assured to give notice of any breach of duty committed by the
employee during the continuance of the risk and the precise
nature of the obligation will then depend upon the terms of the
condition. The equitable obligation, however, as stated in the
preceding paragraph, exists independently of any express term
in the contract (h). The principle, however, does not apply
where the bond is given in favour of some public officer, such
as a county treasurer in respect of rate collectors, who has
no power to dismiss the persons whose fidelity is insured (i). The
power to suspend a person from his office does not entitle the
insurers to have such power exercised for their benefit, and
therefore where the assured has no other power there is no
obligation upon him to give notice of irregularities to the
company.
Speculation Where the policy contained a condition that the employer
or gambling should at once give notice to the company on his becoming aware
to be dis-
that the employee was engaged in speculation or gambling, it was
closed.
held that one isolated act of gambling on a small scale need not
be disclosed (/c).
(d) Guarantee Co. v. Mechanics (1896), 80 Fed. Rep. 766.

(e) Phillips Y-Foxall (1872), L. R. 7 Q. B. 666; Sander son v. Aston (1873),
L. R. 8 Ex. 73 Burgess v. Eve (1872), L. R. 13 Eq. 450.
;
(/) Aetna Indemnity v. Crowe (1907), 154 Fed. Rep. 545 Americam,
;
Surety v. PoMly (1896), 72 Fed. Rep. 470.

(g) National Bank v. Fidelity and Casualty (1898), 89 Fed. Rep. 819.
(h) Phillips V. Foxall (1872), L. R, 7 Q. B. 666.
(i) Lawder v. Lawder (1873), I. R. 7 0. L. 57 ; Byrne v. Muzio (1881),
8 L. R. Ir. 396, 412.
(h) Guarantee Co. v. Mechanics (1896), 80 Fed. Rep. 766.
; ;
Alteration of the terms of service as between the employer Whether

alteration of
and the assured does not discharge the insurers' liability on a terms of
fidelity bond (I) unless the particular terms of service were made service dis-
the basis of the contract («t). Where the bond recited that the charges
grantor of
employer was engaged at a fixed salary of iJlOO, and during the fidelity bond.
currency thereof the employers altered the method of remunera-
tion and paid him by commission on orders executed, it was held
that the alteration discharged the surety from liability (7«).
When
a servant's fidelity is insured the assured is protected Increase of
in respect only of matters within the general scope of the servant's servant's
duties.
employment as it existed when the insurance was effected. If
during the risk entirely new duties are undertaken by the servant
there is an increase of risk which discharges the insurers, and
they are not liable even when the loss occurred in connexion
with the servant's original duties (ii)- A. mere increase in the
burden of the duties performed by the servant does not discharge
the insurers when such duties are all within the scope of his
employment as it existed when the insurance was effected (o).
Where the insurance was against any "act of fraud or dis- Meaning of
honesty " it was held that the words were not restricted to such " fraud or
dishonesty."
conduct as imports a criminal offence, but included any breach of
trust and any want of financial integrity resulting in loss to the
employer (p).
the insurance was against " loss directly occasioned by
Where " Dishonesty
. . dishonesty or negligence," and money was abstracted by

.
or negli-
gence "
some person unknown, but owing to the employee's negligence proxima
in scrutinising and checking the accounts the abstraction was not causa.
discovered at a time when if discovered the defaulter could have
been arrested and the money recovered, and was not discovered
until too late, it was held that the loss was directly occasioned by
such negligence (q).
The insurance is usually confined to defalcations occurring Loss and dis-
(1) during the currency of the policy, and (2) within a specified covery thereof
to be within
period next before discovery, thus excluding the possibility of specified
stale claims made long after the expiration of the risk (r). The time.
evidence of the claimant must show definitely that the loss
occurred within the prescribed limits (s).
(l) Sanderson v. Aston (1873), L. E. 8 Ex. 73.
(m) North Western Railway Co. v. Whinray (1854), 10 Ex. 77.

(n) Pybus v. Gibb (1856), 6 E. & B. 902 ; Wembley U.D.C. v. Poor Law, dc.
Association (1901), 17 T. L. E. 516.
(o) SUllett V. Fletcher (1867), L. E. 2 C. P. 469.
Ip)' United States Fidelity v. Egg Shippers' Co. (1906), 143 Fed. Eep, 353.
(q) Crown Bank v. London Guarantee, dc. (1908), 17 Ont. L. E. 93
United States Fidelity v. Des Moines National Bank (1906), 145 Fed
Eep. 273.
(r) Proctor Coal Co. v. U. S. Fidelity, dc. (1903), 124 Fed. Eep. 424;
America Credit Indemnity v. Champion Paper Co. (1900), 103 Fed. Eep. 609 ;
Florida Central, dc. v. America Surety Co. (1900), 99 Fed. Eep. 674;
Gua/rantee Co. v. Mechanics (1896), 80 Fed. Eep. 766.
(«) Fidelity and Casualty v. Bank of Timmonsville (1905), 139 Fed. Eep.
Policy avail- Where the employees of a company are insured the policy is
able in hands
not avoided by the appointment of a receiver or by the company
of receiver or
liquidator. going into liquidation. The employees are still the company's
servants although the management of the company's affairs is in
the hands of a receiver or liquidator (t).
Condition The policy may provide for the deduction from the amount
that money otherwise payable of all moneys due by the employer to the
due by em-
ployer to
employed. In one case where the loss was greater than the sum
defaulting assured, this was held to mean that such moneys should be
employee deducted from the loss and not from the sum assured, and where
shall be de-
ducted from the assured company was in liquidation and it was uncertain
amount pay- what sum would ultimately be found to be due to the employed,
able under the assured company was held entitled to recover the full sum
the policy.
assured upon the footing that if and when it was settled what
sum was due by them to the employed they should hold that for
the company (u).
Immediate The condition that the assured must give immediate notice of
notice of default to the insurers means that notice must be given with that
default.
degree of promptitude which is reasonable in the circumstances (x).
Condition Where there is a condition to the effect that the assured when
that assured called upon shall use all diligence in prosecuting the defaulting
must prose-
employee to conviction, and there is also a condition in general
cute
defaulter. terms that the policy is issued subject to the conditions which
shall be conditions precedent to the right on the part of the
employer to recover the assured cannot recover if he declines to
prosecute (y).
Conditions which hwve been judicially construed.
Statement, Has been in service of for years and has at all times so far as
etc. , in pro- known faithfully and satisfactorily performed his duties ... his accounts were
posal. last examined on and found correct to date in every particular.
Aetna Indemnity Co. v. Farmers' National Bank (1909), 169 Fed. Eep. 737;
America/ii Bonding Co. v. Spokane Building Society (1904), 130 Fed. Eep.
737 ; American Surety Go. v. Pauly (1896), 72 Fed. Eep. 470.
Q. State as far as circumstances will permit . the checks which will be
. .
used to secure accuracy in his accounts and when and how often they will be
balanced and closed ?
A. Examined by finance committee every fortnight.
Benham v. United Guarantee (1852), 7 Exoh. 744 Towle v. National Ouardia/n
;
Assurance (1861), 10 W. E. 49; Begina v. National Insurance (1887), 13

Vict. L. E. 914 A.-G. v. Adelaide Life (1888), 22 S. Aust. L. E. 5.
;
Q. Will he receive remittances from customers on open accounts ? If so how

often will you render customers a statement of balances due to them and by whom
will this be done ? This should be done by some other person than the applicant
and is important as a means of verifying balances appearing on the ledger.
A. Yes monthly by bookkeeper.
;
Phcenix Insurance v. Guarantee Co. (1902), 115 Fed. Eep. 964.
(t) Americam Surety Co.v. PoMly (1896), 72 Fed. Bep. 470.

\u)Fifth Liverpool, dc. v. Travellers' Accident (1892), 9 T. L. B. 221.
{x) Fidelity and Casualty v. Bank of Timmonsville (1905), 139 Fed.
Bep. 101 American Surety Oo. v. Pauly (1896), 72 Fed. Bep. 470 Han-hour
; ;
Commissioners v. Guarantee Go. (1894), 22 Can. S. 0. 542.

(y) London Gua/rantee v. Fea/rnley (1880), 5 A. C. 911.
Q. How often will the employer balance and settle the applicant's accounts ?
A. Monthly.
Q. Specify the checks which the employer will use to secure accuracy in the
applicant's accounts.
A Statements sent to customers by employer.
.
Q. In particular will employer send accounts direct to customers and if so how

often ?
A. Every three months.
Haworth <i Co. v. Sickness and Accident (1891), 18 E. 563.
Q. It is suggested (1) that all moneys and checks received be deposited intact
in the bank and all disbursements be made either by check or from a petty cash
fund drawn from the bank as required, and (2) that aU checks received be in-
dorsed " For deposit " to prevent any loss or conversion. To what extent will
these practices be followed ?
A. Fully.
Phcenix Insurance v. Guarantee Co. (1902), 115 Fed. Eep. 964.
Q. How will moneys reach
his hands ?
A. Paid to him
in the course of business for transmission to the company.
Q. State largest sum which may be held at any one time.
A. Two months' premium.
Q. To whom does he pay moneys received ?
A. To the company or representative.
its
Q. How often will moneys be deposited in bank ?
A. By him for transmission as stated.
Q. How often and by whom will cash be compared and verified with accounts
and vouchers ?
A. Monthly.
Hunt V. Fidelity and Casualty (1900), 99 Fed. Rep. 242.
Q. Will he be authorised to sign checks on your behalf ?
A. Yes.
Q. Will the counter signature of any other person be invariably required ? If
so, whose ?
A. Yes, X, bookkeeper.
Bice V. Fidelity cmd Deposit Co. (1900), 103 Fed. Rep. 427.
It is agreed that the above answers are true to the best of the knowledge and
belief of the assured and are to be taken as the basis of the contract between the
insurer and the assured.
Hunt V. Fidelity and Casualty (1900), 99 Fed. Rep. 242 ; Bice v. Fidelity and
Deposit Co. (1900), 108 Fed. Rep. 427.
The answers contained in the declaration contain a true statement of the Specific
manner in which the business is kept and the business shall be so continued and warranties
accounts so kept and a proper supervision exercised. that course
Harbour Commissioners of Montreal v. Guarantee Co. (1894), 22 Can. S. 0. of business
542; Dougherty v. London Oua/rantee (1880), 6 Vict. L. R. 376. shall continue
as stated.
This agreement is granted on the condition that the business of the employer
shall he conducted in every particular in accordance with the said proposal state-
ments and declaration, except with the consent of the association in writing.
Haworth & Co. v. Sickness and Accident (1891), 18 R. 563.
The employer shalli observe or cause to be observed all due and customary
supervision over the said employ^ for the prevention of default.
Guarantee Co. v. Mechanics, etc. (1896), 80 Fed. Rep. 766.
If at any time during the term for which the bond is given or any con- All acts of
tinuance thereof there should come to its knowledge the fact that any employ^ dishonesty
for whom the indemnity company is bound was dishonest or had done anything and bad faith
in bad faith and not through mere negligence or error of judgment the bank will during cur-
promptly notify the company of the fact, the failure to do which will relieve it rency of risk
from liability for loss thereafter arising. to be dis-
Aetna Indemnity v. Grown (1907), 154 Fed. Rep. 545 National Bank v. closed.
;
Fidelity and Casualty (1898), 89 Fed. Rep. 819 Guarantee Co. v. Mechanics,
;
etc. (1898), 80 Fed. Rep. 766 ; American Surety v. Pauly (1896), 72 Fed. Rep.
470.
The employer shall at once notify the company on his becoming aware of the
said employ^ being engaged in speculation or gambling.
Ouarmtee Co. v. Mechanics, etc. (1898), 80 Fed. Rep. 766.
;;
Immediate Provided always that the said party hereto of the second part shall within ten
notice of loss, days after the discovery by him of any fraud or dishonesty of the said " person
employed" and of any matter in respect of which any claim may be intended to
be made, give notice in writing at the ofSce of the said society as far as the case
will admit of all the particulars thereof and after any such discovery the guarantee
herein contained shall as to loss by any act of fraud or dishonesty subsequent
thereto be at an end.
Byrne v. Murzio (1881), 8 L. E. Ir. 396.
Immediate notice of default.
Fidelity and Casualty v. Bank of Timmonsville (1905), 139 Fed. Kep. 101
Amerian Surety Co. v. Pauly (1896), 72 Fed. Eep. 470 Harbour Commis- ;
sioners of Montreal v. Guarantee Co. (1893), 22 Can. S. C. 542.
Employer to Subject to the conditions herein contained which shall be conditions pre-
proseoute cedent to the right on the part of the employer to recover under this policy,
defaulter. Provided that the employer shall if and when required by the company (but
at the expense of the company if a conviction be obtained) use all diligence in
prosecuting the employed to conviction for any fraud or dishonesty (as aforesaid)
in consequence of which a claim shall have been made under this policy and
shall at the company's expense give all information and assistance to enable the
company to sue for and obtain reimbursement by the employed or by his estate
of any moneys which the company shall have become liable to pay.
London Guarantee v. Fearnley (1880), 5 A. C. 911.
The employer shall give every description of aid and assistance (not pecuniary)
for the purpose of bringing an offender to justice.
Crown Bank v. London Guarantee, etc. (1908), 17 Ont. L. K. 95.
Description All and any pecuniary loss . . . directly occasioned by dishonesty or negligence,
of risk. Crown Bank v. London Guarantee, etc. (1908), 17 Ont. L. E. 95 ; United States
Fidelity v. Des Moines National Bank (1906), 145 Fed. Eep. 273.
To make good and reimburse to the employer all and any pecuniary loss
sustained by the employer of money securities or other personal property in the
possession of the employ^ or for the possession of which he is responsible by any
act of fraud or dishonesty on the part of the said employ^ in the discharge of the
duties of his office or position hereinbefore referred to or the duties to which in
the employer's service he may be subsequently appointed.
United States Fidelity v. Egg Shippers' Co. (1906), 148 Fed. Eep. 353 American ;
Surety Co. v. Pauly (1896), 72 Fed. Eep. 470.

Shall at the expiration of three months next after proof satisfactory to the
directors of a loss make good to the extent of £1000 all and any pecuniary loss
sustained by the plaintiffs by reason of any fraud or dishonesty of the employed
in connexion with the duties of ... as should amount to a criminal act and
should be committed and discovered during the continuance of the said policy
. . the policy shall extend to cover only such losses as may have occurred
.
within the period of twelve months previous to the date of any notice of claim.
Fanning v. London Guarantee and Accident (1884), 10 Vict. L. E. (Law) 9.
The company shall not be liable hereunder for any loss occasioned by mistake
accident error of judgment on the part of any employ^ or any robbery unless by
or with the connivance or culpable negligence of the employ^ and " culpable ;
negligence " as used in this bond shall be taken and held to mean failure to
exercise that degree of care and caution which men of ordinary prudence and
intelligence usually exercise in regard to their own affairs.
Crown Bank v. London Guarantee, etc. (1908), 17 Ont. L. E. 95.
Against loss not exceeding £ over and above the loss of £ agreed to be
iirst borne by the said indemnified.
American Credit Indemnity v. Champion (1900), 103 Fed. Eep. 609.
Any claim made underthis bond or a renewal thereof shall embrace and
cover only acts and defaults committed during its currency and within twelve
months next before the date of the discovery of the act or default upon which
such claim is based.
Fidelity and Casualty v. Bank of Timmonsville (1905), 139 Fed. Eep. 101
Proctor Coal Co. v. U. S. Fidelity and Guaranty Co. (1903), 124 Fed. Eep.
424; American Credit Indemnity v. Champion Paper Co. (1900), 103 Fed.
Eep. 609 Florida Central v. American Surety Co. (1900), 99 Fed. Eep. 67'4.
;
GUAEANTEE POLICIES 977
And discovered during the continuance of this bond within six months of the
employ 6 ceasing to be in the said service.
&itarantee Co. of North America v. Mechanics (1896), 80 Fed. Bep. 766.
To pay at the expiration of three calendar months after receipt at the office of
the said society of full and satisfactory particulars and proof of the loss, and the
nature and extent thereof, all such loss not exceeding £1000 and happening
within eighteen calendar months next preceding the receipt of such particulars
and proof as the said party hereto of the second part shall sustain from any act
of fraud or dishonesty of the said collector of rates or from any. failure on his
part to duly faithfully diligently and honestly collect all such rates and taxes
now imposed or hereafter to be imposed as he shall be authorised to collect . . .
or from any failure on his part from time to time to well and truly pay over all
and every sum and sums of money which shall be collected or received by him
for or on account of any such rates or taxes.
Byrne v. Muzio (1881), 8 L. R. Ir. 396.
Provided also that any salary or commission which but for the act or acts of Money due
embezzlement on which the claim shall be founded would have become payable by employer
by the employer to the employed as aforesaid or any other money which shall be to defaulting
due to the employed from the employer shall be deducted from the amount pay^ employee to
able under/ this policy and that all moneys estate and efiects of the employed in be applied in
the hands of or received or possessed by the employer and all sums which may be first instance
or may become due from the employer to the employed and also all moneys or to make good
efiects which shall come into the possession or power of the employer for or the loss.
on account of the employed whereupon any claim shall be made on this policy
shall be applied by the employer in and towards making good the amount of his
claim under this policy in priority to any person claiming upon such money
estate or effects.
Fifth Liverpool, etc. v. Travellers' Accident (1892), 9 T. L. R. 221.
Section IX. — Guarantee Policies
Contracts of insurance whereby the insurers guarantee the insurance

assured in respect of the default or insolvency of his debtors must distinguished
be distinguished from the ordinary contract of guarantee where contract rf'*^^
a surety undertakes to be answerable to the creditor for the guarantee.
default of the principal debtor (z). Contracts of insurance are
generally matters of speculation where the person desiring to be
insured has means of knowledge as to the risk and the insurer
has not the means or not the same means. The insured
generally puts the risk before the insurer as a business trans-
action, and the insurer on the risk stated fixes a proper price to
remunerate him for the risk to be undertaken and the insurer ;
engages to pay the loss incurred by the insured in the event of

certain specified contingencies occurring. On the other hand, in
general, contracts of guarantee are between persons who occupy
or ultimately assume the positions of creditor, debtor, and surety,
and thereby the surety becomes bound to pay the debt or make
good the default of the debtor. In general the creditor does not
himself go to the surety or represent or explain to the surety the
risk to be run. The surety often takes the position from motives
of friendship to the debtor and generally not as the result of any
(a) Seaton Heath, [1899] 1 Q. B. 782; Dane v. Mortgage Insurance,

v.
[1894] 1 Q. B. 54Finlay v. Mexican Investment, [1897] 1 Q. B. 517
;
;
Denton's Estate, In re, [1904] 2 Oh. 178 Shaw v. Boyce, Limited, [1011]
;
1 Oh. 188.
I.L. 62
between bim and the creditor or in considera-

direct bargaining
any remuneration passing to him from the creditor (a).
tion of
Contracts of Contracts of guarantee and contracts of insurance are not,
guarantee and however, mutually exclusive, and a contract may have the
contracts of insurance in so far as the relationship
attributes of a contract of
insurance not
mutually between insurer and assured and the duty of uberrima fides are
exclusive. concerned, and at the same time the attributes of a contract of
guarantee in so far as the insurer's obligation to pay and his right
over against third parties is concerned (h).
Insurance Where a contract of guarantee is made by underwriters at
involves duty Lloyd's, or by a company, and is issued in the form of a policy in
of full dis-
closure.
consideration of a premium, the contract must at least, in so far
as the uberrima fides and duty to disclose is concerned, be deemed
to be an insurance, and if full disclosure of all matters material
to the risk is not made the insurers may avoid the contract (c).
Ordinary On the other hand, in the case of an ordinary guarantee,
guarantee where the surety is an individual who offers his bond on account
does not
of his friendship for or interest in the affairs of the debtor, the
necessarily
caU for full surety is not of necessity entitled to receive from the creditor,
disclosure. without inquiry, a full disclosure of all the circumstances and
dealings between the debtor and creditor. If the surety requires
to know any particular matter of which the party about to receive
the surety is informed, he must make it the subject of a distinct
inquiry (d).
Contract Whether a contract of guarantee is one of ordinary guarantee
must be in or is a contract of insurance it falls within the fourth section of
writing.
the Statute of Frauds, which provides that " no action shall be
brought whereby to charge the defendant upon any special
promise to answer for the debt default or miscarriage of another
person . .unless the agreement upon which such action shall
.
be brought, or some memorandum or note thereof shall be in

writing and signed by the party to be charged therewith or some
other person thereunto by him lawfully authorised."
Discharge The creditor must not, during the-risk, consent to any altera-
of guarantor tion in the liability of the debtor or debtors in respect of which
by release of the guarantee is given. The guarantor is entitled to have that
or giving
time to liability preserved intact for his benefit in the event of his having
debtor. to pay. Mere delay on the part of the assured in enforcing his
debt does not affect the guarantee, but any binding contract with
the debtor either by way of releasing him or giving him further
time to pay discharges the guarantors (e).
Insurers' The event upon which a guarantee insurance becomes pay-
obligation to able depends upon the construction of each particular policy.
pay loss
When that event has happened there is an obligation on the
(a) Eomer, L.J., in Seaton v. Heath, [1899] 1 Q. B. 782.
(&) Denton's Estate, In re, [1904] 2 Ch. 178 Shaw v. Boyce, Limited,
;
[1911] 1 Ch. 138.

(c) Seaton v. Heath, [1899] 1 Q. B. 782; Tibhets v. Mercantile CrecUt
Guarantee (1896), 73 Fed. Rep. 95.
(d) Hamilton Y. Watson (1845), 12 CI. & F. 109.
(e) Ward v. National BanTt of New Zealand (1883), 8 A. C. 765.
GUARANTEE POLICIES 979
insurers to pay the loss, and subsequent alterations in the

relationship between debtor and creditor will not discharge
the insurers unless the creditor agrees to surrender some right
to which the insurer ought to be subrogated (/).
Where the obligation is to pay upon the default of the debtor not affected
in payment of capital or interest, and the debtor, being a by subse-
quent dis-
company, makes default and afterwards goes into liquidation and obarge of
a scheme of arrangement is sanctioned by the Court under which debtor under
scheme of
the liabilities of the company are discharged, that does not relieve
arrangement.
the insurers on the guarantee policy on the ground either
(1) that there was no default or (2) that the insurers could not
be subrogated to the claim in respect of the debt (g).
The insurers' obligation is not necessarily an obligation to Loss payable
pay the whole debt upon the default of the debtor. It may be after final
dividend in
confined to an obligation to pay interest on the debt upon default, bankruptcy
but as to the capital, to pay only the balance which remains due or liquida-
tion.
after a final dividend has been declared in bankruptcy or wind-
ing-up .proceedings. In one case, where the insurance was in
this form in respect of a deposit with a bank, the bank went into
liquidation and was reconstructed and again went into liquida-
tion and, after paying dividends to the extent of 5s. Id. in the
pound, transferred the remaining assets, which were practically
exhausted, to a new company for realisation. Shares in the new
company were offered to the assured, but he rejected them and
sued the insurers. The Court held that, although not so called,
there had in fact been a final dividend and that the insurers
were liable. Upon paying the balance of the deposit they would
be entitled to the shares in the assets company as salvage (h).
Where the insureds guaranteed to a debenture holder the Guarantee of
debentures.
payment of debentures within three months of the specified date
of repayment and afterwards by a special resolution of debenture
holders, in respect of which the assured neither assented nor dis-
sented, the date of repayment was postponed, it was held that the
company had made default and that the assured could recover on
the policy when three months after the original date of repay-
ment had expired (i).
But although a guarantee company is not released from its Release of
guarantee
obligation to individual debenture holders merely because the
company
original debt has been discharged or altered by a resolution of under scheme
the debenture holders or by a scheme of arrangement, yet if the of arrange-
ment with
release of a guarantee company's obligation to the whole body of
debenture
debenture holders is made a term in a scheme of arrangement holders.
between the company and the debenture holders, an individual
debenture holder will be bound by the release notwithstanding
that he has dissented from the scheme (/c).
(/) Dane v. Mortgage Insicrance, [1894] 1 Q. B. 54.
Ig) Laird v. Securities Insurance (1893), 22 E. 452 ; Young v. Trustees

Assets Co. (1893), 21 E. 222 ; Law Guarantee Trust v. Munich Be-imm-ance
(1911), The Times, Nov. 10.
(h) Mi(/rdocTc v. Heath (1899), 80 L. T. 50.
(i) Finlay v. Mexican Investment Co., [1897] 1 Q. B. 517.
(k) Shaw V. Boyce, Limited, [1911] 1 Ch. 138.
Guarantee A guarantee in respect of a particular debtor may be a special

may be
guarantee guaranteeing only the repayment of some specified debt
special or
general. or debts, or it may be a general guarantee in respect of all debts
due or to become due from the specified debtor to the creditor
guaranteed. Whether it is one or the other must depend on the
words of the instrument construed in the light of surrounding
circumstances (1).
Eevocation A general guarantee such as that which might be given to a
of general
guarantee.
bank making advances to the person whose solvency is guaranteed
may be withdrawn at any time upon payment to the creditor
of all money then due (l). This, however, would not apply
to a guarantee insurance where the insurers, in consideration
of a premium, have agreed to take the risk for a specified
period.
Guarantee in A guarantee in general terms against loss from insolvency
general terms
against loss
of customers has been held in America to be a contract to pay
from in- only the ultimate loss falling upon the assured after all reason-
solvency. able steps have been taken to realise the debt or any part of it (ii).
If it is intended to give the assured a right to look to the insurers
for immediate payment of the whole debt due from each insolvent
debtor this should be clearly specified.
Primarily Primarily the obligation of the insurers upon a guarantee
insurers liable of a specified debt is to pay the whole debt upon the failure of
for whole
debt and are the debtor to pay the debt when due or upon the insolvency of
entitled to the debtor as the case may be, and any sum which may be
debt and ultimately recovered from the debtor, and all securities for the
securities.
debt belong to the insurers.
Loss caused In one case a depositor with a bank took two guarantee
by insolvency policies, (1) from an insurance company to pay the amount of the
covers refusal
of insolvent deposit three months after the bank stopping payment, (2) from
debtor to pay. underwriters at Lloyd's to pay any loss in consequence of
stoppage of the bank and insolvency of the insurance company.
The bank stopped payment and the insurance company went
into liquidation and denied liability on their policy. The under-
writers decUned to pay on their policy on the ground that the
failure of the insurance company to pay was not due to
insolvency but to the fact that they had, or believed they had,
a defence to the claim. It was held that the defence set up by
the insurance company was so shadowy that it was impossible
to believe that a solvent company would have resisted payment
and that their failure to pay was therefore due to insolvency and
that the amount of the debt could be recovered (o).
Question When a creditor obtains a double security as in the above
whether in-
case, the question may arise as to whether the second guarantor
surers are
co-sureties is a co-surety with the first or whether his obligation only
with some arises upon the failure both of the debtor and of the first
other surety.
guarantor. The distinction is of importance not only with regard
(l) Burgess v. Eve (1872), L. E. 13 Eq. 450.

(m) Mercantile CreAit Guarantee v. Wood (1895), 68 Fed. Bep. 529.
(o) MacVicar v. Poland (1894), 10 T. L. R. 566.
. -
GUARANTEE POLICIES 981
to the primary liability of the second guarantor, but also upon

the question of his right to be subrogated to the debt and the
creditor's securities. Where a debt was secured by a mortgage
deed in which X
joined as surety for repayment of the debt, and
subsequently the mortgagee obtained from a guarantee company
a policy guaranteeing payment of the mortgaged debt, it was
held that, in the circumstances proved, the company guaranteed
payment of the mortgage debt in the event of the default of
both mortgagor and surety and that as their obligation was
supplemental and not collateral they were not co-sureties with
the first surety and bound to contribute with him but were upon
payment of the debt entitled to the mortgagee's securities, and
accordingly were entitled to sue X
for the full amount of the
debt upon his covenant in the mortgage-deed (p).
Where a general guarantee in favour of a trader against Termination
losses due to insolvency of customers specifically covered the of risk.
risk for a term of two years, and the policy thereafter provided
that it should be treated as renewed from the expiration of the
original term upon the same conditions, unless two months'
notice should be given of an intention not to renew, it was held
that the automatic renewal operated once only, and that on
the expiration of four years from the commencement of the risk
the risk ceased unless expressly renewed (q).
Upon a condition that a general guarantee against loss from
insolvency should cease upon the insured trader retiring from
business, it was held that the whole risk determined upon the
retirement from the insured firm of one of the two partners (r).
The bonds of guarantee societies or insurance companies are Bo^^g gj
accepted by the Court in cases where security is required to be guarantee
given by a litigant, liquidator, receiver or any other person (s) societies ao- .
The fact that the liability on the bond is confined to payment 'coavb as^
out of the capital stock and funds of the society, and that the sufficient
personal liability of the directors is expressly excluded is not a security,
valid objection to the bond as a sufficient security (t). The
Court will consider in each case the sufficiency of the company
offered as surety, in the same way as it would consider the
sufficiency of an individual. The bond of a Scottish company
may be accepted if it submits in its bond to the jurisdiction of
the Enghsh Courts and has an address for service within the
jurisdiction (u). The bond of a foreign company may be
accepted if, under the peculiar circumstances of the case, the
Court deems it to be sufficient security (x)
A receiver appointed without salary or remuneration is entitled Allowance of
to be allowed as ^part of his expenditure premiums
i
paid
i
by guarantee
J.
premium in
./
ip) Denton's Estate, In re, [1904] 2 Oh. 178. account's^

[q) Solvency Mutual v. Froane dSSl), 7 H. & N. 5.
(r) Solvency Mutual v. Freeman (1861), 7 H. & N. 17.
(s) Golemore v. North (1872), 27 L. T. 405.
(t) Carpenter v. Treasury Solicitor (1882), 7 P. D. 285.
(u) The Annual Practice, 0. 50, r. 16 note.
(x) Aldrich v. British Griffin, dc. Co., [1904] K. B. 850.
him to a guarantee society on the bond which constitutes his

security {jj). A receiver who is remunerated is bound to pay
such premium out of his salary (j/).
Guarantee of The corporation do hereby guarantee to the assured the due payment of the
debt in de- principal moneys and interest secured by the debentures in maimer following,
fault of pay- ttat is to say, (1) If the debtors make default for more than 60 days in the pay-
ment of ment of any interest due under the debentures the corporation wiU pay the
interest or amount thereof to the assured at the expiration of 14 days after the assured shall
capital. ta-ye demanded payment thereof from the corporation ; (2) If the debtors make
default for more than three calendar months in payment of any principal money
due under the debentures the corporation will pay the same principal moneys to
the assured at the expiration of three calendar months after the assured shall
have demanded payment thereof from the corporation (3) This policy is issued
;
subject to the conditions indorsed hereon which are to be deemed part of it.
Finlay v. Mexicwn Investment Co., [1897] 1 Q. B. 517.
If the debtors default for more than 21 days in payment of any interest
make
due in respect such deposit the assurers will pay the amount thereof to the
of
assured at the expiration of 14 days after the assured shall have demanded pay-
ment thereof from the assurers.
Laird v. Securities Insurance Co. (1895), 22 E. 452.
Loss payable It is understood and agreed that interest is payable hereunder when due and
after final default is made by the bank, and continues payable hereimder on the principal
dividend. or any balance thereof until the principal is paid by the bank or the underwriters ;
and the principal sums less any portion of the principal previously received from
the bank when the final dividend in bankruptcy or liquidation is declared.
Murdoch v. Heath (1899), 80 L. T. 50.
Transfer of After default has been made in payment by the bank pursuant to the notice to
debt to them recalling the money and upon a transfer being made to the company of the
insurers con- deposit note and the money due thereunder, so as to place the company in a
dition pre- position legally to sue for such money as creditors of the bank the company will
cedent to pay to the assured the principal money for the time being due under the deposit
payment. with any interest then due thereon.
Young v. Trustee Assets, etc., Co. (1893), 21 E. 222.
Whenever any such demand as aforesaid is made the assurers shall be at
liberty to make it a condition of complying with such demand that the assured
shaU forthwith transfer the deposit and all his rights in respect thereof to the
assurers in exchange for a sum equal to the amount of the deposit and all interest
thereon up to the date of such transfer and the assured shall be bound to comply
with such condition.
Laird v. Securities Insurance Co. (1895), 22 E. 452.
Guarantee If the total amount of the sales made by the said members in any or any one
against loss of the years to which this guarantee is hereinafter made to extend, shall not
from insol- exceed £8000 then and in such case the subscribed funds of the said company
vency of standing to the credit of the debt guarantee fund mentioned in the said deed of
purchasers. settlement after satisfying all guarantees granted by the said company previously
payable and aU other prior charges on such fund shall ... be subject and liable
to pay or make good to the said members their executors etc. nine tenth parts
of the loss or damage to be occasioned to the said members in respect of goods
sold by the said members during the term of two years, from to , by
reason of any or any one of the purchasers of such goods being duly found and
declared bankrupt, or taking benefit of any act for the relief of insolvent debtors
or making an assignment for the benefit of his or their creditors or compounding
with them under the sanction of the said company within such time aforesaid
and during any further period in respect whereof the said members shall con-
tribute to the funds of the said company and the said company shall consent to
receive further payments at the rate aforesaid.
Solvency Mutual v. Proane (1861), 7 H. & N. 5.
(y) Harris v. Sleep, [1897] 2 Oh. 83.

LIAÊ STOCK POLICIES 983
Against loss by reason of tlie insolvency of debtors owing for mercbandise.

Mercantile Credit Guarantee v. Wood (1895), 68 Fed. Rep. 529 ; Tibbets v.
Mercantile Credit Guarantee (1896), 73 Fed. Rep. 95 Peden Iron and Steel
;
Co. V. Ocean Accident (1907), 151 Fed. Rep. 992.

In aU oases wbere tbe indemnified under tbis contraot sball hold otber Amounts
security, guaranty indemnity or preference or sball bave instituted attacbment realised from
or replevin proceedings against any insolvent debtor covered under tbis bond tbe otber security
amounts realised tberefrom sball be deducted before tbe loss under tbis bond to be de-
sball be adjusted. ducted before
American Credit Co. v. Wood (1896), 73 Fed. Rep. 81. adjustment.
Every guarantee sball be made for a specified term but all guarantees upon Duration of
gross annual returns, floating risks or rent wbatever may be tbe original term of risk,
tbe same, sball from the expiration of such original term, be treated as a renewed
contract of the like nature and conditions, unless either tbe member interested
therein or the board of directors shall give two calendar months' notice of an
intention not to renew the same.
Solvency Mutual v. Froane (1861), 7 H. & N. 5.
If a member of itbis company sball die or if any member guaranteed with
respect to his gross or particular trade debts shall cease to be such trader his
guarantee or contract sball become void upon such death or (if such trader) on
his retiring from such trade but in case of death or in the case of the member
;
retiring from the trade, his executors or administrators shall be entitled to claim
from tbis company for all just demands which may become due on such guarantee
or contract on sales efiected or transactions happening prior to his death or his
retirement from the trade and coming within tbe scope of bis guarantee or
contract.
Solvency Mutual v. Freeman (1861), 7 H. & N. 17.
No loss shall be proven after tbe expiration of this bond provided however
that in case this bond is renewed and the premium on such renewal is paid at or
before tbe expiration of tbis bond loss resulting after such date of expiration on
shipments made during tbe term of tbis bond may be proven during the term of
the removal bond next immediately succeeding.
American Credit Co. v. Aetna Woollen Mills (1899), 92 Fed. Rep. 581,
When tbe gross admitted claims of any member guaranteed upon gross returns Additional
shall in any one year exceed twice tbe amount of subscription payable by such premium
member for such year then the subscription of such member shall, for that year, where claims
be increased after the following rates of percentage upon the gross amount of exceed speci-
such admitted claims, that is to say if the admitted claims shall exceed twice
: fied amount,
the amount of subscription, and do not exceed three times the amount, 10 per
cent. ; if they exceed three times that amount, and not four times the amount 20
per cent., and so on in like proportion.
Solvency Mutual v. Freeman (1861), 7 H. & N. 17.
Tbe assured must not without the consent of the corporation assent to any Condition
arrangements modifying tbe rights or remedies of the assured. that rights
Finlay v. Mexican Investment Co., [1897] 1 Q. B. 517. against
debtor shall
Notification of claims must be delivered to this company on the blanks
not be
furnished and in tbe manner prescribed by it within 10 days after the indemnified
modified.
shall bave bad information of the insolvency of any debtor and must be received
at tbe central office during tbe term of tbis bond. Notification
American Credit Co. v. Carrollton Furniture Co. (1899), 95 Fed. Rep. Ill; of claims.
American Credit Co. v. Wood (1896), 73 Fed. Rep. 81.
Section X. —Live Stock Policies

There is little judicial authority upon the interpretation of General
such policies. There are many different forms in use covering mature of
risks
all kinds of risks to horses, cattle and other animals. An annual covered by.
insurance covering a general farm stock is usually an insurance
against loss by death arising from any accident or disease with
certain specified exceptions such as poisoning, docking, or surgical
operation, improper use, overloading, unskilful treatment, wilful

neglect, malicious injuries or slaughtering, war, tumult, or riot.
Certain other specified causes of death are not insured against
unless an extra premium is paid. These may include death
occurring during transport by rail or sea, or arising from foaling,
castration, fire or lightning, or glanders or farcy. The insurance
is conditional upon every animal insured being in perfect health
and free from any injury at the time of proposal and at the time
the first premium is paid, and upon each annual renewal of the
policy the assured is required to furnish a satisfactory written
declaration of health and soundness. The animals insured by the
policy are specified in a schedule showing the numbers of each
class and distinguishing marks and stating the total compensation
payable in each case. The policy, however, is not as a rule a
valued policy, and the liability to pay in respect of each animal
will not exceed either the sum assured or the actual market value
at the date of death. Among the special risks against which
policies are issued are foaling and castration. Live stock policies
are commonly issued to territorial units in respect of their horses
during training. The policy insures compensation in case of the
death of any horse within the period specified in the policy and a
weekly allowance in case of total disability from injury received
during the training.
Fatal injury. Where the policy insures against the death of an animal and
the animal is so seriously injured that the proper course is to
slaughter it at once, the loss is covered {y).
Walking at In one case a fox terrier dog was insured for £,150 against
port of risk of transport from England to India "against all risks,
destination to
be deemed including mortality from any cause, jettison, and washing over-
a safe board, but walking at Lahore, Punjab, to be deemed a safe
arrival.
arrival." On arrivalLahore the dog was suffering from
at
periostitis of the right leg, and was unable by reason of
hind
such injury to walk upon four legs, and therefore moved upon
only three legs. It was held that there was not a safe arrival.
The clause meant that the dog must be capable of locomotion in the
usual way upon four legs. In this case it was incapable of using
one leg at all. The insurers had therefore to pay a total loss {z).
Evidence In an American case the assured, under a live stock policy,
admissible
to prove
claimed compensation for the loss of a thoroughbred stallion.
value of At the trial the judge admitted the evidence of several witnesses
animal. engaged in farming and stock raising who knew the horse, and
expressed their opinion as to its value, but he excluded evidence
which was offered to show that the animal was sold at a con-
siderably smaller figure six months previously. The Supreme
Court of Iowa upheld these rulings, but it is submitted that the
evidence as to the price at which the animal was sold six months
previously ought to have been admitted [a).
iy) Shiells v. Scottish Assurance Corporation (1889), 16 E. 1014.

(2;) Jacob V. Oamller (1902), 7 Com. Cas. 116.
(a) Gere v. The Council Bhiffs (1885), 67 Iowa, 272.
POLICIES COVERING RISK OF EXPLOSION 985
Section XI. —Plate Glass Policies

policies are largely issued in respect of shop premises. General
These
The policy usually contains a detailed description of the nature of
risk covered
which is insured, and it is insured against breakage by or from by.
any cause whatsoever except the same shall arise or be
occasioned directly or indirectly by fire or explosion. Eisk of
breakages caused by workmen making alterations or repairs on
the premises is usually excepted if the assured does not give
notice of the proposed alterations and pay such additional pre-
mium as may
be required to cover any increase of risk. The
liability ofthe company is limited- to the cost value of the glass
insured, and the company usually reserves the right to reinstate
instead of making a money payment.
In Marsden v. City and County Assurance (b) the insurance Fire, break-
during
was against " loss or damage originating from any cause whatso- age removal, etc.,
ever, except fire, breakage during removal, alteration or repair of excepted.
premises." A fire broke out in adjoining premises and threatened
to destroy the assured's premises. The assured had commenced
to remove his furniture when the mob raided the premises and
broke the windows. The Court held that the loss was covered by
the policy. The proximate cause of loss was the lawless action
of the mob, and the fire and removal of furniture were remote
causes, and the loss could not be deemed to have been caused by
them within the meaning of the exception. The words now
commonly in use excluding loss arising or occasioned directly or
indirectly by fire would probably have included recovery in the
above case.
Section XII. —Polices Covering Eisk of Explosion

Loss by explosion being commonly excepted from the risk in General
fire policies, it is sometimes necessary to insure separately nature of
risk covered
against loss caused by explosion. The meaning of loss or by.
damage by explosion has already been considered from the point
of view of an exception in a fire risk. As policies covering the
risk of explosion are intended to supply the want created by this
exception, the words ought to be construed, as far as possible, on
the one hand to give full protection to the assured against all
risks, but, on the other hand, so as to avoid an overlapping or
double insurance. In an American case the policy insured
" against explosion and accident and against loss or damage
resulting therefrom," and the conditions provided that no claim
should be made under the policy " for any loss or damage by fire
resulting from any cause whatsoever." A small fire broke out in
the insured building and continued for three days though ap-
parently extinguished each day. On the third day efforts to put
out the fire resulted in bringing it in contact with a cloud of
(6) (1866), L. E. 1 C. P. 232.

starch dust which ignited and exploded, demolishing the building

which then burned up. The Court held that the company was
not liable, since the explosion was merely an incident of the
fire (c).
Section XIII. —Policies Covering Risk of Storm and Tempest

î^'^s This is another class of policy designed to fill up what is
y. omitted from the ordinary fire policy. The risk is more com-
monly insured in America than in this country, and the policy
may cover loss by lightning, hurricane, cyclone, tornado, or
windstorm (d).
(c) American Steam Boiler Co. v. Gliicago Sugar (1892), 57 Fed. Bep.
294.
{d) Bealces v. Phoenix Insurance (1894), 143 N. Y. 402 Holmes v. Phoenix
;
Insurance (1899), 98 Fed. Rep. 240; Maryland Casualty v. Finch (1906),

147 Fed. Rep. 388; Phoenix Insurance v. CJia/rleston Bridge Co. (1895), 65
Fed. Rep. 626.
—— ; ; ;
APPENDIX
ASSURANCE COMPANIES ACT, 1909
(9 Edw. 7, c. 49)
An Actto consolidate and amend and extend to other Companies carrying A.V. 1909.
on Assurance or Insurance business the Law relating to Life Assur-
ance Companies, and for other purposes connected therewith.
\^rd December 1909.]
Be it enacted by the King's most Excellent Majesty, by and with the

advice and consent of the Lords Spiritual and Temporal, and Commons,
in this present Parliament assembled, and by the authority of the same,
as follows :
Companies to which Act applies.

1 .This Act shall apply to all persons or bodies of persons, whether Companies
corporate or unincorporate, not being registered under the Acts relating *° which Act
to friendly societies or to trade unions (which persons and bodies of '^PP''^^-
persons are hereinafter referred to as assurance companies), whether
established before or after the commencement of this Act and whether
established within or without the United Kiagdom, who carry on within
the United Kingdom assurance business of all or any of the following
classes :
{a) Life assurance business that is to say, the issue of, or the
;
undertaking of liability under, policies of assurance upon

human life, or the granting of annuities upon human life ;
(6) Fire insurance business that is to say, the issue of, or the
;
undertaking of liability under, policies of insurance against

loss by or incidental to fire ;
(c) Accident insurance business that is to say, the issue of, or the
;
undertaking of liability under, policies of insurance upon the

happening of personal accidents, whether fatal or not, disease,
or sickness, or any class of personal accidents, disease, or
sickness
{d) Employers' liability insurance business ; that is to say, the
issue of, or the undertaking of liability under, policies insuring
employers against liability to pay compensation or damages
to workmen in their employment
(e) Bond investment business that is to say, the business of
;
issuing bonds or endowment certificates by which the company,

in return for subscriptions payable at periodical intervals of
two months or less, contract to pay the bond holder a sum
at a future date, and not being life assurance business as
hereinbefore defined
—
988 APPENDIX
subject as respects any class of assurance business to the special pro-

visions of this Act relating to business of that class.
A company registered under the Companies Acts which transacts
assurance business of any such class as aforesaid in any part of the world
shall for the purposes of this provision be deemed to be a company
transacting such business within the United Kingdom.
General.
Deposit. 2. — Every assurance company shall deposit and keep deposited

(1)
with the Paymaster- General for and on behalf of the Supreme Court
the sum of twenty thousand pounds.
(2) The sum so deposited shall be invested by the Paymaster-
General in such of the securities usually accepted by the Court for the
investment of funds placed under its administration as the company
may and the interest accruing due on any such securities shall
select,
be paid to the company.
(3) The deposit may be made by the subscribers of the memorandum
of association of the company, or any of them, in the name of the pro-
posed company, and, upon the incorporation of the company, shall be
deemed to have been made by, and to be part of the assets of, the
company, and the registrar shall not issue a certificate of incorporation
of the company until the deposit has been made.
(4) Where a company carries on, or intends to carry on, assurance
business of more than one class, a separate sum of twenty thousand
pounds shall be deposited and kept deposited under this section as
respects each class of business, and the deposit made in respect of any
class of business in respect of which a separate assurance fund is re-
quired to be kept shall be deemed to form part of that fund, and all
interest accruing due on any such deposit or the securities in which it
is for the time being invested shall be carried by the company to that
fund.
(5) The Paymaster-General shall not accept a deposit except on
a warrant of the Board of Trade.
(6) The Board of Trade may make rules with respect to applications
for warrants, the payment of deposits, and the investment thereof or
dealing therewith, the deposit of stocks or other securities in lieu of
money, the payment of the interest or dividends from time to time
accruing due on any securities in which deposits are for the time being
invested, and the withdrawal and transfer of deposits, and the rules
so made shall have efieot as if they were enacted in this Act, and shall
be laid before Parliament as soon as may be after they are made.
(7) This section shall apply to an assurance company registered
or having its head oflB.ce in Ireland, subject to the following modifica-
tions :
References to the Supreme Court shall be construed as references

to the Supreme Court of Judicature in Ireland, and references
to the Paymaster-General shall be construed as references to the
Accountant-General of the last-mentioned Court.
Separation
^" —
(') ^''^ *^® ^^^^ °^ ^^ assurance company transacting other
of funds. business besides that of assurance or transacting more than one class
of assurance business, a separate account shall be kept of all receipts
in respect of the assurance business or of each class of assurance business.
— :
ASSURANCE COMPANIES ACT, 1909 989
and the receipts in respect of the assurance business, or, in the case of
a company carrying on more than one class of assurance business, of
each class of business, shall be carried to and form a separate assurance
fund with an appropriate name Provided that nothing in this section
:
shall require the investments of any such fund to be kept separate from
the investments of any other fund.
(2) A fund of any particular class shall be as absolutely the security
of the policy holders of that class as though it belonged to a company
carrying on no other business than assurance business of that class,
and shall not be liable for any contracts of the company for which it
would not have been liable had the business of the company been only
that of assurance of that class, and shall not be applied, directly or in-
directly, for any purposes other than those of the class of business to
which the fund is applicable.
4. Every assurance company shall, at the expiration of each finan- Accounts and
cial year of the company, prepare balance
(a) A revenue account for the year in the form or forms set forth sheets.
in the First Schedule to this Act and applicable to the class
or classes of assurance business carried on by the company
;
(&) A profit and loss account in the form set forth in the Second
Schedule to this Act, except where the company carries on
assurance business of one class only and no other business
;
(c) A balance sheet in the form set forth in the Third Schedule to
this Act.
5. — (1) Every assurance company shall, once in every five years, or Actuarial
at such shorter intervals as may be prescribed by the instrument con- report and
stituting the company, or by its regulations or byelaws, cause an in- abstract.
vestigation to be made into its financial condition, including a valuation
of its liabilities, by an actuary, and shall cause an abstract of the report
of such actuary to be made in the form or forms set forth in the Fourth
Schedule to this Act and applicable to the class or classes of assurance
business carried on by the company.
(2) The foregoing provisions of this section shall also apply when-
ever at any other time an investigation into the financial condition of
an assurance company is made with a view to the distribution of profits,
or the results of which are made public.
6. Every assurance company shall prepare a statement of its assur- Statement

ance business at the date to which the accounts of the company are °^ assurance
made up for the purposes of any such investigation as aforesaid in the "^^8^^-
form or forms set forth in the Fifth Schedule to this Act and applicable
to the class or classes of assurance business carried on by the company :
Provided that, if the investigation is made annually by any company,

the company may prepare such a statement at any time, so that it be
made at least once in every five years.
7. — (1) Every account, balance
sheet, abstract, or statement herein- Deposit of
before required to be made be printed, and four copies thereof, accounts, &o.
shall
Board
one of which shall be signed by the chairman and two directors of the '^tj?
company and by the principal officer of the company and, if the company
has a managing director, by the managing director, shall be deposited
at the Board of Trade within six months after the close of the peiiod
to which the account, balance sheet, abstract, or statement relates
990 APPENDIX
Provided that, if in any case it is made to appear to the Board of Trade
that the circumstances are such that a longer period than six months
should be allowed, the Board may extend that period by such period
not exceeding three months as they think fit.
(2) The Board of Trade shall consider the accounts, balance sheets,
abstracts, and statements so deposited, and, if any such account,
balance sheet, abstract, or statement appears to the Board to be in-
accurate or incomplete in any respect, the Board shall communicate
with the company with a view to the correction of any such inaccuracies
and the supply of deficiencies.
(3) There shall be deposited with every revenue account and
balance sheet of a company any report on the afiairs of the company
submitted to the shareholders or policy holders of the company in
respect of the financial year to which the account and balance sheet
relates.
(4) Where an assurance company registered under the Companies
Acts in any year deposits its accounts and balance sheet in accordance
with the provisions of this section, the company may, at the same time,
send to the registrar a copy of such accounts and balance sheet ; and,
where such copy is so sent, it shall not be necessary for the company
to send to the registrar a statement in the form of a balance sheet as
8 Edw. 7, required by subsection (3) of section twenty-six of the Companies (Con-
^. 69.
solidation) Act, 1908, and the copy of the accounts and balance sheet
so sent shall be dealt with in all respects as if it were a statement' sent
in accordance with that subsection.
Right of 8. Aprinted copy of the last-deposited accounts, balance sheet,

shareholders, on the application of any shareholder or
abstract, or statenaent, shall
&c. to copies
policy holder of the company be forwarded to him by the company by
of accounts,
&c. post or otherwise.
Audit of 9. Where the accounts of an assurance company are not subject

accounts. to audit in accordance with the provisions of the Companies (Con-
8 & 9 Vict. solidation) Act, 1908, or the Companies Clauses Consolidation Act,
c. 16. 1845, relating to audit, the accounts of the company shall be audited
annually in such manner as the Board of Trade may prescribe, and
the regulations made for the purpose may apply to any such company
the provisions of the Companies (Consolidation) Act, 1908, relating to
audit, subject to such adaptations and modifications as may appear
necessary or expedient.
List of share- 10. Every assurance company which is not registered under the
holders. Companies Acts, or which has not incorporated in its deed of settle-
ment section ten of the Companies Clauses Consolidation Act, 1845,
shall keep a " Shareholders Address Book," in accordance with the
provisions of that section, and shall, on the application of any share-
holder or policy holder of the company, furnish to him a copy of such
book, on payment of a sum not exceeding sixpence for every hundred
words required to be copied.
Deed of 11. Every assurance company which is not registered under the
settlement. Companies Acts shall cause a sufficient number of copies of its deed of
settlement or other instrument constituting the company to be printed,
and shall, on the application of any shareholder or policy holder of the
— —
ASSUEANCE COMPANIES ACT, 1909 991
company, furnisli to him a copy of such deed of settlement or other

instrument on payment of a sum not exceeding one shilling.
12. Where any notice, advertisement, or other official publication Publication of

of an assurance company contains a statement of the amount of the authorised,
authorised capital of the company, the publication shall also contain
and paid-up
a statement of the amount of the capital which has been subscribed capital.
and the amount paid up.
13. —
(1) Where it is intended to amalgamate two or more assur- Amalgama-
ance companies, or to transfer the assurance business of any class from ^^°^ 'f
one assurance company to another company, the directors of any one
or more of such companies may apply to the Court, by petition, to
sanction the proposed arrangement.
(2) The Court, after hearing the directors and other persons whom
it considers entitled to be heard upon the petition, may sanction the
arrangement if it is satisfied that no sufficient objection to the arrange-
ment has been established.
(3) Before any such application is made to the Court
(a) notice of the intention to make the application shall be pub-
lished in the Gazette
; and
(6) a statement of the nature of the amalgamation or transfer, as
the case may be, together with an abstract containing the
material facts embodied in the agreement or deed under which
the amalgamation or transfer is proposed to be effected, and
copies of the actuarial or other reports upon which the
agreement or deed is founded, including a report by an in-
dependent actuary, shall, unless the Court otherwise directs,
be transmitted to each policy holder of each company in
manner provided by section one hundred and thirty-six of
the Companies Clauses Consolidation Act, 1845, for the
transmission to shareholders of notices not requiring to be
served personally
: Provided that it shall not be necessary
to transmit such statement and other documents to policy
holders other than life, endowment, sinking fund, or bond
investment policy holders, nor in the case of a transfer to
such policy holders if the business transferred is not life
assurance business or bond investment business
; and
(c) the agreement or deed under which the amalgamation or
transfer is effected shall be open for the inspection of the policy

holders and shareholders at the offices of the companies for a
period of fifteen days after the publication of the notice in
the Gazette.
(4) Noassurance company shall amalgamate with another, or
transfer its business to another, unless the amalgamation or transfer
is sanctioned by the Court in accordance with this section.
14. Where an amalgamation takes place between any assurance Statements

companies, or where any assurance business of one such company is ^ "^ê of
^^'gâ'ation
transferred to another company, the combined company or the pur-
chasing company, as the case may be, shall, within ten days from the
date of the completion of the amalgamation or transfer, deposit with
the Board of Trade
—
992 APPENDIX
(a) certified copies of statements of the assets and liabilities of

the companies concerned in such amalgamation or transfer,
together with a statement of the nature and terms of the
amalgamation or transfer ; and
(b) a certified copy of the agreement or deed under which the
amalgamation or transfer is efiected ; and
(c) certified copies of the actuarial or other reports upon which
that agreement or deed is founded and ;
(d) a declaration under the hand of the chairman of each company,

and the principal officer of each company, that to the best
of their belief every payment made or to be made to any
person whatsoever on account of the amalgamation or transfer
is therein fully set forth, and that no other payments beyond
those set forth have been made or are to be made either in

money, policies, bonds, valuable securities, or other property
by or with the knowledge of any parties to the amalgamation
or transfer.
Special pro- 15. The Court may order the winding up of an assurance company,
visions as to in accordance with the Companies (Consolidation) Act, 1908, and the
winding up provisions of that Act shall apply accordingly, subject, however, to the
of assurance
companies. following modification :
The company may be ordered to be wound up on the petition of

ten or more policy holders owning policies of an aggregate value
of not less than ten thousand pounds :
Provided that such a petition shall not be presented except by

leave of the Court, and leave shall not be granted until a prima
facie case has been established to the satisfaction of the Court and
until security for costs for such amount as the Court may think
reasonable has been given.
Winding up 16.— (1) Where the assurance business or any part of the assurance
of subsidiary business of an assurance company has been transferred to another
companies. company under an arrangement in pursuance of which the first-men-
tioned company (in this section called the subsidiary company) or the
creditors thereof has or have claims against the company to which such
transfer was made (in this section called the principal company), then,
if the principal company is being wound up by or under the super-
vision of the Court, the Court shall (subject as hereinafter mentioned)
order the subsidiary company to be wound up in conjunction with the
principal company, and may by the same or any subsequent order
appoint the same person to be liquidator for the two companies, and
make provision for such other matters as may seem to the Court neces-
sary, with a view to the companies being wound up as if they were
one company.
(2) The commencement of the winding up of the principal company
shall, save as otherwise ordered by the Court, be the commencement
of the winding up of the subsidiary company.
(3) In adjusting the rights and liabilities of the members of the
several companies between themselves, the Court shall have regard
to the constitution of the companies, and to the arrangements entered
into between the companies, in the same manner as the Court has regard
to the rights and liabilities of different classes of contributories in the
case of tlie winding up of a single company, or as near thereto as cir-

cumstances admit.
(4) Where any company alleged to be subsidiary is not in process
of being wound up at the same time as the principal company to which
it is subsidiary, the Court shall not direct the subsidiary company to
be wound up unless, after hearing all objections (if any) that may be
urged by or on behalf of the company against its being wound up, the
Court is of opinion that the company is subsidiary to the principal
company, and that the winding up of the company in conjunction with
the principal company is just and equitable.
(5) An application may be made in relation to the winding up of any
subsidiary company in conjunction with a principal company by any
creditor of, or person interested in, the principal or subsidiary company.
(6) Where a company stands in the relation of a principal company
to one company, and in the relation of a subsidiary company to some
other company, or where there are several companies standing in the
relation of subsidiary companies to one principal company, the Court
may deal with any number of such companies together or in separate
groups, as it thinks most expedient, upon the principles laid down in
this section.
17. — (1) is being wound up by the Valuation of

Where an assurance company
Goi^rt, or subject tothe supervision of the Court, or voluntarily, the value annuities and
of a policy of any class or of a liability under such a policy requiring to policies.
be valued in such winding up shall be estimated in manner applicable
to policies and liabilities of that class provided by the Sixth Schedule
to this Act.
(2) The rules in the Sixth and Seventh Schedules to this Act shall
be of the same force, and may be repealed, altered, or amended, as if they
were rules made in pursuance of section two hundred and thirty-eight
of the Companies (Consolidation) Act, 1908, and rules may be made
under that section for the purpose of carrying into efiect the provisions
of this Act with respect to the winding up of assurance companies.
18. The Court, an assurance company which has been Power to

in the case of
proved to be unable to pay may, if it thinks fit, reduce the Court to
its debts,
amount of the contracts of the company upon such terms and subject reduce tracts.
con-
to such conditions as the Court thinks just, in place of making a winding-

up order.
19. Section two hundred and seventy-four of the Companies (Con- Extension of
solidation) Act, 1908 (which contains provisions as to companies in- 8 Edw. 7, c.
69, B. 274, to
corporated outside the United Kingdom), shall apply to every assurance all assurance
company constituted outside the United Kingdom which carries on companies
assurance business within the United Kingdom, whether incorporated established
or not. outside the
United
20. The Board of Trade may
any documents deposited with Kingdom.
direct
them imder this Act, or certified copies thereof, to be kept by the Custody and
registrar or by any other officer of the Board of Trade and any such inspection of
;
documents and copies shall be open to inspection, and copies thereof documents
deposited
may be procured by any person on payment of such fees as the Board with Board
of Trade may direct. of Trade.
21. — Every document deposited under this Act with the Board
(1) Evidence of
documents.
of Trade, and certified by the registrar or by any person appointed in
I.L. 63
:
994 APPENDIX
that behalf by the President of the Board of Trade to be a document

so deposited, shall be deemed to be a document so deposited.
(2) Every document purporting to be certified by the registrar, or
by any person appointed in that behalf by the President of the Board
of Trade, to be a copy of a document so deposited shall be deemed to
be a copy of that document, and shall be received in evidence as if it
were the original document, unless some variation between it and the
original document be proved.
Alteration 22. The Board of Trade may, on the application or with the consent
of forms. of an assurance company, alter the forms contained in the schedules
to this Act as respects that company, for the purpose of adapting them
to the circumstances of that company.
Penalty for 23. Any assurance company which makes default in complying
non-compli- with any of the requirements of this Act shall be liable to a penalty not
ance with Act.
exceeding one hundred pounds, or, in the case of a continuing default, to a
penalty not exceeding fifty pounds for every day during which the default
continues, and every director, manager, or secretary, or other officer
or agent of the company who is knowingly a party to the default shall
be liable to a like penalty and, if default continue for a period of three
;
months after notice of default by the Board of Trade (which notice

shall be published in one or more newspapers as the Board of Trade
may, upon the application of one or more policy holders or shareholders,
direct), the default shall be a ground on which the Court may order
the winding up of the company, in accordance with the Companies
(Consolidation) Act, 1908.
Penalty for 24. If any account, balance sheet, abstract, statement, or other
falsifying document required by this Act is false in any particular to the know-
statements, ledge of any person who signs it, that person shall be guilty of a mis-
&c.
demeanour and shall be liable on conviction on indictment to fine and
imprisonment, or on summary conviction to a fine not exceeding fifty
pounds.
Recovery and 25. Every penalty imposed by this Act shall be recovered and applied
application of in the same manner as penalties imposed by the Companies (ConsoU-
penalties. dation) Act, 1908, are recoverable and applicable.
Service of 26. Any notice which is by this Act required to be sent to any
notices. policy holder may be addressed and sent to the person to whom notices
respecting such policy are usually sent, and any notice so addressed
and sent shall be deemed and taken to be notice to the holder of such
policy
Provided that where any person claiming to be interested in a
policy has given to the company notice in writing of his interest, any
notice which is by this' Act required to be sent to policy holders shall
also be sent to such person at the address specified by him in his notice.
Accounts, &o. 27. The Board of Trade shall lay annually before Parliament the
to be laid accounts, balance sheets, abstracts, statements, and other documents
before Par-
liament.
under this Act, or purporting to be under this Act, deposited with them
during the preceding year, except reports on the affairs of assurance
companies submitted to the shareholders or policy holders thereof,
and may append to such accounts, balance sheets, abstracts, statements^
;; ; —
or other documents any note of the Board of Trade thereon, and any
correspondence in relation thereto.
28.— (1) This Act shall not affect the National Debt Commissioners Savings.
or the Postmaster-General, acting under the authorities vested in them
respectively by the Government Annuities Acts, 1829 to 1888, and the
Post Office Savings Bank Acts, 1861 to 1908.
(2) This Act shall not apply to a member of Lloyd's, or of any other
association of underwriters approved by the Board of Trade, who
carrieson assurance business of any class, provided that he complies
with the requirements set forth in the Eighth Schedule to this Act, and
applicable to business of that class.
(3) Save as otherwise expressly provided by this Act, nothing in
this Act shall apply to assurance business of any class other than one
of the classes specified in section one of this Act, and a policy shall not
be deemed to be a policy of fire insurance by reason only that loss by
fire is one of the various risks covered by the policy.
29. In this Act, unless the context otherwise requires, Interpreta-

The expression " chairman " means the person for the time being tion.
presiding over the board of directors or other governing body
of the assurance company ;
The expression " annuities on human life " does not include super-
annuation allowances and annuities payable out of any fund
applicable solely to the relief and maintenance of persons
engaged or who have been engaged in any particular pro-
fession, trade, oremployment, or of the dependants of such
persons ;
The expression " policy holder " means the person who for the
time being is the legal holder of the policy for securing the
contract with the assurance company ;
The expression " underwriter " includes any person named in a

policy or other contract of insurance as liable to pay or contribute
towards the payment of the sum secured by such policy or
contract
The expression " financial year " means each period of twelve
months at the end of which the balance of the accounts of the
assurance company is struck, or, if no such balance is struck,
then the calendar year ;
The expression " Court " means the High Court of Justice in
England, except that in the case of an assurance company
registered or having its head office in Ireland it means, in the
provisions of this Act, the High Court of Justice in Ireland,
and in the case of an assurance company registered or having
its head office in Scotland it means, in the provisions of this
Act other than those relating to deposits, the Court of Session,
in either division thereof ;
The expression " Companies Acts " includes the Companies

(Consolidation) Act, 1908, and any enactment repealed by
that Act
The expression " registrar " means the Eegistrar of Joint Stock
Companies
The expression. " actuary " means an actuary possessing such
; ; ; ; ; ;
996 APPENDIX
qualifications as may be prescribed by rules made by the

Board of Trade
The expression "Gazette" means the London, Edinburgh, or
Dublin Gazette, as the case may be.
Application to Special Classes of Business.
Application 30. Where a company carries on life assurance business, this Act
to life assur- shall apply with respect to that business, subject to the following
modifications :—
ÎTieT""'
^™'^^'
(a) " Policy on human life " shall mean any instrument by which
the payment of money is assured on death (except death by
accident only) or the happening of any contingency dependent
on human life, or any instrument evidencing a contract which
is subject to payment of premiums for a term dependent on
human life
"
(6) Where the company grant annuities upon human life, " policy
shall include the instrument evidencing the contract to pay
such an annuity, and " policy holder " includes annuitant
(c) The obligation to deposit and keep deposited the sum of twenty
thousand pounds shall apply notwithstanding that the
company has previously made and withdrawn its deposit, or
been exempted from making any deposit under any enactment
hereby repealed
(d) Where the company intends to amalgamate with or to transfer
its assurance business to another assurance company,
life
the Court shall not sanction the amalgamation or transfer in
any case in which it appears to the Court that the life policy
holders representing one-tenth or more of the total amount
assured in the company dissent from the amalgamation or
transfer
(e) Nothing in this Act providing that the life assurance fund shall
not be liable for any contracts for which it would not have
been liable had the business of the company been only that
of life assurance shall afiect the liability of that fund, in the
case of a company established before the ninth day of August
eighteen hundred and seventy, for contracts entered into by
the company before that date ;
(/) In the case of a company carrying on life assurance business

and established before the ninth day of August eighteen
hundred and seventy, by the terms of whose deed of settlement
the whole of the profits of all the business carried on by the
company are paid exclusively to the life policy holders, and
on the face of whose life policies the liability of the life assur-
ance fund in respect of the other business distinctly appears,
such of the provisions of this Act as require the separation of
funds, and exempt the life assurance fund from liability for
contracts to which it would not have been liable had the
business of the company been only that of life assurance, shall
not apply
(g) Any business carried on by an assurance company which under
the provisions of any special Act relating to that company
; : :
is to be treated as assurance business shall continue to be

life
so treated, and not be deemed to be other business or a

shall
separate class of assurance business within the meaning of this
Act
(Ji) In the case of a mutual company whose profits are allocated to
members whoUy or mainly by annual abatements of premium,
the abstract of the report of the actuary on the financial
condition of the company, prepared in accordance with the
Fourth Schedule to this Act, may, notwithstanding anything
in section five of this Act, be made and returned at intervals
not exceeding five years, provided that, where such return is
not made annually, it shall include particulars as to the rates
of abatement of premiums applicable to difierent classes or
series of assurancesallowed in each year during the period
which has elapsed since the previous return under the Fourth
Schedule.
31. Where a company carries on fire insurance business, this Act Application
shall apply with respect to that business, subject to the following tofireinsui-
modifications :—
Tier""'
(a) It shall not be necessary for the company to prepare any state-
ment of its fire insurance business in accordance with the
Fourth and Fifth Schedules to this Act
(b) Such of the provisions of this Act as relate to deposits to be
made under this Act shall not apply with respect to the fire
insurance business carried on by the company if the company
has commenced to carry on that business within the United
Kingdom before the passing of this Act :
(c) Such of the provisions of this Act as relate to deposits to be

made under this Act shall not apply where the company is
an association of owners or occupiers of buildings or other
property which satisfies the Board of Trade that it is carrying
on, or is about to carry on, business wholly or mainly for the
purpose of the mutual insurance of its members against damage
by or incidental to fire caused to the houses or other property
owned or occupied by them :
(d) It shall not be necessary to make a deposit in respect of fire

insurance business where the company has made a deposit in
respect of any other class of assurance business, and, where
a company, having made a deposit in respect of fire insurance
business, commences to carry on life assurance business or
employers' liability insurance business, the company may
transfer the deposit so made to the account of that other
business, and after such transfer the deposit shall be treated
as if it had been made in respect of such other business
(e) So much of this Act as requires an assurance company transacting
other business besides assurance business, or more than one
class of assurance business, to keep separate funds into which
all receipts in respect of the assurance business or of each
class of assurance business are to be paid shall not apply as
respects fire insurance business :
(/) The provisions of this Act with respect to the amalgamation of

companies shall not apply where the only classes of assurance
: : —
998 APPENDIX
business carried on by botb of tbe companies are fire insur-

ance business, or fire insurance business and accident insurance
business, and tbe provisions of this Act witb respect to the
transfer of assurance business from one company to another
shall not apply to fire insurance business.
Application 32- Where a company carries on accident insurance business, this

to accident j^^^ gjjg^y applywith respect to that business, subiect to the foUowmg
insurance ™ j-£ j.-
modifications:—
'j
companies.
(a) In lieu of the provisions of sections five and six of this Act the
following provisions shall be substituted :
" The company shall annually prepare a statement of

its accident insurance business in the form set forth in
the Fourth Schedule to this Act and applicable to accident
insurance business, and the statement shall be printed,
signed, and deposited at the Board of Trade in accordance
with section seven of this Act " :
(6) Such of the provisions of this Act as relate to deposits to be
made under this Act shall not apply with respect to the accident
insurance business carried on by the company if the company
has commenced to carry on that business in the United
Kingdom before the passing of this Act
(c) It shall not be necessary to make or keep a deposit in respect
of accident insurance business where the company has made
a deposit in respect of any other class of assurance business,
and, where a company, having made a deposit in respect of
accident insurance business, commences to carry on life
assurance business or employers' liability insurance business,
the company may transfer the deposit so made to the account
of that other business, and after such transfer the deposit
shall be treated as if it had been made in respect of such other
business
(d) So much of this Act as requires an assurance company transacting
other business besides assurance business, or more than one
class of assurance business, to keep separate funds into which
all receipts in respect of the assurance business or of each class
of assurance business are to be paid shall not apply as respects
accident insurance business :
(e) The provisions Act with respect to the amalgamation of

of this
companies shall not apply where the only classes of assurance
business carried on by both of the companies are accident
insurance business, or accident insurance business and fire
insurance business, and the provisions of this Act with respect
to the transfer of assurance business from one company to
another shall not apply to accident insurance business :
{/) The expression "policy" includes any policy under which

there is for the time being an existing liability already accrued,
or under which a liability may accrue :
(g) Where a sum is due, or a weekly or other periodical payment

is payable, under any policy, the expression " policy holder "
includes the person to whom the sum is due or the weekly

or other periodical payment payable.
— —
33. — (1) Where a company carries on employers' liability insurance Application

^
business, this Act shall apply with respect to that business, subject to j^^Sfy msur-
the following modifications :
anoe corn-
fa) This Act shall not apply where the company is an association panics.
of employers which satisfies the Board of Trade that it is
carrying on, or is about to carry on, business wholly or mainly
for the purpose of the mutual insurance of its members against
liability to pay compensation or damages to workmen em-
ployed by them, either alone or in conjunction with insurance
against any other risk incident to their trade or industry :
(b) This Act shall not apply where the company carries on the
employers' liability insurance business as incidental only to

the business of marine insurance by issuing marine policies,
or policies in the form of marine policies, covering liability
to pay compensation or damages to workmen as well as losses
incident to marine adventure or adventure analogous thereto :
(c) In lieu of the provisions of sections five and six of this Act the
following provisions shall be substituted :
" The company shall annually prepare a statement of

its employers' liability insurance business in the form set
forth in the Fourth Schedule to this Act and applicable to
employers' liability insurance business, and shall cause an
investigation of its estimated liabilities to be made by an
actuary so far as may be necessary to enable the provisions
of that form to be complied with, and the statement shall
be printed, signed, and deposited at the Board of Trade in
accordance with section seven of this Act " :
(d) Such of the provisions of this Act as relate to deposits to be

made under this Act shall not apply with respect to the
employers' liability insurance business carried on by a com-
pany where the company had commenced to carry on that
business within the United Kingdom before the twenty-
eighth day of August nineteen hundred and seven :
(e) As soon as the employers' liability fund set apart and secured
for the satisfaction of the claims of policy holders of that

class amounts to forty thousand pounds, the Paymaster
General shall, if the company has made a deposit in respect
of any other class of assurance business, return to the com-
pany the money deposited in respect of its employers' liability
insurance business, and it shall not thereafter be necessary
for the company to keep any sum deposited in respect of that
business, so long as the sum deposited in respect of any other
class of assurance business is kept deposited :
(/) Where money is paid into a county court under the provisions
of the Eighth Schedule to this Act, the court shall (unless
the court for special reason sees fit to direct otherwise) order
the lump sum to be invested or applied in the purchase of an
annuity or otherwise, in such manner that the duration of
the benefit thereof may, as far as possible, correspond with
the probable duration of the incapacity :
(g) The expression

" policy " includes any policy under which
there is for the time being an existing liability already accrued,
or under which any liability may accrue :
— : :
1000 APPENDIX
Qi) Where any sum is due, or a weekly payment is payable, imder

any the expression " policy holder " includes the
policy,
person to whom the sum is due or the weekly payment
payable :
(i) If the company

carries on employers' liability insurance business
outside the United Kingdom, that business shall not be
treated as part of the employers' liability insurance business
carried on by the company for the purposes of this Act.
(2) In the application of this section to Scotland the expression
" county court " means sherifi court.
Application
to bond
34. Where a company carries on bond investment business, this
investment Act shall apply with respect to that business, subject to the following
companies. modifications :
(a) The expression " policy " includes any bond, certificate, receipt,
or other instrument evidencing the contract with the com-
pany, and the expression " policy holder " means the person
who for the time being is the legal holder of such instrument
(6) Such of the provisions of this Act as relate to deposits shall not
apply with respect to the bond investment business carried
on by the company, if the company has commenced to carry
on that business in the United Kingdom before the passing
of this Act
(c) As soon as the bond investment fund set apart and secured
for the satisfaction of the claims of the policy holders of that
class amounts to forty thousand pounds, the Paymaster-
General shall, if the company has made a deposit in respect
of any other class of assurance business, return to the com-
pany the money deposited in respect of its bond investment
business, and it shall not thereafter be necessary for the
company to keep any sum deposited in respect of that business,
so long as the sum deposited in respect of any other class of
business is kept deposited :
(d) The first statement of the bond investment business of the

company shall be deposited at the Board of Trade on or before
the thirtieth day of June nineteen hundred and eleven :
(e) The company shall not give the holder of any policy issued after
the passing of this Act any advantage dependent on lot or
chance, but this provision shall not be construed as in anywise
prejudicing any question as to the application to any such
transaction, whether in respect of a policy issued before or
after the passing of this Act, of the law relating to lotteries.
Power of 35. The Board of Trade may, on the application of any unregistered
Board of trade union originally established more than twenty years before the
Trade to
exempt un- commencement of this Act, extend to the trade union the exemption
registered conferred by this Act on registered trade unions, and may on the
trade unions application of an unregistered friendly society extend to the society the
and friendly
exemption conferred by this Act on registered friendly societies if it
societies.
appears to the Board, after consulting the Chief Registrar of Friendly
Societies, that the society is one to which it is inexpedient that the
provisions of this Act should apply.
: ;
ASSURANCE OOMPANIES ACT, 1909 1001
Provisions as to Collecting Societies and Industrial

Assurance Companies.
36. — (1) Amongst the purposes for whicli collecting societies and Provisions as
industrial assurance companies may issue policies of assurance there *° collecting
shall be included insuring money to be paid for the funeral expenses
i^^-ustria?"'^
of a parent, grandparent, grandchild, brother, or sister. assurance
(2) No policy eSected before the passing of this Act with a collect- companies,
ing society or industrial assurance company shall be deemed to be void
by reason only that the person effecting the policy had not, at the time
the policy was effected, an insurable interest in the life of the person
assured, or that the name of the person interested, or for whose benefit
or on whose account the policy was effected, was not inserted in the
policy, or that the insurance was not one authorised by the Acts relating
to friendly societies, if the policy was efiected by or on account of a
person who had at the time a bonfi, fide expectation that he would incur
expenses in connection with the death or funeral of the assured, and if
the sum assured is not unreasonable for the purpose of covering those
expenses, and any such policy shall enure for the benefit of the person
for whose benefit it was effected or his assigns.
(3) Any collecting society or industrial insurance company which,
after the passing of this Act, issues policies of insurance which are not
within the legal powers of such society or company shall be held to
have made default in complying with the requirements of this Act
and the provisions of this Act with respect to such default shall apply
to collecting societies, industrial insurance companies, and their officers,
in like manner as they apply to assurance companies and their officers.
(4) Without prejudice to the powers conferred by section seventy-
one of the Friendly Societies Act, 1896, the committee of management 59 & 60 Vict.
or other governing body of a collecting society having more than one '^- ^^
hundred thousand members may petition the court to make an order
for the conversion of the society into a mutual company under the
Companies (Consolidation) Act, 1908, and the court may make such an
order if, after hearing the committee of management, or other governing
body, and other persons whom the court considers entitled to be heard
on the petition, the court is satisfied, on a poll being taken, that fifty-
five per cent, at least of the members of the society over sixteen years
of age agree to the conversion and the court may give such directions
;
as it thinks fit for settling a proper memorandum and articles of associa-

tion of the company but, before any such petition is presented to the
;
court, notice of intention to present the petition shall be published in

the Gazette, and in such newspapers as the court may direct.
When a collecting society converts itself into a company in accord-
ance with the provisions of this subsection, subsection (3) of section
seventy-one of the Friendly Societies Act, 1896, shall apply in like
manner as if the conversion were effected under that section.
(5) In this section the expressions
" collecting society " and " indus-
trial assurance company " have the same meanings as in the Collecting
Societies and Industrial Assurance Companies Act, 1896. 59 & 60 Vict.
c. 26.
Supplemental.
37. The enactments mentioned in the Ninth Schedule to this Act are Repeal,
hereby repealed to the extent specified in the third column of that schedule
1002 APPENDIX
Provided that nothing in this repeal shall afiect any investigation

made, or any statement, abstract, or other document deposited, under
any enactment hereby repealed, but every such investigation shall be
deemed to have been made and every such document prepared and
deposited under this Act.
Short
and com-
title 38. — (1) This Act may be cited as the Assurance Companies Act,
1909.
mencement.
(2) This Act shall come into operation on the first day of July
nineteen hundred and ten, except that as respects section thirty-six
it shall come into operation on the passing thereof.
ASSTTRANOE OOMPANTES AfIT, lilOO 1003
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—
1010 APPENDIX
FOUKTH SCHEDULE.
Sections 5, N.B. —Where sinking fund or capital redemption insurance business is
30, 32 and carried on, a separate statement signed by the actuary must be furnished,
^^- showing the total number of policies valued, the total sums assured, and the
total office yearlypremiums, and also showing the total net liability in respect
of such business and the basis on which such liability is calculated.
(A.) Form applicable to Life Assurance Business.
Statement respecting the Valuation of the Liabilities under Life Policies

and Annuities of the , to be made
and signed by the Actuaey.
(The answers should be numbered to accord with the numbers of the corre-
sponding questions.)
1. The date up to which the valuation is made.
2. The general principles adopted in the valuation, and the method followed
in the valuation of particular classes of assurances, including a statement of
the method by which the net premiums have been arrived at, and whether
these principles were determined by the instrument constituting the company,
or by its regulations or byelaws, or how otherwise ; together with a statement
of the manner in which policies on under average lives are dealt with.
3. The table or tables of mortality used in the valuation. In oases where
the tables employed are not published, specimen poUcy values are to be given,
at the rate of interest employed in the valuation, in respect of whole-life
assurance policies effected at the respective ages of 20, 30, 40, and 50, and
having been respectively in force for five years, ten years, and upwards at
intervals of five years respectively ; with similar specimen pohoy values in
respect of endowment assurance policies, according to age at entry, original
term of policy, and duration.
4. The rate or rates of interest assumed in the calculations.
5. The actual proportion of the annual premium income, if any, reserved
as a provision for future expenses and profits, separately specified in respect
of assurances with immediate profits, with deferred profits, and without
profits. (If none, state how this provision is made.)
6. The oonsoUdated revenue account since the last valuation, or, in case
of a company which has made no valuation, since the commencement of the
business. (This return should be made in the form annexed. No return
under this heading will be required where a statement under this schedule is
deposited annually.)
7. The liabihties of the company under fife pohcies and annuities at the
date of the valuation, showing the number of policies, the amount assured,
and the amount of premiums payable annually under each class of pohcies,
both with and without participation in profits ; and also the net liabilities
and assets of the company, with the amount of surplus or deficiency. (These
returns to be made in the forms annexed.)
8. The principles upon which the distribution of profits among the share-
holders and poMcy holders is made, and whether these principles were deter-
mined by the instrument constituting the company or by its regulations or
byelaws or how otherwise, and the number of years' premiums to be paid
before a bonus (a) is allotted, and (6) vests.
— ; —
9. The results of the valuation, showing

(1) The total amount of profit made by the company, allocated as
follows :
(a) Among the pohcy holders with immediate participa-

tion, and the nimiber and amount of the poUoies which
participated
(6) Among pohcy holders with deferred participation,
and the number and amount of the pohcies which par-
ticipated ;
(c) Among
the shareholders ;
(d) To
reserve funds, or other accounts ;
(e) Carried forward unappropriated.
(2) Specimens of bonuses allotted to whole-life assurance pohcies

for £100 effected at the respective ages of 20, 30, 40, and 50,
and having been respectively in force for five years, ten years,
and upwards at intervals of five years respectively, together
with the amounts apportioned under the various modes in
which the bonus might be received ; with similar specimen
bonuses and particulars in respect of endowment assurance
pohcies, according to age at entry, original term of policy,
and duration.
—
Note. Separate statements to be furnished throughout in respect of
Ordinary and Industrial business respectively, the basis of the division being
stated.
1012 APPENDIX
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1014 APPENDIX
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(C.) Form applicable to Accident Insurance Business,
Statement Estimated Liability in respect of Outstanding Claims

of the
arising in the year of Account, and in the preceding year or years ;
computed as at the end of the year in which the claims arose, and as
at the end of the year of Account ; with particulars as to the number
and amount of the claims actually paid in the intervening period.
I. —Claims arising during the year of account ending 19
(a) Particulars as to Claims arising, and settled, during the year of
Account :
1016 APPENDIX
II. -Outstanding claims which arose during the firstyear preceding the
year of account, ending 19 .
Particulars of
——
ASSUBANCE GOMPANIBS ACT, 1909 1017
(D.) Form appUcdble to Employers' Liabiliiy Insurance Business.
Statement Estimated Liability in respect of outstanding Claims

of the
arising during each of the Five Years preceding the Year of Aocotjnt,
and in such Year ; computed as at the end of the Year in which the
Claims arose, and as at the end of the Year of Account ; with
Particulars as to the Number and Amount of the Claims actually paid
in the intervening Period.
I. —Claims arising during the year of account ending 19 .
(a) Particulars as to claims arising and settled during the year of

account :
Class of Claim.
(1)
1018 APPENDIX
III.-MDutstanding claims which arose during the second year preceding

the year of account, ending the 19 •
Particulars
of
Claims.
(1)
V'l. —Outstanding claims which arose during the fifth year preceding the
year of account, ending the 19.
Particulars
of
Claims.
(i)
;; ; ;
1020 APPENDIX
(a) The table of mortality upon which such hie annuity values
are based
(6) The rate of interest at which such life annuity values are
computed
(c) Whether such life annuity values are discriminated accord-
ing to the sex of the workers ;
( (d) The proportion of such hfe annuity values representing
the estimated habihty
(e) The modifications (it any) made in the true ages of the
workmen, in deducing the estimated habiUty
( /
) The amount of the estimated liability. (To be returned,
in respect of each year of hfe, in column (6) of the tabular state-
ment given below.)
(ii) If the estimated liabihty is not determined on the basis of the value
of an immediate hfe annuity, fuU particulars are to be specified as
to the precise method adopted in deducing such estimated hability,
and the total amount of estimated liability is to be returned under
column (6) of the tabular statement given below.
Number
of
Claims.
(1)
—— ; — ;
(E.) Form applicable to Bond, Investment Business.
Statement respecting the Valuation of the Liability under Bonds and

Endowment Certificates of the to be
made and signed by the Actuary.
sponding questions.)
1. The date up to which the valuation is made.

2. The principles adopted in the valuation of the habihties under bond
investment policies and endowment certificates, and whether these principles
were determined by the instrument constituting the company, or by its regu-
lations or byelaws, or how otherwise.
3. The rate or rates of interest assumed in the calculations.
4. The actual proportion of the annual income from contributions, if any,
reserved as a provision for futvire expenses and profits. (If none, state how
this provision is made.)
5. The consoUdated revenue account since the last valuation, or, in the
case of a company which has made no valuation, since the commencement of
the business. (This return should be made in the form annexed. No return
imder this heading will be required where the valuation is made annually.)
6. The habihties of the company under bond investment pohcies and
endowment certificates at the date of the valuation, showing the number of
policies or certificates, the amounts assured, the amount of contribution
payable annually, and the provision for future expenses and profits ; also
the net liabiUties and assets of the company, with the amount of surplus or
deficiency. (These returns should be made in the forms annexed.)
7. The principles upon which the distribution of profits among the bond
and certificate holders and shareholders is made, and whether those principles
are determined by the instrument constituting the company, or by its regula-
tions or byelaws, or how otherwise, and the time during which a bond invest-
ment poUoy or endowment certificate must be in force to entitle it to share in
the profits.
8. The results of the valuation, showing
(1) The total amount of profit made by the company, allocated as

follows :
(a)among participating bond or certificate holders, with the

number so participating and the total amount of their bonds or
certificates
(6) among the shareholders ;
(c) to reserve funds, or other accounts
(d) carried forward unappropriated.
(2) Specimens of profit allotted to poUcies or certificates for £100
effected for different periods, and having been in force for different
durations.
1022 APPENDIX
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—
FIFTH SCHEDULE. Section 6.
—
N.B. ^Where sinking fund or capital redemption business is carried on,
a separate statement, signed by the actuary, must be furnished showing the
total sums assured maturing in each calendar year and the corresponding
office premiums.
(A.) Form applicable to Life Assurance Business.
Statement of the Life Assueance and Annuity Business of the

on the 19 , to be signed
by the Actuary.
sponding questions. Statements of re-assurances corresponding to the
statements in respect of assurances are to be given throughout.) Separate
statements are to be furnished in the rephes to all the headings under
this schedule for business at other than European rates. Separate
statements are to be also furnished throughout in respect of ordinary
and industrial business respectively.
1. The published table or tables of premiums for assurances for the whole
term of Ufe and for endowment assurances which are in use at the date above
mentioned.
2. The total amount assured on
lives for the whole term of life which are
in existence at the date above mentioned, distinguishing the portions assured
with immediate profits, with deferred profits, and without profits, stating
separately the total reversionary bonuses and specifying the sums assured for
each year of life from the youngest to the oldest ages, the basis of division as
to immediate and deferred profits being stated.
3. The amount of premiums receivable annually for each year of life, after
deducting the abatements made by the apphcation of bonuses, in respect of
the respective assurances mentioned under Heading No. 2, distinguishing
ordinary from ejstra premiums. A separate statement is to be given of
premiums payable for a limited number of years, classified according to the
number of years' payments remaining to be made.
4. The total amount assured under endowment assurances, specifying
sums assured and office premiums separately in respect of each year in which
such assurances wiU mature for payment. The reversionary bonuses must
also be separately specified, and the sums assured with immediate profits,
with deferred profits, and without profits, separately returned.
5. The total amount assured under classes of assurance business, other
than assurances dealt with under Questions 2 and 4, distingmshing the sums
assured under each class, and stating separately the amount assured with
immediate profits, with deferred profits, and without profits, and the total
amount of reversionary bonuses.
6. The amount of premiums receivable annually in respect of each such
special class of assurances mentioned under Heading No. 5, distinguishmg
ordinary from extra premiums.
7. The total amount of premiums which has been received from the com-
mencement upon pure endowment policies which are in force at the date
above mentioned.
8. The total amount of immediate annuities on lives, distinguishing the
amounts for each year of life, and distinguishing male and female fives.
9. The amount of aU annuities on lives other than those specified under
Heading No. 8, distinguishing the amount of annuities payable under each
class, and the amount of premiums annually receivable.
10. The average rate of interest yielded by the assets, whether invested
i.L. 65
—
1026 APPENDIX
or uninvested, constituting the life assurance fund of the company, calculated

upon the mean fund of each year during the period since the last investigation,
without deduction of income tax.
It must be stated whether or not the mean fund upon which the average
rate of interest is calculated includes reversionary investments.
11. A table of minimum values, it any, allowed for the surrender of poKoies
for the whole term of life and for endowments and endowment assurances, or
a statement of the method pursued ia calculating such surrender values, with
instances of the apphcation of such method to poUcies of different standing
and taken out at various interval ages from the youngest to the oldest. In
the case of industrial poUcies, where free or paid up poUcies are granted in
Ueu of surrender values, the conditions under which such policies are granted
must be stated, with specimens as prescribed for surrender values.
(E.) Form applicable to Bond Investment Business.

Statement of the Bond Investment Business of the
on the 19 (To be signed by the Actuary.)
.
sponding questions. Statements or re-insurances, corresponding to the
statements in respect of insurances, are throughout to be given.)
1. The pubHshed table or tables of rates of contribution for bond invest-
ment poHoies and endowment certificates which are in use at the date above-
mentioned ; with fuU particulars as to the terms and conditions on which
advances are made under such policies or certificates, whether on security of
house property or land, or otherwise.
2. The total amounts assured under policies or certificates which are in
existence at the date above-mentioned, distinguishing the portions insured
with and without profits, stating separately the total additions by way of
bonus, and specifying such sums insured and bonuses respectively according
to the number of complete years unexpired at such date.
3. The amount of premiums receivable annually, in respect of the respective
insurances mentioned under Heading No. 2, separately speci&ed according to
the number of complete years unexpired at the date above mentioned.
4. The total amount of premiums which have been received from the
commencement upon all poUcies or certificates mentioned under Headings
Nos. 2 and 3, separately specified according to the number of complete years
unexpired at the date above mentioned.
5. The average rate of interest realised by the assets, whether invested
or uninvested, constituting the bond investment and endowment certificate
fund of the company, calculated upon the mean fund of each year during the
period since the last investigation, without deduction of income tax.
6. FuU particulars as to the terms and conditions upon which surrenders
of poUcies and certificates are granted, with specimens of the values aUowed
in respect of different durations, and different unexpired terms at the date of
surrender.
7. Full particulars as to the terms and conditions upon which aUowances
are made on the death of a poUoy or certificate holder, with specimen values
as required under Heading No. 6.
8. Full particulars as to the terms and conditions upon which transfers
of the interest in a poUcy or certificate are granted, whether on the death of
the poUcy or certificate holder, or during his lifetime.
9. FuU particulars as to the terms and conditions upon which redemption
of advances is granted, with specimens of redemption values ia respect of bonds
or certificates of different durations, and having different unexpired terms,
at the date of redemption.
10. A tabular statement in respect of poUcies or certificates lapsed during
the period since the last investigation, showing the number, the amount
insured, the yearly premiums, and the total premiums received from the
— ——
commencement ; according to the year in which such poKoies or

classified
certificates were effected, and lapsed, respectively
with a similar tabular
;
statement in respect of policies or certificates surrendered during the period :
Provided that policies or certificates which have lapsed and been revived
shall not be entered as lapses.
11. A statement of the total number of advances made under policies or
certificates to the holders thereof, whether on the security of house property
or land or otherwise, and the total amount of such advances outstanding at
the date above mentioned, distinguishing the advances on first mortgage and
those on second or subsequent mortgage.
SIXTH SCHEDULE. section n.
Rules for Valuing Policies and Liabilities.
(A.) As respects Life Policies and Annuities.

Bule for valuing an Annuity.
An annuity shall be valued according to the tables used by the company
which granted such annuity at the time of- granting the same, and, where
such tables cannot be ascertained or adopted to the satisfaction of the court,
then according to such rate of interest and table of mortaUty as the court may
direct.
Bule for valuing a Policy.

The value of the policyto be the difference between the present value
is
of the reversion in the sum
assured according to the contingency upon which
it is payable, including any bonus or addition thereto made before the com-
mencement of the winding up, and the present value of the future annual
premiums.
In calculating such present values interest is to be assumed at such rate,
and the rate of mortahty according to such tables, as the court may direct.
The premium to be calculated is to be such premium as according to the
said rate of interest and rate of mortaUty is sufficient to provide for the risk
incurred by the office in issuing the pohcy, exclusive of any addition thereto
for office expenses and other charges.
(B.) As respects Fire Policies.

Bule for valuing a Policy.
The value poUoy shall be such portion of the last premium
of a current
paid as is proportionate to the unexpired portion of the period in respect of
which the premium was paid.
(0.) As respects Accident Policies.
Bule for valuing a periodical Payment.

The present value of a periodical payment shall, in the case of total per-
manent incapacity, be such an amount as would, if invested in the purchase of
a life annuity from the National Debt Commissioners through the Post Office
Savings Bank, purchase an annuity equal to seventy-five per centum of the
annual value of the periodical payment, and, in any other case, shall be such
——
1028 APPENDIX
proportion of such amount as may, under the circumstances of the case, be

proper.
Bide for valuing a Policy.

The value of a current policy shall be such portion of the last premium
which the premium was paid.
(D.) As respects Employers' Liability Policies,
Rule for valuing a WeeUy Payment.

The present value of a weekly payment shall, it the incapacity of the
workman in respect of which it is payable is total permanent incapacity, be
such an amount as would, if invested in the purchase of an immediate life
annuity from the National Debt Commissioners through the Post Office
Savings Bank, purchase an annuity for the workman equal to seventy-five
per cent, of the annual value of the weekly payment, an'd in any other case
shall be such proportion of such amount as may, under the circumstances of
the case, be proper.
Rule for valuing a Policy.
The value of a current policy shall be such portion of the last premium
which the premium was paid, together with, in the case of a policy under
which any weekly payment is payable, the present value of that weekly
payment.
(E.) As respects Bonds or Certificates.
Rule for valuing a Policy or Certificate.
The value of a policy or certificate to be the difference between the

is
present value of the sum assured according to the date at which it is payable,
including any bonus or addition thereto made before the commencement of
the winding up, and the present value of the future annual premuims.
In calculating such present values, interest is to be assumed at such rate
as the court may direct.
The premium to be calculated is to be such premium as, according to the
said rate of interest, is sufficient to provide for the sum assured by the policy
or certificate, exclusive of any addition thereto for office expenses and other
charges.
Section 17. SEVENTH SCHEDULE.

Where an assurance company is being wound up by the court or subject
to the supervision of the court, the liquidator, in the case of all persons appear-
ing by the books of the company to be entitled to or interested in policies
granted by such company, is to ascertain the value of the hability of the com-
pany to each such person, and give notice of such value to such persons in such
manner as the court may direct, and any person to whom notice is so given
shall be bound by the value so ascertained unless he gives notice of his in-
tention to dispute such value in manner and within a time to be prescribed by
a rule or order of the court.
—— : — —
EIGHTH SCHEDULE. ^Ss.^^

Kequirements to be complied with by Undekwriters
BEING Members oe Lloyd's or oe any other
Association of Underwriters approved
BY the Board op Trade.
(A.) As respects Life Assurance Business.
1. Every underwriter shall deposit and keep deposited in such manner

as the Board of Trade may direct a sum of two thousand pounds. The Board
of Trade may make rules as to the payment, repayment, investment of, and
dealing with, a deposit, the payment of interest and dividends from any
such investment, and for any other matters in respect of which they may
make rules under section 2 (6) of this Act in relation to deposits made by
assurance companies. The sum so deposited shall, so long as any liabihty
under any pohcy issued by the underwriter remains unsatisfied, be available
solely to meet claims under such policies.
2. The underwriter shall furnish every year to the Board of Trade a state-
ment in such form as may be prescribed by the Board showing the extent and
character of the life assurance business effected by him.
(B) and (C.) As respects Fire and Accident Insurance Business.

1. Except as hereinafter provided, every underwriter shall comply with
the following requirements :
(a) He shall deposit and keep deposited in such manner as the Board of
Trade may direct a sum of two thousand pounds in respect of each
class of business. The Board of Trade may make rules as to the
payment, repayment, investment of, and dealing with, a deposit,
the payment of interest and dividends from any such investment,
and for any other matters in respect of which they may make rules
under section 2 (6) of this Act in relation to deposits made by
assurance companies. The sum so deposited shall, so long as any
liabihty under any pohcy issued by the underwriter remains un-
satisfied, be available solely to meet claims under such pohcies.
(6) He shall furnish every year to the Board of Trade a statement, in such
form as may be prescribed by the Board, showing the extent and
character of the fire or accident insurance business effected by him.
2. An underwriter who carries on fire insurance or accident insurance
business may, in heu of complying with the above requirements, elect to comply
with the under-mentioned conditions :
(a) AH premiums received by or on behaM of the underwriter in respect

of fire and accident insurance or re-insurance business carried on
by him, either alone or in conjunction with any other insurance
business for which special requirements are not laid down in this
schedule, shall without any apportionment be placed in a trust fund
in accordance with the provisions of a trust deed approved by the
Board of Trade
(6) He shall also furnish security to the satisfaction of the Board of Trade
the Board so direct, to the satisfaction of the committee of
(or, it
the association), which shall be available solely to meet claims
under pohcies issued by him in connexion with fire and accident
business and any other non-marine business carried on by him for
which special requirements are not laid down in this schedule.
— — —
1030 APPENDIX
The security may be furnished in the form of either a deposit or a

guarantee, or partly in the one form and partly in the other.
The amount of the security to be furnished shall never be less
Jhan the aggregate of the premiums received or receivable by the
underwriter in the last preceding year in connexion with such fire
and accident and other non-marine business :
(c) The accounts of every underwriter shall be audited annually by an

accountant approved by the committee of the association, who
shall furnish a certificate to the committee of the association and
to the Board of Trade in a form prescribed by the Board of Trade :
(d) For the purpose of these requirements " non-marine insurance busi-
ness " means the business of issumg poMcies upon subject-matters
of insurance other than the following, namely :
Vessels of any description, including barges and dredgers,

cargoes, freights, and other interests which may be legally
insured by, in, or in relation to vessels, cargoes, and freights,
goods, wares, merchandise, and property of whatever description
insured for any transit by land or water, or both, and whether
or not including warehouse risks or similar risks in addition or
as incidental to such transit.
(D.) As respects Employers' Liability Insurance Business.
1. Every underwriter shall deposit and keep deposited in such manner

as the Board of Trade may direct a sum of two thousand pounds. The
Board of Trade may make rules as to the payment, repayment, investment
of, and dealing with, a deposit, the payment of interest and dividends from
any such investment, and for any other matters in respect of which they may
make rules under this Act in relation to deposits made by assurance companies.
The sum so deposited shall, so long as any liability under any poHoy issued by
the underwriter remains unsatisfied, be available solely to meet claims under
such poUcies.
Where the person insured by any poUcy issued by an underwriter is
2.
make a weekly payment to any workman during the incapacity of
liable to
the workman, and the weekly payment has continued for more than six
months, the liability therefor shall before the expiration of twelve months
from the commencement of the incapacity be redeemed by the payment of a
lump sum in accordance with paragraph (17) of the First Schedule to the
Workmen's Compensation Act, 1906, and the underwriter shall pay the lump
sum into the county court, and shall inform the court that the redemption
has been effected in pursuance of the provisions of this schedule.
ment in such form as may be prescribed by the Board showing the extent
and character of the employers' liability business effected by him.
4. For the purposes of this schedule " pohcy " means a policy insuring any
employer against hability to pay compensation or damages to workmen in
his employment.
(E.) As respects Bond Investment Business.

Every underwriter shall deposit and keep deposited in such manner
1.
as the Board of Trade may direct a sum of two thousand pounds. The Board
of Trade may make rules as to the payment, repayment, investment of, and
deahng with, a deposit, the payment of interest and dividends from any such
investment, and for any other matters in respect of which they may make
rules under section 2 (6) of this Act in relation to deposits made by assurance
companies. The sum so deposited shall, so long as any habihty under any
policy issued by the underwriter remains unsatisfied, be available solely to
meet claims under such policies.
ment in such form as may be prescribed by the Board showing the extent and
character of the bond investment business efEected bv him.
NINTH SCHEDULE. Section 37.
Enactments Repealed.
Session and
Chapter.
—
1032 APPENDIX
STATUTORY RULES, 1910.
Order op the Board of Trade dated June 6, 1910, making Kules

AND Regulations and prescribing Forms under the Assurance
Companies Act, 1909 (9 Edw. 7, c. 49).
The Board of Trade in pursuance of tte powers conferred upon
them by Sections 2, 9, 20, 21, and 29 and by the 8th Schedule of the
Assurance Companies Act, 1909, do hereby make the following Rules
and Regulations and prescribe the following Forms.
Sydney Buxton,
President of the Board of Trade.
Board of Trade,
6th June, 1910.
Rules relating to deposits by Assurance Companies under

Section 2 of the Assurance Companies Act, 1909.
1. These Rules apply to all Companies to which the Assurance
Companies Act, 1909, applies and in the construction of these Rules,
;
unless and except so far as the context may otherwise require, the
following words or phrases shall have the following meanings, that is
to say :
" The Act " means the Assurance Companies Act, 1909.
" Company " means a Company to which the Act applies, and
includes an Irish Company as next hereinafter defined.
" Irish Company " means a Company to which the Act applies,
and which is registered or has its head o£S.ce in Ireland.
" Assurance business " means all or any of the five classes of
assurance business specified in Section 1 of the Act.
" The Court " means the Supreme Court of Judicature in England
or in the case of an Irish Company the Supreme Court of-
Judicature in Ireland.
" The Paymaster-General" means the Paymaster-General for the
time being or in the case of an Irish Company the Accountant-
General for the time being of the Supreme Court of Judicature in
Ireland.
" The Assistant Paymaster-General " means the official or one of
the officials acting for the time being as the Assistant or Deputy
of the Paymaster- General as hereinbefore defined in relation to
business connected with the Court.
" The Bank " means the Bank of England (Law Courts' Branch),
or in the case of an Irish Company the Bank of Ireland or in
either case such Bank or Branch of a Bank as may from time to
time be appointed to receive and deal with cash and securities
under the control of the Paymaster-General on behalf of the
Court.
2.Where any Company is required, in pursuance of the Act, to
deposit the sum of twenty thousand pounds with the Paymaster-
General for the time being for and on behalf of the Court, the Company,
or the subscribers of the Memorandum of Association of the Company
or any of them, as the case may be (in this Rule referred to as the
Note. —
The marginal letters are not in the King's Printer's copies of the
Rules, but are inserted here for convenience of reference in the text.
— —
STATUTORY EULES, 1910 1033
Depositors), may, in the Company, make application to the

name of the
Board of Trade for a Warrant, and the Board of Trade may thereupon
issue their Warrant to the Depositors for lodgment of such deposit
in Court, which Warrant shall be a sufiacient authority for the Company
or persons therein named to lodge the money therein mentioned at the
Bank to the account of the Paymaster-General for and on behalf of
the Court, and for the Paymaster- General or the Assistant Paymaster-
General to issue directions to the Bank to receive the same, to be placed
in the books of the Paymaster-General, to the credit of ex -parte the
Company mentioned in such Warrant, according to the method for the
time beiag in force respecting the lodgment of money.
Provided, that in lieu, wholly or in part, of the lodgment of money,
the Depositors may bring into Court as a deposit an equivalent sum of
any stocks, funds, or securities in which cash under the control of or
subject to the order of the Court may for the time being be invested
(the value thereof being taken at a price as near as may be to, but not
exceeding, the current market price) and in that case the Board of
;
Trade shall vary their Warrant accordingly, by directing the lodgment

of such amount of such stocks, funds, or securities, by the Company or
the persons therein named, to the said account of the said Paymaster-
General for the credit in his books of ex parte the Company mentioned
in such Warrant.
3. Where the assurance business by reason whereof the deposit
is made is a class which a separate assurance
of business in respect of
fund required to be kept (that is to say, is either life assurance busi-
is
ness, employers' liability insurance business or bond investment

business), then and in any such case the application to the Board of
Trade and the Warrant of the Board of Trade shall specify the particular
class of business in respect of which the deposit is being made, and
the deposit shall be marked accordingly in the books of the Paymaster-
General to a special ledger credit. In all other respects the provisions
of the last preceding Eule
apply to any such separate deposit.
shall
4. Where a lodgment or securities has been made under
of money
the preceding Eules, the Court may, on the application of the Company,
order :
(a) Investment in such of the stocks, funds, or securities in which

cash under the control of or subject to the order of the Court
may for the time being be invested as the applicants desire
and the Court thinks fit, and either by way of original invest-
ment or by way of variation of investment.
(6) Payment to the Company of the interest, dividends, or income
from time to time accruing due on any stocks, funds, or
securities in which the deposit is for the time being invested.
(c) Transfer or payment in the cases provided for by the Eules
following of the deposit and the stocks, funds, or securities
for the time being representing the same either from one
ledger credit of the Company to another or out of Court.
In the subsequent provisions of these Eules the term " the
5.
deposit fund " means the money or securities deposited, or the stocks,
funds, or securities for the time beiag representing the same, as the
case may be.
6. In any case where it may appear to be just and equitable so to
do, and in particular in any of the following cases, namely :
; ; ;
1034 APPENDIX
(a) Where a Company having carried on or having intended to

carry on only a class or classes of assurance business in respect
of which a separate assurance fund is not required to be kept
(that is to say either fire insurance business or accident
insurance business) and having a deposit fund standing to
the credit of the Company generally, intends subsequently to
carry on a class of assurance business in respect of which a
separate assurance fund is required to be kept
(b) where a Company having carried on employers' liability insurance
business or bond investment business as the case may be and

having a deposit fund standing to a special ledger credit in
respect of the class of business in question, has a fund amount-
ing to £40,000 set apart and secured for the satisfaction of the
claims of policy holders of that class, and intends subsequently
to carry on in the first case bond investment business or in
the second case employers' liability insurance business or in
either of the said cases life assurance business ;
the Court may on the application of the Company order the deposit
fund to be transferred from the general account of the Company to a
special ledger credit in respect of a particular class of assurance business,
or from one special ledger credit in respect of one particular class of
assurance business to another special ledger credit in respect of another
particular class of assurance business, or otherwise to be dealt with as
may be just and equitable and not in contravention of any -provision
of the Act.
7. In any case where it may be just and equitable so to do, and
particularly in any of the following cases, namely : —
(a) Where a Company having carried on or having intended to carry
on either fire insurance business, or accident insurance business,
or both, and having a deposit fund standing to the credit of
the Company generally, makes a further deposit in respect of
any other class of assurance business ;
(6) where a Company has a deposit fund to a special ledger credit

in respect of employers' liability business, and the employers'
liability fund of the Company set apart and secured for the
claims of policy holders of that class amounts to £40,000,
and the Company has or makes a further deposit in respect of
any other class of assurance business as provided for in Section
33 (e) of the Act
(c) where a Company has a deposit fund to a special ledger credit
in respect of bond investment business, and the bond invest-

ment fund of the Company set apart and secured for the
claims of the policy holders of that class amounts to £40,000,
and the Company has or makes a further deposit in respect of
any other class of assurance business as provided for in
Section 34 (c) of the Act
{d) where a Company has ceased altogether to carry on within the
United Kingdom, either assurance business of any class, or
the particular class of assurance business to the special ledger
credit whereof a deposit fund (not being the sole deposit fund)
is standing, and all liabilities in respect of the deposit fund have
been satisfied or are otherwise provided for ;
the Court may, on the application of the Company, order the deposit
fund to be paid or transferred out of Court and returned to the Company

or as it shall direct.
8. The issuing in any case of any Warrant or certificate relating to
a deposit or to the deposit fund, or any error in any such Warrant or
certificate, or in relation thereto, shall not make the Board of Trade, or
the person signing the Warrant or certificate on their behalf, in any
manner liable for or in respect of the deposit fund, or the interest or
dividends accruing on the same, or any part thereof, respectively.
9. Any application under these Eules to the Court shall be made in
such manner as shall from time to time be prescribed by Rules of
Court, and until otherwise prescribed in the like manner in which
similar applications under the Life Assurance Companies Acts, 1870 to
1872, and the Employers' Liability Insurance Companies Act, 1907,
were made immediately prior to the commencement of the Act. Pro-
vided always that any application under Rule 6 or Rule 7 shall be
served on the Board of Trade.
10. These Rules shall, so far as may be, extend to and authorise
applications with regard to deposits already made by existing Com-
panies under the provisions of the Life Assurance Companies Acts,
1870 to 1872, and the Employers' Liability Insurance Companies Act,
1907, and for this purpose deposits made under the Life Assurance
Companies Acts, 1870 to 1872, and the deposit funds representing the
same shall prima Jacie and in default of reason to the contrary be
treated and dealt with as having been made in respect of the life assur-
ance business of the Companies by or on behalf of which such deposits
were made, and deposits made under the Employers' Liability Insurance
Companies Act, 1907, and the deposit funds representing the same shall
prima Jacie and in default of reason to the contrary, be treated and
dealt with as having been made in respect of the employers' liability
insurance business of the Companies by or on behalf of which such
deposits were made.
Where any such deposit as in this Rule mentioned has been made
by an Irish Company, the same may be ordered by the Supreme Court of
Judicature in England to be transferred from the account of the Pay-
master- G-eneral of the English Court to a corresponding account of the
Accountant-General of the Supreme Court of Judicature in Ireland.
Rules eelating to Deposits by Underwriters who are members

OF Lloyd's.
1. These Rules shall apply only to deposits made pursuant to the
Assurance Companies Act, 1909, by Underwriters who are members of
Lloyd's, and such Underwriters are hereinafter referred to simply as
Underwriters.
2. Where under the provisions of the Eighth Schedule to the said
Act any Underwriter has to make and keep any deposit in respect of
any class of assurance business, the payment, repayment, investment
of, and dealing with, such deposit and the payment of interest and
dividends on such deposit, and the investments from time to time

representing the same shall be regulated by the terms of an Indenture
under Seal, which shall be executed in the case of each deposit by the
Underwriter making the deposit, by Lloyd's, and by Trustees to be
appointed by the Committee of Lloyd's for the time being, and shall be
—
1036 APPENDIX
in accordance with a model form approved by the Board of Trade for

deposits in relation to that class of assurance business.
3. Where any Underwriter carries on more than one class of assurance
business and accordingly has, under the provisions of the said Eighth
Schedule, to make a separate deposit in respect of each class of business
a separate Indenture of the nature specified in the last preceding Rule,
shall be executed in respect of each separate deposit.
So soon as any deposit has been made by an Underwriter and a
4.
corresponding Indenture executed under the preceding Eules, Lloyd's
shall forthwith notify to the Board of Trade the name and address of
such Underwriter, the date of the Indenture, and the class of assurance
business in respect of which the deposit has been made and the Indenture
has been executed, and Lloyd's and the Trustees for the time being of
the Indenture shall from time to time notify to the Board of Trade any
alteration in the address or the name of the Underwriter, and shall
at all times furnish to the said Board any material information in
regard to the deposit and the investment thereof, and the dealings
therewith and the position of the Underwriter in relation thereto, and
otherwise, which may from time to time be possessed by Lloyd's and
the said Trustees.
Rules relating to the Audit of Accounts oe Assurance

Companies.
C 1. The accounts company not subject to audit
of every assurance
in accordance with the provisions of the Companies (Consolidation)
Act, 1908, or of the Companies Clauses Consolidation Act, 1845, relating
to audit shall be audited in accordance with the provisions of Section
113 (1) and (2) of the Companies (Consolidation) Act, 1908.
2. No director or o£S.cer of the company shall be capable
of being
appointed an auditor.
3. In the case of a company having a share capital, the auditor or
auditors shall be elected annually by the shareholders.
Rules relating to the Custody, Inspection, and

Certification of Documents.
D 1. A copy of every account, balance sheet, abstract, statement, or
report required by the Assurance Companies Act, 1909, to be deposited
with the Board of Trade shall be kept by the Registrar of Joint Stock
Companies, and shall be open to inspection by any person on payment
of a fee of one shilling for each inspection ; and any person may procure
a copy of any such document or any part thereof on payment of M. a
foho of 72 words.
2. The Assistant Registrars are hereby appointed (in addition to the
Registrar) for the purpose of certifying documents under Section 21
of the said Act.
Rules relating to the Qualifications op an Actuary.

E 1. Any person signing as actuary valuation returns of life-assurance
business, sinking fund or capital redemption insurance business, or bond
investment business shall be either,
—
STATUTORY RULES, 1910 1037
(1) a Fellow of the Institute of Actuaries or of the Faculty of

Actuaries or ;
(2) where application is made by a company and where, in the

opinion of the Board of Trade, special circumstances exist,
an Associate of the Institute of Actuaries or of the Faculty
of Actuaries or ;
(3) the actuary at the date of making these Rules to a company

imder the Assurance Companies Act, 1909, having its head
office within the United Kingdom or to any closed fund of
such a company established in consequence of an amalgama-
tion or transfer ; or
such other person having actuarial knowledge as the Board of
(4)
Trade may, on the application of a company, approve.
2. Any person signing as actuary returns with regard to employers'
liability business shall be either
(1) a Fellow or Associate of the Institute of Actuaries or of the

Faculty of Actuaries or ;
(2) the actuary at the date of making these Rules to a company

under the said Act having its head office within the United
Kingdom or to any closed fund of such a company established
in consequence of an amalgamation or transfer or ;
(3) such other person as the Board of Trade may, on the application
of a company, approve.
Secueity to be furnished by Underwritees being members of

Lloyd's.
The security to be furnished under the Eighth Schedule to the Assur- F
ance Companies Act, 1909 (B) and (C), 2 (b), by underwriters being
members of Lloyd's, shall be furnished to the satisfaction of the Com-
mittee of Lloyd's.
Form of Certificate to be furnished on Audit of Accounts of

Underwriters being members of Lloyd's.
The following Form is hereby prescribed as the Form of Certificate 6
to be furnished by auditors of the accounts of underwriters being
members of Lloyd's carrying on fiie or accident insurance business who
have elected to comply with the conditions set out in clause 2 of the part
of the 8th Schedule to the Assurance Companies Act, 1909, applicable
to fire and accident insurance business.
To the Committee of Lloyd's.

We have examined the Books for the above Accounts for the year ending
31st December, 19 , in accordance with the " Instructions for the guidance of
Auditors " drawn up by your Committee and approved by the Board of Trade.
In our opinion, so far as the Liabilities and Assets shown in the Books are
concerned, the Assets shown in the Books and those deposited with Lloyd's
Committee and those since provided, belonging to each name, are correctly
valued and available and sufficient to meet his habihties as therein shown, and
to wind up his outstanding Underwriting Accounts. The Liabihty of the
current Underwriting Accounts has been calculated on the basis of the pro-
portion of settlements to Premiums actually made in respect of the years
Ifl , 19 , and 19 .
1038 APPENDIX
We have verified, by actual inspection or Banker's Certificate, the Invest-

ments and Cash at the Bankers at 31st December, 19 ,and have compared
the Brokers' balances with the Ledger, and in arriving at the Brokers' balances,
discount has been taken into account and provision made for any debts whose
recovery in fuU is doubtful. The funds also are held in trust under a Deed of
Trust, duly executed, approved by your Committee.
AU the information we required has been suppUed to us, and so far as our
examination of the Books has gone, they appear to have been properly kept.
Dated 19 .
(Signed)
Accountants approved by the
Committee of Lloyd's.
Forms of Annual Statements to be furnished by

Underwriters.
H The following Forms aie hereby prescribed as the Forms of State-
ments to be fumished by Underwriters in respect of assurance business
efiected by them under the Eighth Schedule of the Assurance Companies
Act, 1909.
H
W
E-i
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H
H
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05
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fl^
1040 APPENDIX
Life Assubance — {cont.).
Summary and Valuation of the Life Assurance Policies as at , 19
Description of Transactions.
H
1042 APPENDIX
CO
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—
STATUTOBY RULES, 1910 1043
Accident Insurance — (cont).
Statement of the Estimated Liability in respect of Outstanding Accident Claims

arising in the year of Account, and in the preceding year or years ; computed
as at the end of the year in which the claims arose, and as at the end of the
year of Account ; with particulars as to the number and amount of the
claims actually paid in the intervening period.
I. —Claims arising during the year of account ending , 19 .
(a) Particulars as to Claims arising, and settled, during the year of

Account :
Class of Claim.
(1)
1044 APPENDIX
Accident Insueance — (cont.).
II. —Outstanding Claims which arose during the first year preceding the
year of account ending , 19 .
SI'S.. ^3.1
^ -p-
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1046 APPENDIX
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1048 APPENDIX
-a-
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III
1050 APPENDIX
Bond Investment Business — {cont.).
Summary and Valuation of the Bond, Investment Policies or Endowment Cer-

tificates as at 19 ,
Description of Transactions.
INDEX.
ABROAD. See Foreign Country.

ABSOLUTE OWNERSHIP CLAUSE,
meaning and eSect of, 126
conditions relating to which have been judicially construed, 893
ACCEPTANCE. See Proposal.
ACCIDENT INSURANCE,
application of Assurance Companies Act, 1909, to, 26
accident insurance business defined, 28
third party risk policy not an accident policy, 28
obligation to make deposit, 29
transfer of deposit to life or employers' liability, 30
annual statement of business, 39
members of Lloyd's may place premiums in trust and furnish security
instead of making deposit, 42
when they adopt this alternative accounts to be audited annually, 42
no statutory restrictions on transfer of business, 46
within Life Assurance Act, 1774, requiring insurable interest, 152
accident policies, 918
bodily injury caused by violent accidental external means, 918
pre-existing latent weakness or defect, 919
where assured exerts himself beyond his strength, 919
evidence must show some unintentional act or movement, 920
disease not an accident, 920
death resulting from sunstroke, 921
poisonous matter or infectious germs alighting on person of
assured, 922
disease supervening on accident, 922
accident supervening on disease, 922
death or injury from taking poison or inhaling gas, 922
death by choking, &c., 923
intentional injuries inflicted by third person, 923
negligence of assured, 923
injury caused by shock without physical contact, 923
death or injury caused by direct action of the elements, 923
death caused by lightning, 923
drowning, 923
risk limited to accident happening in a particular place or manner, 925
accidents happening while travelling by railway or otherwise, 925
travelling as a passenger, 925
public or private conveyance, 926
in compliance with carriers' rules and regulations, 926
United Kingdom held to include Jersey, 927
exclusion of injuries where there is no external mark upon the
body, 927
such clauses construed very strictly, 927
visible sign, 927
dead body, 917
pallid complexion, 927
discoloration, 928
—
1052 INDEX.
ACCIDENT INSURANCE—con«iraM6rf.
accident poUcies continued.
conditions relating to proof of claim, 928
direct and positive proof includes circumstantial evidence, 928
admissibility of statements made by deceased with regard to
alleged accident, 929
nature of injury may be primd facie proof of accidental cause, 929
evidence equally consistent with accidental and non-accidental
cause, 929
proof satisfactory to the directors, 930
powers of the directors to call for all reasonable information and
evidence, 930
powers of the directors to call for examination of the body, 931
right to require exhumation, 931
clauses defining the necessary relation between the injury and conse-
quent death or disability, 932
when is injury the oaiase of death or disability, 932
the direct cause, 933
the sole cause, 933
no recovery for disability supervening after a specified time, 934
disability caused by assured's negligence, 935
death caused by accidental means without intervening injury,
935
when disability is deemed to be immediate, 935
total or partial incapacity, 936
total incapacity for usual business, 936
for any and every kind of business, 936
disability defined, 937
as period during which assured is confined to bed, 937
as meaning loss of sight, hand, or foot, 937
benefit payable on loss of both eyes, effect of insuring a one-eyed
man, 937
clauses defining amount of compensation payable, 939
express exception of injuries intentionally inflicted by the assured or
some other person, 939
when suicide follows as consequence of injury, 940
intentional injtiries inflicted by third person, 940
meaning of " intentional," 940
injuries received in consequence of any breach of law, 941
there must be a wilful act, 941
violation of by-laws, 942
natural and probable consequence of violation alone excepted, 942
injuries resulting from fighting, quarrelling, or drinking, 943,
injuries caused by exposure to imnecessary danger, 943
exceptions not to be read too literally, 943
conduct of a reasonably prudent man, 944
does not include ordinary pursuits of Ufe, 944
exposure to danger from motives of humanity, 945
hidden danger, 945
burden of proof, 946
exception of injuries caused by certain specified hazards, 948
clauses limiting or excluding the right of the assured when engaged
in an occuptaion more hazardous than that specified, 949
meaning of " occupation," 949
express exception of death or disability caused by disease, 950
disease must be proximate cause, 950
need not be sole cause, 950
when disease niay be deemed a proximate cause, 950
disease arising in consequence of accident, 951
exception excluding aU consequences of disease, 951
where disease is defined in poUoy, 952
meaning of disease when not so defined, 952
clauses excluding death or disability resulting from poison inhaling
gas or medical treatment, 954
how far such exceptions imply a conscious act, 954
surgical or medical treatment, 954
— —
INDEX. 1053
ACCIDENT INSURANCE—coniimted.
accident policies continued.
conditions requiring notice of accident, 955
how far to be construed as conditions precedent, 956
when giving notice is impossible within the time, 957
where serious nature of accident is not at first apparent, 958
meaning of immediate notice, 958
contents of notice, 959
waiver of conditions as to notice, 959
notice given to agent instead of to head office, 959
how far proofs and information can be demanded if insurers
repudiate liability on ground of insufficient notice, 960
conditions requiring proof to be furnished within a specified time, 962
construction of such conditions, 962
statements in proof may be amended, 962
where insurers repudiate all liability, 962
blank forms for proof, 962
acceptance of proof no admission of claim, 962
obligation on company to point out defects, 963
preliminary proofs not necessarily on oath, 963
conditions relating to limitation of action, 963
ACCOUNTS AND STATEMENTS OF AFFAIRS. And see Friendly

Societies, Colleotistg Societies, Trade Unions, Lloyd's, Foreign
Assurance Companies.
provisions of Life Assurance Act, 1870, relating to, 25
relating to now in force, 34
Companies Acts
list of members, 35
summary of aSairs, 35
amount called up on each share, 35
total shares forfeited, 35
names and addresses of directors, 35
mortgages and charges, 35
balance sheet, 35
half-yearly statement of share capital, liabilities and assets, 35
to be posted in company's place of business, 36
investigation of affairs by Board of Trade inspectors, 36
annual appointment of auditors, 36
report of auditors, 37
Assurance Companies Act, 1909
every statement of capital testate amount subscribed and paid up, 37
separate account in respect of each class of assurance business, 37
assurance fund in life, employers' liability, and bond invest-
ment, 37
annual accounts, 37
provisions of Companies Act relating to audit to apply, 38
periodical investigation of life and bond investment business, 38
report by actuary, 38
periodical statement of life or bond investment business, 39
qualification of actuary, 39
annual statement of accident or employers' liability business, 39
estimated liability on claims in employers 'liability business to be made
and signed by actuary, 39
no periodical investigation or statement of fire business, 39, 40
register of members and shareholders' address book, 40
accounts and other statements of affairs to be deposited with Board
of Trade, 40
Board of Trade to correct inaccuracies in accounts, &c., 41
printed copies of accoimts, &c., to be sent to shareholder or poUoy
holder, 41
right to inspect and obtain copies of accounts, &c., 41
Board of Trade to lay accounts, &o., annually before Parliament, 41
provisions as to members of Lloyd's, 42
foreign assurance companies, 45
accounts of liquidator to be sent to Board of Trade and audited, 82
1054 INDEX.
ACCUMULATION OF INCOME,
beyond legal period by means of a life policy and direction to trustees to
pay income as premiums thereon, 535
ACT OF PARLIAMENT,
companies incorporated by, 4
limitation of powers defined in, 182, 186
ACTUARY,
valuation of liabilities of company upon investigation of life or bond invest-
ment business, 38
must sign periodical statement of life or bond investment business, 39
qualification of, 39
must make and sign estimated liability on claims in employers' liability,
39
to report on valuation of assets and liabilities of Friendly Society, 43
annuity tables of friendly society to be certified by, 18
ADMINISTRATION,
distribution of friendly society funds by society on intestacy, 18, 647
summary administration of debtor's estate in small bankruptcies, 618
administration order in County Court, 619
by liquidator in respect of deceased contributory, 82
of estate of contributory, 91
ADMINISTRATOR. See Stjccbssion.
ADMINISTRATORS,
insurable interest of, 129
ADVERTISEMENT. See Coupon Insurance.

how far advertisement or prospectus of company may modify terms of
poHcy, 295, 858
AGE. See Pkoof of Death and Age.

materiality of misstatement relating to, 270, 271, 286, 331
how proved, 394 —399
AGENT,
company doing business in United Kingdom through, 46
foreign
payment of premium to agent as evidence of novation in case of amalgama-
tion or transfer, 68
payment of premium by assured's agent as evidence of novation, 68
employment of, by liquidator in winding-up, 81
authority of agents to contract on behalf of company, 188
principal bound by apparent authority of agent, 188, 234
constructive notice of limitation of agent's authority if contained in
private Act, deed, or articles, 188
limitation of agent's authority contained in policy, 188
person dealing with agent must make reasonable inquiry as to
authority, 188
authority implied from agent's position, 189
private instructions limiting authority, inoperative, 189
general agent intrusted with blank policies, 189
agent appointed to receive and forward applications, 189
interim insurance, 189, 202, 205
authority to grant renewal receipts, 189
agent intrusted with completely executed policy, 189
apparent authority depends on general custom of insiu'ance business,
189, 265
extension of authority by acquiescence in acts of agent, 190, 234,
265, 266
notice of restriction on authority must be clear and unambiguous, 190
restriction on authority printed on company's proposal forms, 190
waiver of express restrictions by subsequent course of conduct, 191,
234
authority to transact ordinary business of underwriter at Lloyd's, 191
agent acting in his own interests or dishonestly, 191, 205
— —
INDEX. 1055
AGENT continued.
authority of agents to contract on behalf of company continued.
authority to perform ministerial acts only, 191
to communicate director's acceptance of proposal, 191
agent's authority to delegate duties, 191
to canvasser employed to solicit insurance, 191
to clerk to countersign policy, 192
company's agent insuring with company, 192
knowledge of agent, when deemed to be knowledge of principal, 190, 192,
241, 263, 289, 346, 358, 966
ratification by insurers, 192
when agent intended to make contract for his own benefit, 192
contract must be professedly made as agent, 192
must be ratified within a reasonable time, 192
repudiation before ratification, 193
rescission before ratification, 193
ratification implied from knowledge and acquiescence, 193
warranty of authority, habiUty for breach of, 193
whether oral contract within scope of authority, 198, 203, 205
contract concluded by entry in agent's book, 198
broker not assured's agent to receive notice to determine interim risk, 201
notice to determine interim protection may be given to general agent of
assured, 201
receipt of premium and statement that applicant woiild be insured, 202
proposal accepted subject to approval of directors, 212
authority to receive pajmaent of premium, 234, 235
to collect premium notes, 235
delegation of authority to collect premiums, 235
waiver of condition that printed receipt alone binding, 236
broker's authority to collect premiums, 236
condition that any person other than assured procm-ing policy shall be
deemed agent of assured, and not of company, 236, 917
payment of premium by, on behalf of assured, 239
authority of agents of companies to give credit for premiums inter se, 241
who is agent of assured to accept notice to determine risk, 245
promise by, that notice of renewal premium falling due would be given,
261
where agent gives credit for premiums and company subsequently accepts
them with notice of irregularity, 263
authority of agent to waive conditions relating to premium, 264
authority to accept premiums otherwise than in cash, 264
to give credit for premium, 264, 265
to take a cheque as conditional payment, 265
authority of agent to waive forfeitures and revive lapsed policy, 266
conditions that agents are not authorised to alter contracts or waive
forfeitures, 266, 344, 875, 917
notice of definite restriction on agent's authority, 266
this condition, like others, may be waived by the company, 267, 916
rescission and return of premiums where contract induced by fraud of,
276, 280
misrepresentations, effect of, where agent knows the truth, 289
authority of, to make representations as to meaning and effect of contract,
295
to explain meaning of conditions in proposal form or policy,
296, 360
representations of, as to ex gratia practice of company granting bonuses,
&o., 296
authority of agent to waive breach of warranty, 343, 368, 916
local agent without power to make contracts, 344
held out by company as having authority to waive breach of warranty,
344, 369
agent with general powers, 344
limit of authority defined in application form, 344, 917
authority limited by conditions in policy, 344, 917
provision that conditions can only be waived in prescribed manner,
345, 875, 917
—
1056 INDEX.
AGENT continued.
misrepresentation or non-disclosure by agent of assured, 348
by agent to procure insurance, 248
of assured in charge of property insured, 349
by fraudulent agent, 350
whether innocent non -disclosure by agent of a loss avoids the policy,
or creates an exception, 350
by life or referee, 350
where debtor or other person procures a policy in his own interest
payable to another, 353
fraud or mistakes by agent of the company in filling up proposal, 355
explaining the questions, 355
misunderstanding the assured, 356
obvious mistakes, 356
fraudulent misstatements, 356
proposal signed in blank, 357
proposal filled in by agent from his own knowledge, 357
when the answers are warranted true, 358
condition that agent is agent of applicant, 358
condition that knowledge of agent is not knowledge of company, 358
onus of proof, 358
authority of agent to accept notice of increased risk, &o., on behalf of
company, 368
payment of claim to claimant's agent, 413, 516
notice of assignment of policy given to agent, 435, 441
agent of mortgagee, power to exercise mortgagee's power of sale, 504
conditions in poUcy relating to authority of agents, 917
AGRICULTUEAL INSTRUMENTS,
described as " in coach house, &c.," not covered in adjoining yard, 371
ALBERT LIFE ASSURANCE COMPANY,

failure of, 24
appointment of arbitrator by act of parliament, 24
novation of policy holders' contracts, 62
rules for valuation of contingent claims, 93
ALIEN ENEMY. See Enemy.
ALTERATION OF RISK,
before premium paid and policy issued, 207
change of risk between proposal and acceptance, 214
agreement to insure lost or not lost, 215
from specified date, 215, 217
knowledge of applicant that risk has altered, 215
what duty to communicate to insurers before acceptance, 215
change of risk after acceptance and before issue of policy, 216
material time is date when it is agreed risk shall attach, 217
condition that there shall be no insurance until premium is paid, 217
change of risk after policy issued, 217
alteration of premises covered by fire policy, 361
alterations varying the description but not increasing the risk, 361, 362,
365
increasing the risk but not affecting the description, 362
erection of contiguous buildings increasing risk, 363
alteration in user of premises, 363
increasing risk but not expressly prohibited, 363
carrying on more hazardous business, 364
change of tenancy, 364
warranty against alteration increasing risk, 365
meaning of alteration increasing risk, 366
increase in size of structure, 366
introduction of engines, machinery, &c., 366
classification of hazards, 366
increase of risk in one part and decrease in another, 366
—
INDEX. 1057
ALTERATION OF BISK—continued.
warranty against alteration increasing risk continued.
prohibits permanent alteration of user as well as structure, 367
dwelling house used as hotel, 367
ceasing to keep fire extinguishing appliances, 367
taking boarders, 367
does not prohibit temporary variation either of user or structure, 369
boiling tar for purposes of repairs, 369
using kiln for djdng bark, 369
breach of rules by employees, 370
temporary variation may be prohibited in express terms, 370
alteration of title or creation of incumbrance, 367
" change " of risk held to connote " increase " of risk, 367
when assured is not in possession, 367
increase of risk " in any manner within the control of the assured,"
368
condition requiring notice of increase of risk, 368
from causes arising on adjoining premises, 368
condition requiring notice of any alteratioHS or additions, 368
includes all such irrespective of increase' of risk, 368
authority of agent to waive conditions relating to increase of risk, 368
consent in general terms to make alterations and repairs, 369
conditions relating to, which have been judicially construed, 888
AMALGAMATION OR TRANSFER. See Novation.

of friendly society, 19
provisions of Life Assurance Companies Act, 1870, relating to, 25
Assurance Companies Act, 1909, relating to, 46
petition to Court to sanction, 47
notice in London Gazette, 47
what documents must be prepared, 47
copies of documents to be transmitted to policy holders and others, 47
how documents may be transmitted, 47
when they must be transmitted, 47
documents need not be sent to new policy-holders, 47
when petition may be heard, 48
provisional agreement to be open for inspection, 48
when Court may sanction agreement, 48
dissent of life policy-holders representing one-tenth of amount assured, 48
documents to be sent to Board of Trade on completion of, 48
when agreement is intra vires, 49
no power to compel shareholders to become shareholders in transferee
company, 50
when shareholder deemed to hEjve become shareholder in transferee
company, 51
primA facie company has no power to become a shareholder in transferee
company, 51
no power to relieve shareholder from liability, 51
deed of settlement may confer express power to terminate shareholder's
Habihty, 52
when liability of shareholder may be terminated by transfer of shares, 52
power to transfer policy-holder's contract without his consent, 53
right of policy-holder or shareholder to restrain company from carrying
out agreement ultra vires, 54
transfer of business under provisions of Connpanies Act, 1908. .54
scheme of arrangement under sec. 120. .54
Bale of business by liquidator under sec. 192 in voluntary winding up, 54,
55, 56
must be sanctioned by Court if company wound up compulsorily, 55
shareholders cannot be placed under additional liability by sale of busi-
ness, 56
whether transfer of business under provisions of Companies Act can be
carried through without reference to provisions of Assurance Companies
Act, 56
summary of principal provisions in agreement for transfer of a life busi-
ness, 59
LL. 67
1058 INDEX.
AMALGAMATION OR TKANSFEB,—continued.
covenant to indemnify transferor company against claims, 60
where transferred funds form special security for policy-holders in trans-
feror company, 98
AMBIGUITIES,
construction in favour of assured, 332, 853
AMOUNT. See Sum Assured.

ANNUITIES. See Govbenment Annuities.
granting annuities on human life is life assurance business, 27, 28
widows' pensions to purchasers of tea, 27, 28
superannuation allowances, maintenance of employees and de-
{lendants, 28
when annuity contracts are deemed to be novated in case of transfer or
amalgamation, 70
proof in winding up of company, 92
valuation of, 94
claim of annuitant on transferred funds, 98
contract to purchase is void if annuitant is in fact dead, 270
ANTICIPATION. See Ebstbaint on Anticipation.

APPLIANCES FOR EXTINGUISHING FIRE,
ceasing to keep on insured premises, alteration of risk, 367
APPLICATION. See Proposal.
APPOINTMENT,
exercise of power by infant, 575
APPORTIONMENT. See Contribution.

of sum assured between different items insured, 210
ARBITRATION,
different forms of arbitration clause, 906
how far jurisdiction of court may be ousted, 906
scope of submission to arbitration, 907
question whether arbitration is a condition precedent to action, 907
where arbitration clause is confined to differences touching the
amount of loss or damage, 907
question whether such arbitration can be enforced if company
denies all liability, 908
waiver of arbitration by company, 908
where company elects to reinstate, 908
company may waive condition precedent and apply for stay, 908
arbitration clause binding as a valid submission although policy not signed
by assured, 908
submission to foreign jurisdiction is a valid submission to arbitration, 909
arbitration clause in Scotland, 909
English policy issued in Scotland, 909
stay of proceedings under Ai-bitration Act, 1899, s. 4. .909
reference to County Court Judge, 910
how far finding of arbitrator as to value of property is conclusive, 910
ARRANGEMENT. See Scheme of Arrangement, Deed op Arrange-
ment.
ARTICLES OP ASSOCIATION,
contents of, 11
right to inspect and obtain copies of, 40
contain rules for the conduct of company's business, 185
contain limitation on directors' authority, 186
alteration of by special resolution, 187
ASSIGNEE FOR CREDITORS,

INDEX. 1059
ASSIGNMENT OF FIRE POLICY,

assignment of chose in action, 764
in equity, 764
under the Judicature Act, 764
contract of indemnity cannot be transferred except by novation, 765
personal i-epresentatives and trustee in banliruptcy, 765
condition in favour of purchaser of property insured, 766
ASSIGNMENT OF LIFE POLICY. See Mortgage of Life Policy.

to person without interest in life is legal, 168, 437
rights of assignee where death caused by assured's own act, 174
suicide does not disentitle assignee of life policy, 174
unless there is a warranty against suicide, 175
and no reservation in favour of assignees, 175
death of assm-ed caused by act of assignee, 176
payment of premium recited in policy, company estopped as against
assignee for value, 233
promise to give assignee notice of assignor's default in payment of premium,
261
contract to assign void if life has already dropped, 270
assignee takes subject to defences open against assignor, 274
payment of claim to voluntary assignee, inquiry as to solvency of assignor,
412
company paying assignee has no right to documents of title, 412
assignment of the legal chose in action, 425
effect of statutory provisions, 425
PoUcies of Assurance Act, 1867 .425
.
right of assignee to sue at law under, 427

right in equity to receive the money, 427
agreement to assign is not an assignment mtliin the Act, 428
assignment by way of mortgage within the Act, 429
Judicatm-e Act, 1873, sec. 25 (6). .429
right of assignee to sue at law under, 430
right in equity to receive money not essential to the passing of
the right to sue at law, 430
whether this Act can be relied on in settlement of life policies, 430
mortgage is an absolute assignment within meaning of, 431
question whether part of claim can be assigned so as to give the
assignee the right to sue at law, 431
statutory provisions do not affect equitable claims to policy moneys,
431
notice of assignment, 434
to give assignee the right to sue at law, 434
to bind the company in equity, 435
condition requiring formal notice to be served at principal ofBce,
435
notice to agent, 435
to acquire priority, 436, 440
to preserve priority, 436, 440, 588
notice to be given by sub-assignee of policy, 436, 442, 510, 589
assignment in equity, 436
how enforceable, 436
assignee need have no interest in the life, 168, 437
policies expressed to be " not assignable" 437
what constitutes an equitable assignment, 438
expression of intention sufficient, 438, 439
direction to company not communicated to payee, 439
mere delivery of policy with intention to assign, 440
priority of equitable claims — •
not affected by the right to sue at law, 440

after payment of policy moneys no equitable claim can be enforced of
which insurers had no notice, 440
equitable assignees rank primarily in order of date, 440, 486
but priority may be acquired by first formal notice, 441, 486
in the absence of any notice preserving priority, 441
— —
1060 INDEX.
ASSIGNMENT OF LIFE FOU-CY^contmued.

priority of equitably claims continued.
sufficiency of notice, 441, 588
notice of assignment without particulars, 441, 588
knowledge of director or other officer, 441, 588, 589
sub-assignee takes the same priority as the assignee from whom he
took, 442
notice to one of several trustees, 442
knowledge of earlier equities, 442, 588
not bound to search for, 443
constructive notice of prior equity, 443
non -production of policy by assignor, 443, 486
priority of assignee who has negligently left policy in hands of assignor,
443
voluntary assignee obtains no priority by priority of notice, 444
money in Court stop order, 444
;
notice by personal representatives or trustee in bankruptcy, 444

priority over trustee in bankruptcy may be acquired by notice, 445
effect of assignment where policy void or voidable, 445
where company makes ex gratia payment, 445
policy surrendered in exchange for new policy, equitable claims attach, 445
assignee prima facie entitled to possession of policy, 445
where assignee has negligently left policy in hands of assignor, 445
in foreign country, conflict of laws, 449
rules of private international law, 449
apphed to assignment of insurance poUcy, 450
English policy assigned in Scotland or other " foreign country," 453
voidable assignments
misrepresentation as ground for rescission, 454
settlement obtained by fraud of beneficiary, 454
mutual mistake or error in essentialibus, 454
false representation as to nature of document, 455
duress and undue influence, 456
right to rescind as against purchaser from assignee, 457
trustee in bankruptcy of assignee, 458
validity of voluntary assignments, 458
equity will not complete imperfect gift, 438, 458
declaration of trust, 458
assignment to wife, 458
rule against assisting volunteers applied to assignments of policies
and other choses in action, 459
voluntary promise defuturo, 460
written words purporting to assign de prcesenti, 460
oral gift of poUoy, 460
where donee appointed executor, 466
donatio mortis causa, 467
although gift of policy moneys may be void gift of document
may be valid, 447, 461
illegal consideration, 467
settlements in consideration of unlawful cohabitation, 467
providing for separation of spouses, 468
in restraint of marriage, 468
on illegal consideration completed by transfer of property
to trustees, 468
assignment to moneylenders, 469
harsh and unconscionable transactions, 471
illegal transactions void ab initio, 472
right of debtor to declaration and return of securities, 472, 473
policy included in bill of sale, 473
inoperative as to policy moneys, 473
may be effective to pass property in document, 474
deed of arrangement, 474
voidable as act of bankruptcy, 474
void if unregistered, 474
ASSIGNMENT OP MARINE POLICY,
contract of indemnity may be transferred, 766
INDEX. 1061
ASSURANCE COMPANIES ACT, 1909. And see Accounts and State-

ments Apfaies, Life Assurance, Fire Insurance, Accident
01"
Insurance, Employers' Liability Insurance, Bond Investment,
Deposit of Assurance Fund, Amalgamation or Transfer, Winding
Up.
not applied to marine insurance business, 26
five classes of insurance business to which it applies, 26
companies and individuals to which it applies, 26
companies and individuals exempt from provisions of, 26
ATTORNEY. See Power of Attorney.

AUDIT. See Accounts, Auditor.
AUDITOR,
annual appointment of, under Companies Acts, 36
right of access to company's books and accounts, 36
must make report on accounts and balance sheets, 37
two or more to audit accounts of Friendly Society, 43
of annual returns of collecting society, to be an accountant, 45
AUTHORITY. See Ultra Vires, Directors, Agent.

AUTHORITY OF DIRECTORS. 5'ee Directors.
AVERAGE. See Contribution.
BAILEE. See Subrogation.

insuring goods need not disclose nature of interest, 122
goods held in trust or on commission to be insured as such, 126, 127
insurance on his own behalf to the full value, 147
effect of insuring on goods in trust or on commission, 148, 149
separate interest of owner and bailee, no double insiu-ance, 709
BANKER,
payment to, as agent for claimant, 413, 516
BANKRUPTCY,
power of liquidator of company to prove in, 81
of contributory, 91
power of company to prove in bankruptcy of shareholder, 91
discharge of shareholder's liability on shares, 92
insurable interest of trustee in property of bankrupt, 130
whether discharge of debtor terminates insm-able interest of creditor in
debtor's life, 158
right of trustee to delivery up of policy when assignment set aside as
voluntary or fraudulent, 447
right to rescind assignment of policy against trustee in bankruptcy of
assignee, 458
settled policy, proof in bankruptcy of settlor on covenant to pay pre-
miums, 531
petition, 580
receiving order, 580
adjudication, 580
official receiver, 580, 581
power to give a valid discharge, 580
settle claims, 580
trustee's title, 581
adjudication order and certificate of Board of Trade, 581
passing of property, 582
every interest in policy passes, 582
powers of appointment, 582
of revocation, 582
exercisable only with consent of third person, 582
contingent interests, 582
property held by bankrupt in trust, 583
trustee takes subject to all equitable claims, 583
—
1062 INDEX.
BANKRUPTCY—conJiMweJ.
passing of property continued.
cannot gain priority by prior notice to office, 445, 583
right to impeach assignments does not depend on notice, 683
must give notice in order to preserve priority against subsequent
equities, 445, 583
trustee disclaiming policy or failing to keep it on foot, 584
liability for salvage premiums, 584
where bankrupt did not disclose policy, 585
property acquired by bankrupt after adjudication, 585, 586
does not pass to triistee until claimed, 586
intermediate transactions with purchasers valid, 586
purchasers of chose in action must have perfected title by notice, 586
persons taking from bankrupt as personal representatives legatees or
voluntary assignees, 586
title to property after bankruptcy closed, 586
revesting of property in bankrupt, 587
order of Court or written assignment necessary to revest the legal
chose in action, 587
reputed ownership, 587
choses in action expressly excluded from operation of clause, 587
except in Ireland, 588
what is reputed ownership , 588
choses in action, absence of notice by assignee to holder of fund,
588
nature of notice required, 588
reputed ownership in Ireland, 589
effect of Policies of Assurance Act, 1867 . 589
.
reputed ownership of goods in fire insurance, 590

trustee's title to sell policies, bring actions or settle claims, 590
trustee's receipt a good discharge, 590
consent of committee to action or settlement of claim, 590
action pending at date of adjudication, 591
relation, back of trustee's title, 592
to first act of bankruptcy within three months preceding petition, 592
transactions with bankrupt void, subject to certain exceptions, 592
executions and attachments before receiving order, 592
payments to or by bankrupt without notice, 592
transactions without notice for value, 592
act of bankruptcy may be protected, 593
notice of act of bankruptcy, 594
claim made upon insurers who have notice of an act of bankruptcy
by claimant, 594, 412
payment to claimant who has executed a trust deed for creditors, 595
trustee under a trust deed, 595
bankrupt after date of receiving order without notice, 596
not protected by specific provision, 696
protected in England on general principles of equity, 412, 597
not protected in Ireland or Scotland, 697
act of bankruptcy, what constitutes, 697
voluntary and fraudulent dispositions, 698
or fraudulent settlements voidable under the Bankruptcy Act,
1883, sect. 47—
meaning of " settlement," 699
what settlements are struck at, 699
settlement voidable, not void, 599
bond fide purchaser for value may acquire good title from donee, 599
trustees of settlement may claim costs, charges, and expenses, 699
settlement voidable as against trustee only, 600
trustee does not acquire settlee's priority over subsequent incum-
brancers, 600
who are purchasers for value, 600
any person who has acquired an interest for valuable considera-
tion, 601
instrument itself not conclusive of its voluntary or onerous
nature, 601
— —
WD'EX. 1063
BANKRUPTCY—conimue^f.
voluntary and fraudulent dispositions continued.
who are bond fide purchasers, 601
settlor's bad faith immaterial, 602
period within which settlements are voidable, 602
each premium paid on a settled policy is not a new settlement, 602
no set-oS by settlee of payments due by bankrupt, 602
fraudulent conveyances voidable under 13 Elizabeth, c. 5
comparisons with provisions of Bankruptcy Act, sec. 47 604 . .
when available for benefit of creditors, 604

position of fraudulent disponee in case of debtor's death, 604
how far the property may be followed, 605
what dispositions are struck at, 605
includes dispositions of choses in action, 605
intent to defraud an essential element, 605
means intent to withdraw property from reach of creditors, 606
intent to prefer creditors not a fraud within the statute, 606
voluntary disposition by person indebted, conclusive evidence of
fraud, 606
but probably only where some creditors existing at date of
disposition are still unpaid, 606
when is a disposition " voluntary " for this purpose, 607
marriage is valuable consideration, 706
settlement in pursuance of pre-existing obligation, 607
post-nuptial settlement pursuant to oral promise made
before marriage, 607
disposition to further secure existing debt, 608
consideration means some actual benefit to grantor, 608
when is settlor deemed to be " indebted," 608
where settlor not " indebted " there may be other evidence of
fraud, 609
large dispositions by trader, 609
pending liabilities, 609
disposition of debtor's whole property, 610
reservation of benefits for settlor, 610
power of revocation, 610
inadequacy of consideration, 610
intent to defeat execution, 611
assignment made without notice to holder, 611
volimtary dispositions voidable not-inthstanding bona fides of grantee,
611
onerous disposition in fraud of creditors not voidable in hands of
bona fide purchaser for value, 611
marriage settlement where wife takes bona fide, 611
question whether innocent grantee entitled to refund of premiums if
assignment set aside, 612
fraudulent preferences voidable under Bankruptcy Act, 1883, sec. 47
what is a preferential payment, 013
bona fides of creditor immaterial, 613
when it may be set aside, 613
secured creditors, rights of,
option to hold security, surrender and prove for whole debt or realise,
or value, and prove for balance, 613
,right of mortgagee who has valued and proved for balance, 614
separate securities to be valued separately, 615
right to consolidate as against trustee, 616
debts provable in bankruptcy
covenant to pay future premiums, 616
value of such covenant, 617
mortgagee's right to prove for, in bankruptcy of mortgagor, 617
composition or scheme of arrangement, 617
approved by Court binds all creditors, 617
certificate of of5ficial receiver, evidence of, 617
may be annulled upon debtor's failure to comply with, 618
primA facie does not include after-acquired property, 61S
property distribtited as in bankruptcy, 618
1064 INDEX.
BANKRUPTCY—cowimMccZ.
summary administration of debtor's estate in small banlauptoiea, 618
receiver acts as trustee, 618
official
administration order in County Court, 619
of estate of deceased insolvent, 619
rules of bankruptcy as to proof and secured creditors to apply to, 619
provisions of Bankruptcy Act, sec. 47, relating to voluntary settle-
ments do not apply to, 619
BAPTISM. See Proof of Death and Age.

BARK
drying in kiln, whether alteration of risk, 369
BENEFICIARIES,
insurable interest of, in property subject to trust, 129
named in policy, right of, to recover in respect of loss caused by assured's
174
illegal act,
not entitled to recover if loss caused by, 176
settled policy, settlement of claims without consulting, 410, 514
not entitled to claim direct payment, 516
who are protected as under settlement policy, 556
BENZINE. See DANOEEors Goods.
BILL OF EXCHANGE. See Negotiable Instrument.
BILL OF SALE,
insurable interest in goods mortgaged by, 143
effect of including insurance policy in schedule to, 473
BIRTH. See Proof of Death and Age.

payment among objects of friendly
on, society, 16
BLOOD,
spitting blood a material fact to be disclosed, 304
BOA.RD OF TRADE,
investigation of company's affairs by inspector appointed by, 36
appointment of auditor by, 36
power to alter forms in schedules to Assurance Companies Act, 1909 .37 .
powers in relation to qualification of actuary, 39

accounts, &c., of assurance companies to be deposited with, 41
duty of, to correct inaccuracies in accounts, &c., 41
to lay accounts, &c., of assurance companies annually before
Parliament, 41
trust deed relating to deposit by members of Lloyds to be approved by, 42
members of Lloyds making deposits to be notified to, 42
documents to be sent to on completion of amalgamation or transfer, 48
accounts of liquidator to be sent to and audited by, 82
BOILER,
bursting of, whether damage by fire, 651
BOND INVESTMENT,
Assurance Companies Act applied to, 29
bond investment business defined, 29
deposit to form separate assurance fund, 30
withdrawal or transfer of deposit, 33
receipts to be carried to separate assurance fund, 37
periodical investigation and actuarial report, 38
statement of business, 39
statutory restrictions on transfer of business, 46
BONUS,,
acceptance of, as evidence of novation, 66, 67
right of mortgagee to receive from company, 509
—
INDEX. 1065
BONUS continued.
payment of, to trustees, 515
in case of settled policy falls into the settlement, 527
participating poUcy clause, 877
BOOKS,
condition that they shall be kept in fire-proof safe at night, breach of, 370
BREACH OF LAW,
exception in accident policy of injuries caused by, 941
BROKER
not necessarily applicant's agents to receive notice to determine risk, 201
authority to collect premiums, 236
BUILDER'S RISK,
notice of occupation to be given, 888
BUILDINGS,
condition that fire policy shall cease upon fall of, 669, 882
BURGLARY INSURANCE. See Insurable Intebbst.

prima facie, a contract of indemnity, 113
burglary policies, 963
scope of policy, 763
meaning of " burglary," 963
" housebreaking," 964
' robbery," 964
" theft " or " larceny," 964
definition of terms in policy may exclude their technical meaning in
law, 964
" forcible and violent entry upon the premises, 965
theft by member of assured's household excepted, 965
servant implicated as principal or accessory before the fact, 965
exception where premises unoccupied for a specified number of days,
965
recovery excluded in case of " false or fraudulent claims," 965
reinstatement clause, 966
BURIAL. See Proof of Death and Age.

BUYER. See Sale of Goods.
CALLS. See Contbibutories.

unliquidated claims of member may be set off against, 244
liability of members
of mutual association for, 3
conditions relating to payment of, 867
CANCELLATION. See Rescission.
CAPITAL,
company under the Companies Act, 12
reserve capital, 12
application of profits to reduce paid-up capital, 12
increase or readjustment of, 12
reduction of, 12
extinction or reduction of unpaid-up share capital, 13
words " and reduced " to be added to name, 13
creditor's right to object to reduction, 13
effect of reduction on liabihty of shareholders, 13
CAPITAL OR INCOME. See Life Tenant Leasehold fob Lives.

;
settled policy, apportionment of policy moneys between, 533

premiums and interest on mortgage of settled policy chargeable on capital,
534
benefit of insurance by tenant for life, 777
whether insurance by trustees should fall on capital or income, 778, 780,
781
— — —
1066 INDEX.
CARBOLIC SMOKE-BALL CASE, 110
CARETAKEB. See Watchman.

CARRIER,
insuring goods need not disclose natiare of interest, 122
insurance on his own behalf to full value of goods, 149
CATTLE INSURANCE. See Live Stock Policies.

mere acknowledgment ofpremium held not to give interim protection, 202
CATTLE INSURANCE SOCIETIES. See Friendly Societies.

definition of, 17
subscriptions recoverable at law, 18
CAUSA PROXIMA,
rule applied to ascertaining cause of loss
in fire insurance, 652 654 —
in accident insurance, 922, 932
in fidelity insurance, 973
in relation to excepted perils, 666
CHANGE OF BISK. See Alteration of Risk.
CHARTERED COMPANIES ACT, 1837,

letters patent to unincorporated companies, 4
actions in the name of registered officers, 4
liability of members limited, 6
deed of partnership or association, 5
return of particulars to enrolment office, 5
transfer of shares, 5
proceedings by or against, brought in name of registered representatives,
100
CHARTERED COMPANIES ACTS,

companies formed under, 4
CHEQUE. See Negotiable iNSTRtriuENT.

payment of jiremium by, 239, 264, 265
CHILDREN,
insurable interest on life of, 160, 161, 163
child farming, illegality of insurance on life of child under 7 164 . .
primA facie term " children " does not include remoter issue, 556
Friendly Society
insurance for funeral expenses within the objects of, 16
limitation of amounts recoverable in case of child under 10 18 . .
payment on birth within objects of, 16

Industrial Assurance Company
insurance for funeral expenses deemed valid, 24
limitation of amount recoverable in case of child under 10. .24
Trade Union-
limitation of amounts recoverable in case of child under 10 . . 22
CHOKING,
death by, may be covered by accident policy, 923
CIVIL COMMOTION,
clause in fire policy excepting loss from, 880
CLAIMS. See Title to Life Policy Peooi? oe Death and Age Pkoof or
; ;
Loss Proof Satisfactory to Directors Title to Fiee Policy.

; ;
appropriation of, towards payment of premiums, 243

condition in employer's liability policy reserving to insurers right to
settle, 969
in respect of funds in friendly society, 18, 19
—
INDEX. 1067
CLASS,
warranty that premises insured fall within description of class in schedule,
365
COACH-HOUSE,
insurance of implements described as being in, 371
COLLATERAL PROMISE
distinguished from warranty or condition precedent, 273, 274
COLLECTING SOCIETIES AND INDUSTRIAL ASSURANCE COM-

PANIES. See Fbiendly Societies.
Collecting Societies and Industrial Assurance Companies Act, 1896. .22
collecting society defined, 22
industrial assurance company defined, 22
rules to be delivered with policy, 23
notice that premium is due to be given before forfeiture, 23, 262
transfer of member's insurance to another society, 23
provisions of Act to be set forth in rules, 23
settlement of disputes, 23
exemption of society from provisions of Act, upon certificate of Chief
Registrar of Friendly Societies, 23
payments on death of children, 24
insiu'ances made without insurable interest, 24
conversion of collecting society into mutual company under Companies
Act, 24
accounts and statement of affairs
balance-sheet to be open to inspection, 44
auditor of annual returns to be an accountant, 45
special investigation of affairs, 45
insurances for funeral expenses of children, parents, grandparents, &c., 160
COMMENCEMENT. See Duration oe Risk.

COMMISSION
goods in trust or on commission to be insured as such, 126, 127
consignee's interest to insure commission on goods consigned, 138
effect of insuring " on goods in trust or on commission," 148, 149
" goods in trust or on commission for which they are responsible," 149
deducted by solicitor paying premiums on behalf of mortgagee, right to
charge full premium in mortgagor's account, 484
trust or commission clauses which have been judicially construed, 879, 894
COMMISSION AGENT,
insurable interest of, in goods, 124, 138
COMMITTEE OP INSPECTION,
appointment of, in winding-up, 80
none in Scotland or Ireland, 81
powers of liquidator which may be exercised with sanction of, 81
COMMON LAW PARTNERSHIP,

joint liability of members, 3
joint stock company formed as, 3
liability of shareholders in, 3, 88
policy-holders entitled to share profits with or without liability as
members, 4
illegality of, if unregistered, 9
legal proceedings by or against, brought in name of company, 100
contractual capacity of, 180
COMPANIES ACT, 1862,

illegality of unregistered companies, 9
what insurance companies can legally carry on business since 1862. .9
COMPANIES ACT, 1908. See Accounts and Statement of Affairs ;
Amalgamation or Thansfer Winding-up ;Proof in Winding- ;
up Contributobies.
;
incorporation under, 11, 12

—
1068 INDEX.
COMPANIES ACT—continued.
memorandum of association, 11
articles of association, H
registrar's certificate, 12
members, 12
register of members, 12
share register, 12
transfer of shares, 12
reserve capital, 12
profits applied in reduction of paid-up capital, 12
increase or readjustment of share capital, 12
reduction of share capital, 12
unlimited company registered as limited, 13
registered office, 13
name of company, 13
register of mortgages, 13
registration of companies not formed under Companies Acts, 14
certain provisions of, applied to companies not formed or registered under,
15
service of process on company, 102
powers of company defined in memorandum, 184
rules for conduct of business contained in articles, 185
COMPANY. See PROCEEDiisras, Legal.

insurable interest of shareholder in property of, 124
doctrine of ultra vires, 180
contractual capacity of corporations, 180
common law partnerships or associations, 180
whether corporation must contract under seal, 197
COMPENSATION PAYABLE UNDER ACCIDENT POLICIES,

clauses defining amount of, 939
COMPROMISE. See Scheme of Abbanoement.
CONCEALMENT. See Non-Disclosure.
CONDITIONS. See Waiver ; Warranty ; Construction.

breach of, by nominal assured affects rights of third parties on whose
behalf insurance is effected, 151
certain conditions not applicable until issue of policy, 204
how far conditions applicable to interim receipt, 203, 204
proposal made with reference to, 210
modification of, by statements in prospectus or advertisement, 251, 256,
295
when is it a condition precedent to liability, 273, 328, 334
and when is it merely a collateral promise, 273
suspensive condition distinguished from warranty, 274
when is it a condition precedent to recovery, 274, 956
when is arbitration a condition precedent to action, 907
relating to misrepresentation, 298
life policies
relating to suicide, 861
excluding death resulting from violation of the law, 865
conditions against going abroad, 866
relating to payment of premium, 867
receipts for premiums, 869
declarations and warranties as to truth of statements in proposal, 870
questions, answers, and statements in proposal, 871
authority of agents to alter contracts or waive forfeiture, 875
indisputable clause, 875
right to demand loan or surrender value, 877
participating policy clause, 877
notice and proof of death, 878
fire policies
clauses describing property insured, 878
describing risk and exceptions therefrom, 880
relating to payment of premiums and duration of risk, 882
—
INDEX. 1069
CONDITIONS—continued.
fire policies continued.
avoiding the policy for niisdescriptions or omissions, 883
condition that policy shall be deemed to be in accordance with
application, 885
specific warranties relating to risk, 885
questions relating to risk, 886
relating to occupancy, 887
alteration or change of risk, 888
reserving liberty to terminate risk, 891
requiring interest to be stated and prohibiting incumbrances, 893
prohibiting transfer of property or change of title, interest, or posses-
sion, 894
prohibiting assignment of policy, 897
mortgagee clause and other conditions in favour of mortgagee or
other assignee, 897
relating to average, double insurance and contribution, 898
notice and proof of loss, 903
arbitration, 906
valuation of property and adjustment of loss, 913
reinstatement, 913
limitation of action, 914
subrogation, 915
authority of agents, 915
reinsurance, 917
form of notice, 918
Accident policies
defining injurj' caused by accidental means, 918
limiting risk to accidents happening in a particular place or manner,
925
excluding injm-ies where there is no external mark, 927
relating to proof of claim, 928
defining relation between injury and consequent disability or death,
932
total or partial disability, 936
compensation payable, 939
excepting intentional injuries, 939
injuries in consequence of breach of law, 941
resulting from fighting, quarrelling, or drinking, 942
exposure to unnecessary danger, 943
certain specified hazards, 948
relating to assured engaging in more hazardous occupations, 949
excluding death or disability caused by disease, 950
poison, inhaling gas, or medical treatment, 954
relating to notice of accident, 955
preliminary proofs, 962
burglary policies, 963
employers' liability policies, 966
third-party risk policies, 969
fidelity policies, 971
guarantee policies, 977
live stock policies, 983
plate glass policies, 985
policies covering risk of explosion, 985
storm and tempest, 986
CONFLICT OF LAW,
application of rules of international law where policy is assigned in a
foreign country, 449 —
454
rules determining the law in the light of which a policy issued in a foreign
country ought to be construed, 851, 852, 909
CONSIGNEE,
insurable interest in goods consigned, 138
insurances on his own behalf to full value, 146
1070 INDEX.
CONSOLIDATION. See Mortgage.
CONSTRUCTION,
warranties to be strictly construed, 331
ambiguities to be construed in favour of freedom from warranty, 332
reasonable meaning to be given to the words used, 332, 333
not necessarily strictly literal meaning, 332, 333
whole contract must be read together, 334
conflicting provisions, more onerous yield to less onerous, 334
where penalty of forfeiture is expressly attached to some conditions but
not to others, 334
general warranty modified by another more specific warranty, 335
ambiguities in proposal may be explained by definite provision in policy,
335
clerical errors in description, 374
parol evidence as to identity, 374
where there is conflict of law hx contractus prevails, 851
prima facie place of the contract is the law of the contract, 851
policy effected through agent in foreign country, 851
terms of contract may indicate contrary intention, 852
arbitration clause in English form, 852, 909
English policy issued in Scotland, 909
foreign law may be incorporated for limited purpose, 852
policies construedUke other written instruments, 852
ambiguities construed most strongly against party who prepared docu-
ment, 853
where language is that of assured, 855
tendency to favour protection as against forfeiture, 853
in absence of ambiguity obvious meaning must be accepted, 853
words to be construed in ordinary and popular sense, 853
with reasonable latitude in consonance with general sense of contract,
854
certain words may have a conventional or technical meaning, 854
words of common form, 854
written clauses override printed conditions, 854
printed form inapplicable to class of risk, 854
marine policy used to cover risks on land, 855
ordinary fire policy used for reinsurance contract, 855
application of policy conditions to interim receipt, 855
general words following specific enumeration to be construed ejusdem
generis, 856
clauses of specific application control those of general application, 856
repugnant provisions, 856
proposal incorporated as part of contract, 856
incorporation of other documents, 857
subsequent alteration of articles or by-laws, 857
alteration of articles not validly confirmed, 858
statements in company's prospectus or advertisement, 858
may constitute part of the preliminary contract, 858
may be merely expressions of opinion as to the legal effect of the com-
pany's policy, 859
rectification of policy so as to correspond with contract actually made, 859
strong presumption that policy does represent the actual contract, 859
misrepresentation of agent as to terms of policy, 860
insurers may claim rectification, 860
parol evidence to fill blanks, 860
parol evidence inadmissible to vary written contract, 860
when parol evidence is admissible, 860
CONTRACT. See Form q]? Contract ; Ultra Vires ; Directors ; Agent.
Proposal.
of company not legally formed, 10
CONTRACTOR,
insurable interest in property in respect of which he has contracted to
execute work, 144
INDEX. 1071
CONTRIBUTION. See Double Insurance.

without average, 720
equitable contribution at common law, 703, 720
contribution clause, 720
concurrent policies, 721
policies which are not concurrent, 721
method of mean apportionment, 721
other methods of apportionment, 724
contribution in proportion to liability instead of in proportion
to sums assured, 725
in non-commercial risks offices contribute inter se without regard to
the different interests which they may insure, 726
in commercial risks they do not contribute unless there is double
insurance on same interest, 726
Canadian and American decisions on contribution among non -con-
current policies, 727
contribution where insurers have jâid more than they were bound
to pay, 729
under the average clause, 729
pro rata condition of average, 730
Lloyd's policy " subject to average," 730
applied without the second condition of average, 730
second condition of average, 731
the average condition, 732
CONTRIBUTORIES,
power of liquidator to prove in banliruptey of, 81
take out letters of administration to deceased, 81
may apply to Court with respect to exercise of powei'S of liquidator, 82
right to inspect accounts of liquidator, 82
meetings of, in winding up, 82, 83
settling hst of, 82, 83, 85
may be ordered to pay debts, 83
calls on, in winding-up, 83, 85
adjustment of rights inter se, 83, 85
may apply to Coux't in voluntary winding up, 85
in case of companies formed and registered under Companies Act, 86
who are liable as, 86
extent of hability, 86
liability of past members, 86, 87
where company limited by shares, 86
guarantee, 87
liability of individual members restricted by policy, 87
where funds of company alone made liable, 87
when a call may be made, 87
in ease of companies not formed, but subsequently registered under
Companies Acts, 88
in ease of unregistered companies, 88
specific performance of agreement to become member, 89
ultra vires for one mutual association to be member of another, 89
transfer of shares, 89, 90
compromise of claim for calls, 90
transfer of shares to pauper to escape liability, 90
agreement by, to sell shares, 90
delay in completing transfer, 90
purchase of shares by infant, 90
transfer of shares after commencement of winding up, 91
death of contributory, 91
administration of estate of, 91
bankruptcy of, 91
husband of female contributory, 92
no set-off of claims against company against claims for calls, 92
order on, to pay debts other than calls, 92
scheme of arrangement binding on, 99
CONVEYANCE,
meaning of travelling by public or private conveyance, 926
1072 INDEX.
COSTS
of winding-up, 83
company entitled to costs of action where title of claimant not legally
constituted, 508
where preliminary proof is not clear, 393, 930
COUGH,
question relating to, 873
COUNTY COURT,
arbitration clause,
stay of proceedings by, 909
reference to, as arbitrator, 910
administration order in, 619
COUPON INSURANCES,
offer in newspaper coupon, when accepted, 211, 227
commencement and duration 6f risk, 227
payment of stamp duty on, by composition, 807
COVER NOTE. See Interim Pbotection.
CREDIT,
authority of agent to give credit for premiums, 264
CREDITORS. See Debtor and Creditor.

right to inspect accounts of liquidator, 82
meeting of, in winding up, 82, 83
time fixed within which they must prove, 83
meeting of, to be called by liquidator in voluntary winding-up, 84
advertised in Gazette, 84
may apply to Court in voluntary mnding-up, 85
past creditors no preference on calls of past members, 87
power of liquidator to compromise claims, 98
arrangement with, in voluntary winding-up, 98
scheme of arrangement between company and creditors, 99
CROWN,
question whether bound by a settlement policy, 555
CUSTOM
of insurance business regulates apparent authority of agent, 189
CUSTOMS ANNUITY- AND BENEVOLENT FUND,

Customs Annuity and Benevolent Funds Act, 1816. .642
Fund Rules, 1872.. 643
subscriber's interest a limited power of appointment, 644
is
fund does not form part of subscriber's estate, 644
widow and children are beneficiaries, 644
stranger may be admitted by nomination and acceptance, 644
nomination and acceptance of trustee for named beneficiaries, 644
nominee may be appointed to a vested interest, 644
appropriation to nominee by way of mortgage, 645
CYCLONE,
loss from, excepted from fire policy, 880, 881
DAMAGE. See Loss on Damage by Fike.

DANGER,
exposure to, unnecessary, excepted from risk in accident policy, 943
DANGEROUS GOODS OR TRADE,
conditions relating to, may be absolute warranties or suspensive conditions.
274
or loss caused by presence of, may be accepted from risk, "274
warranty no fireworks kept, waiver by issung policy with knowledge, 345
gunpowder exceeding fifty -six pounds, knowledge of business, waiver, 345
temporary introduction of, may be expressly prohibited, 371
INDEX. 1073
DANGEROUS GOODS OR TRADE—continued.

conditions prohibiting or excepting loss oooiirring through or while such
goods on premises, 880
specific warranties relating to, 885
provisions in accident policies relating to hazardous occupations, 950
warranty against use of explosives in employer's liability policy, 968
DATE. See Duration of Risk.

DAYS OF GRACE. See Premium.
DEATH. See Proof of Death atstd Aqe ; Presumption of Death ; Suc-

cession.
DEBENTURES,
effect of policies guaranteeing payment of, 979
DEBTOR,
insurable interest of, when banlcrupt, 130
DEBTOR AND CREDITOR. 5'ee MoRiaAGE.

policy on life of debtor, no interest need be shown at date of death, 112
creditor need not disclose nature of interest, 121
creditor's insurable interest in debtor's property, 143
life of debtor, 157
creditor's right to recover as assignee of policy in the event of debtor's
suicide, 174
guarantee policy procured by debtor in favour of creditor, question whether
policy effected by non -disclosure by debtor, 353
debtor entitled to policy for which he pays, 138
where creditor undertakes to transfer the policy on repayment of debt, 038
where interest on debt is calculated to cover cost of insiu'ance, 639
debtor's equity of redemption, 639
failvu'e of debtor to pay premiums as agreed, 639
insurance at sole expense of creditor, 639
debtor not entitled to have policy moneys applied in extinguishing debt,
640
where creditor insures as trustee, 640
where transaction between debtor and creditor is set aside, 640
illegality of policy and ex gratia payment, 641
debtor trustee of policy for creditor, 641
DECLARATION,
assured cannot claim declaration as to validity of policy because insurers
repudiate during currency, 248
DECOY POLICY,
avoidance of other policies obtained by use of, 287
DEED. See Deed of Settlement ; Policy ; Deed of Arrangement.

DEED OF ARRANGEMENT,
assignment of policy by, 474
isan act of bankruptcy and voidable by trustee, 474
deed for benefit of creditors generally is void if not registered, 474
Deeds of arrangement Act, 1887 .474 .
mode of registration, 475

form of register, 475
DEED OP SETTLEMENT,
printed copies required by Life Assurance Companies Act, 1870 25 . .
Assurance Companies Act, 1909. .40

right to copy of, 40
when it contains power to amalgamate or transfer business, 49
defines powers and regulates conduct of business of company formed under
Joint Stock Companies Act, 1844. .185
DELIVERY OF DEED. See Policy.

I.L. 68
1074 INDEX.
DELIVERY UP
of policy on ground of misrepresentation or nondisclosure, 272
DEPOSIT OF ASSURANCE FUND. See Lloyds.

under Life Assurance Companies Act, 1870, 1871, 1872. .25
Assurance Companies Act, 1909. .29
deposit of £20,000 in respect of each class of business, 29
obligation in respect of business, 29
life
business, 29
fire
accident business, 29
bond investment business, 29
employers' liability business, 29
transfer of, from fire or accident to life or employers' liability, 30
inability of company to make deposit, 30
deposit to form separate insurance fund in life, employers' liability and
bond investment, 30
manner of making deposit, 30
application to Court for order as to investment and payment of interest
on, 31
authorised securities, 31
depreciation of securities, 32
deposit in respect of life assurance can never be withdrawn or transferred to
other class of business, 33
withdrawal or transfer of deposit in respect of employers' liability or bond
investment, 33
of deposit on transfer of biisiness, 33, 34
paid in by mistake, 34
application in respect of deposit to be by petition, 34
provisions as to members of Lloyds, 42
deposit a special security for policy holders, 97
DEPOSIT OP POLICY. See Mortgage ; Lien.

memorandum of deposit and promise to assign but no actual deposit of
document, 428
deposit of document with intention to assign but no memorandum, 440
power of depositee to give purchaser a good title, 503
a valid discharge for whole policy moneys, 506
DESCRIPTION
may be representation, definition of risk, or warranty, 360, 878
nature of warranty implied from description, 361
alterations affecting the description, but not increasing the risk, 361, 365
warranty as to absolute accuracy of description, 364
against material misdescription, 365
of locality of movable property, 371
not an absolute warranty, but limits the risk, 371, 372
relating to ownership of property insured,
not a strict warranty of absolute title, 372
relating to use or occupancy, 372
may warrant nature of occupancy at commencement of risk only, 373
" assured's dwelling-house," 372
" occupied by the assured," 373
may be a continuing warranty of user during risk, 373
clerical errors in description, 374
mere misnomer where there is no question as to identity, 374
parol evidence as to identity, 374
extent of premises insured, 374
misdescription as to part of premises, divisibility of risk, 374
of assured's business in employer's liability policy, 966
inaccuracy of description, knowledge of agent, 966
DIARY. See Cottpon Instjbanoe.
DIRECTORS. See Proposal ; Interim Protection.

when personally liable upon policy, 101
power to sign bills, 184
—
INDEX. 1075
DIRECTORS— conimMccZ.
limitation of authority in respect of formalities in executing policy, 185
implied authority to do everything necessary for carrying on business,
185
authority limited to what is usual and right, 185
express limitation of authority in company's articles, deed, or private act,
186
constructive notice of limitation of authority, 180
informality in appointment of, 186
irregularity in internal management, 186
extension of authority
by company altering articles of association, 187
acquiescing in course of conduct, 187
ratification by company of acts ultra vires, 187
acquiescence by whole body of shareholders, 187
warranty of authority, liability for breach of, 193
DISABILITY
when covered by accident policy, 932 —935
total or partial, meaning of, 936 —937
DISCHARGE. See Title to Life Policy.
DISEASE. See Health ; Doctor ; Accident Insurance.

DISHONESTY,
meaning of, in fidelity policy, 973
DIVIDENDS,
appropriation towards payment of premiums, 243
DIVISIBILITY OP RISK,
misrepresentation, &o., as to part only of property insured, 374, 375
conditions relating to divisibility, 375
DIVORCE AND SEPARATION,

effect of divorce, 566
judicial separation, 566
protection order, 567
where separation terminates or order discharged, 567
where wife is trustee, 567
power of Court to order guilty wife to make a settlement, 567
vary settlements, 568
DOCKS,
ship insured as " lying in the Victoria Docks with liberty to go into dry
dock," 371
DOCTOR,
examining physician primA facie no authority to receive premiums, 235
questions and answers as to attendance of, 282
attendance of, between proposal and acceptance to be disclosed, 304
operation for tumor some years previously material fact to be disclosed
304
opinion of, as to applicant's state of health a material fact to be disclosed,
311
attendance of brain specialist not necessarily a material fact in itself, 312
questions put by and answers filled in by examining physician, 321
disclosure to examining physician is disclosure to company, 321
warranty by assured that he has not been attended by a doctor except as
stated, 323
knowledge of examining physician that statement made to him is false, 343
misrepresentations made by medical man referred to for information in
respect of life, 350, 351
questions relating to last illness and medical attendance, 873
right of directors to require medical examination in case of accident
claim, 931
—
1076 INDEX.
DOCUMENTS OF TITLE. See Title to Life Policy.

company paying claim to assignee has no right to delivery up of, 412
DOUBLE INSURANCE. See Contribution.

questions and answersrelating to other insurance, 282, 874, 886
statements relating to other insurance are material, 285
must be true at the date contract is completed, 297
double insurance and over insurance, 705
primd facie each insurer liable for whole loss, 705
but assured cannot recover more than one indemnity, 706
may discuss insurers in any order, 706
insurers entitled to contribution inter se, 706
question whether common law principles of contribution apply to all
classes of indemnity insurance, 706, 707
conditions relating to double insurance, 706
double insurance means insurance
on the same property, 708
non-current policies, 707
on the same risk, 708
accidental overlapping of fire and marine policy, 333, 708
on the same interest, 709
owner and bailee of goods, 709
mortgagor and mortgagee, 709 —714
vendor and purchaser, 709
landlord and tenant, 709—712
when assured receives indirect benefit from insurance on another
interest, 712
efiect of Metropolitan Building Act, 1774. .712
where assured has contractual right to benefit of some other
party's insurance, 713
for the benefit of the same assured, 714
double insurance effected without authority of assured, 714
assured ignorant of existing insurance, 715
where the other insurance is voidable, 715
where other insm-anoe has not attached, 715
operation of policy suspended dm-ing non-payment of premium, 715
where other insurance is issued by company's agent without authority, 716
where assured receives ex gratia payment from other insurer, 716
form of other insurance immaterial, 716
where two or more policies each prohibit double insurance, 717
onus on insurers to prove other insurance, 717
conditions prohibiting double insurance without notification or consent,
717
breach discharges the insurers absolutely, 718
whether substituted insurance need be notified, 718
where there is a mistake in particulars of insurance notified, 718
where notified insurance lapses, 718
no implied warranty that double insurance will be maintained, 718
what is sufficient notification, 719
waiver of conditions relating to double insurance, 719
issuing policy or accepting renewal premium with knowledge, 719
authority of company's officer or agent, 719, 720
knowledge of agent, knowledge of company, 719
agent's authority may extend only to interim receipt, 719
investigation of claim and asking for proof of loss, 720
DROWNING,
death caused by, covered by accident policy, 923
DRUNKENNESS. See Intempeeance.

assured setting fire to house while drunk, 173
contracts and dispositions of property made during, 578
injuries resulting from, excepted from risk in accident policy, 943
DUES. See Calls.

application of sick benefits in payment of, 244
—
INDEX. 1077
DUEATION OF BISK. See Premium ; Rbnbwai, op Policy.

commencement of risk, 209
policy antedated to date of application, 209, 225
twelve months' risk implied in fire, biirglary, and accident, 209
inferred from previous insurances, 210
losses occurring before acceptance may be covered, 214, 215
primd facie risk does not commence before acceptance, 216
risk runs primd facie from date of contract, 225
period of risk may be computed from an earlier date, 225
meaning of " from " or " to " a particular day, 225
coupon insurances, 227, 228
effect of condition that policy shall not be in force until first premium is
paid, 228
where policy purports to insure from specified date, 229
it insm?es from the date of the policy, 229
no such condition implied in absence of express condition, 230
where receipt of premium is acknowledged in policy, 230
presumption in marine insurance that premium has been paid, 232
recital in policy estops company as against assignees, 233
waiver of prepayment condition, 233
delivery of policy without demanding payment, 233, 234
termination of risk
by refusal to accept renewal premium, 244
by notice to determine during currency, 244, 891
notice must be given to assured or his agent, 245, 891
whether tender of unearned premium is necessary, 245
automatic renewal in absence of notice to determine, 981
guarantee insurance to cease upon assured retiiing from business, 981
is a life poUcy an annual risk, 245
DURESS,
assignment of policy obtained by, 456
DUTY, ESTATE. See Tbustebs.
EARTHQUAKE
causing fire, 653
consequences of, excepted from risk in fire policy, 666, 668, 669, 881
ELECTRIC CURRENT,
whether damage done by, is damage by fire, 656
EMPLOYEE. See Fidelity Insurance.

EMPLOYERS' LIABILITY INSURANCE,
application of Assurance Companies Act, 1909, to, 26
employers' liability business defined, 28
exemption of mutual association of employers, 28, 29
when incidental to business of marine insurance, 29
when business carried on outside the United Kingdom, 29
transfer of deposit from fire or accident, 30
deposit to form separate assurance fund, 30
annual statement of business,-39
estimated liability on claims to be made and signed by actuary, 39
members of Lloyds to redeem weekly payments to workmen by payment
of lump sum, 43
statutory restrictions on transfer of business, 46
employer's liability policies, 966
condition relating to immediate notice of accident, 204
contracts of indemnity, 966
description in policy of assured's business, 966
inaccuracy of description knowledge of agent, 966
;
where insurance covered statutory liability only, 967

—
1078 INDEX.
EMPLOYERS' LIABILITY INSURANCE—conimMeci!.

employers' liability policies continued.
wages-book and adjustment of premium, 967, 968
account of wages may be enforced by action, 967
whether keeping a wages book is a condition precedent, 274, 967
conditions which have been judicially construed, 968
risk covered, 968
exception, assured's breach of statutory duty, 968
warranty against use of explosives, 968
immediate notice of accident, 968
insurer's right to settle claims and defend proceedings, 969
ENDOWMENT POLICY
isa life assurance policy, 27
within Life Assurance Act, 1774, requiring insurable interest, 152
question whether within protection of Married Women's Property Act, S6S
ENEMY,
trading with, insurance upon proceeds of, 170
illegality of contracts made with alien enemy, 176
contracts made before war, 176
right of action suspended during war, 177
loss caused to, by act of King's forces, 177
loss arising independently of hostilities, 177
British subject resident in enemy's country, 178
enemy subject remaining in this country under licence from Crown, 179
insurance of British subject against loss during hostilities, 179
disability of enemy subjects to bring action, cannot be waived, 179
how far wttr dissolves contract of insurance with alien, 179
ENGINE,
no steam-engine to be introduced, breach of warranty, 325, 371
warranty that mill be worked by day only, 331, 332
using engine for a new kind of work, 363
machinery in mill used for more hazardous processes, 364
" no steam-engine employed on the premises," condition against altera-
tions increasing risk, steam-engine not increasing risk no breach, 365
EQUITABLE CHARGES. See Mortgage.

insurable interest arising from, 143
EQUITABLE RELIEF,
none against forfeiture for non-payment of premium, 259
EQUITY OF REDEMPTION. See Mortgage.
ERROR IN ESSENTIALIBUS. Sec Mistake.
ESCROW. See Policy.

ESTATE DUTY. See Trustees.
payment of, by friendly society on death of member, 19
ESTOPPEL. See Waiver.

where receipt of premium is recited in policy under seal, 230, 233
mortgage money by mortgagor is acknowledged in mort-
gage deed, 509
EUROPE,
condition against going outside, 866
EUROPEAN ASSURANCE SOCIETY,

failure of, 24
appointment of arbitrator by Act of Parliament, 24
novation of poiicj'-holder's contracts, 62
rules for valuation of contingent claims, 93
EVIDENCE. See PROor ; Construction ; Parol Evidence.

INDEX. 1079
EXCEPTIONS FROM RISK

exclude loss from special causes, 27'4
fire policies,
excepted perils, 666
rule of causa proxima applies, 666
loss consequent upon explosion, 666, 881
occasioned by or tlirougli earthquake, 666, 668, 669, 881
occasioned by incendiarism, 666, 882
remote consequence of excepted peril, 667
biu^den of proof, 667, 670
clause determining risk upon fall of buildings, 669, 882
partial loss followed by total loss from excepted peril, 670
thieves and rioters, 660, 881
spontaneous combustion, 661
invasion, insurrection, and riot, 880, 881
riot or civil commotion, 880, 881
miUtary or usurped power, 880, 881
by order of any civil authority, 880, 881

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v^f.

ii^ til ' '^ I ' »»5^'"^

3 1924 022 383 958

LIFE, PIEE, GUARANTEE, BUEGLARY,

As I go to press the Money-lenders (No. 2) Bill, 1911, stands

Bohinson, In re, [1910], 2 Ch. 571, to the effect that where an

value. Under Clause 1 of the Bill any agreement with or

operation of Section 2 of the Money-lenders Act, 1900. This

which might unknown to the holder have been acquired from or

facilities to societies desirous of doing such business to enable

amalgamation or transfer of business. Special provisions are

made for the transfer of members, the keeping and auditing of

Another Bill affecting the subject-matter of this book and

formation or extension of industrial and friendly societies

specially adapted to the development of the agricultural industry.

Provident Societies Acts, 1893 to 1895, or under the Friendly

Societies Acts, 1896 to 1908, and will be approved by the Board

towards the cost of the formation of such societies or the payment

the Society.For the purposes of the Act a society for carrying

the Married Women's Property Bill, 1911 [127]. The object of

the Bill is to remedy a defect in Section 1 of the Married

necessary in some cases to join the husband in dealing with trust

Mr. 0. Morgan Owen, joint secretary of the Alliance Assurance

Fire Loss Assessors, and Dr. A. E. Sprague, F.I.A., secretary

The original of this bool< is in

the Cornell University Library.

There are no known copyright restrictions in

II. Deposit and Accounts . 24

INSURABLE INTEREST AND ILLEGALITY.

FORMATION OP THE CONTRACT.

DURATION OF THE RISK.

LIFE INSURANCE; CLAIMS AND TITLE TO POLICY.

I. Proof of Death and Age 393

FIRE INSURANCE CLAIMS.

CLAIMS FOR PREMIUMS.

CLAUSES AND CONDITIONS.

Assurance Companies Act, 1909 987

Index ... 1051

9 Anne, c. 19. (Gaming Act, 1710) . 106

1 Geo. 1, 0. 22. (Eiot Act, 1714), s. 7. 762

14 Geo. 3, c. 48. (Life Assurance Act, 1774) . 109, 110-116, 747

(SmaU Debt (Scotland) Act, 1837), s. 22 764

20 & 21 Vict. 0. 85. (Matrimonial Causes Act, 1857)—

XIV TABLE OP STATUTES.

37 & 38 Vict. e. 62. (Infants Relief Act, 1874) .... .

(Employer's Liability Act, 1880)

XVIU TABLE OF Statutes.

(E'riendly Societies Act, 1896)

TABLE OP STATUTES. XIX

PAGE V. Davey (1887) . . 867, 874

313, 852, 860 917, 926, 927, 948, 949

V. Crandal (1886) 859, Dobree, [1900]

940, 941, 950, 953

^w. Gflpin (1871) ....

265, 268 V. Robinson, [1901] ... 525

XXVI TABLE OP CASES.

(1871) 49 291, 300, 323, 324, 330, 332, 333,

—— V. Mercantile Mutual Acci- 745, 746, 898, 903

940, 941 858, 875, 876, 877

ville (1878) 126, 893 Arden v. Arden (1885) 441 ...