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405 Boehm, 3 Burr. 1905. Every fact which would affect the judgment of a rational underwriter, governing himself by the principles and calculations on which underwriters do in practice act, although it does not increase or diminish the risk incurred, must be disclosed ; Ionides v. Pender, L. R., 9 Q. B. 131 ; Rivaz v. Gerussi, 6 Q. B. D. 222, C. A., cited post, p. 406 ; even though the fact was once
known to the underwriter, if it was not present to his mind, at the time of effecting the insurance ; Bates v. Hewitt, L. R., 2 Q. B. 595. And, the assured is bound to communicate all the information he has received, though he does not know it to be true, and though it afterwards turns out to be false. Lynch v. Hamilton, 3 Taunt. 37. The question is whether the fact concealed would have influenced the mind of a reasonable underwriter if communicated. Stribley v. Imperial Marine Insur. Co., 1 Q. B. D. 507. If a principal, effect an insurance, in ignorance of a material fact, which ought to have been communicated to him, by an agent, having charge of the subject-matter of insurance, the insurance is void. Fitzherbert v. Mather, 1 T. R. 12 ; Proudfoot v. Montefiore, L. R., 2 Q. B. 511. But, where the agent without fraud neglects to communicate to the owner damage done to the vessel, this damage is excepted out of the policy. Gladstone v. King, 1 M. & S. 35. To prove the defence of concealment of a material fact, it lies on the defendant to prove, not only the fact, and the plaintiff's knowledge, but, also the non-communication of it to the defendant; but, slight evidence is enough, and the mere subscribing of the policy may be evidence of it, where the suppressed fact is one which would have prevented a reasonable man from subscribing ; as, that the ship had been so long abroad, on her voyage, as to be a missing ship. Elkin v. Janson, 13 M. & W.663. It is sufficient to communicate facts, without the opinion or conclusion founded upon those facts. Bell v. Bell, 2 Camp. 479. Mere rumours or news in the public papers need not be mentioned. 3 Kent, Com. 285 ; but see Durrell v. Bederley, Holt, N. P. 283. Facts which the underwriter is presumed to know need not be communicated, as that a ship, classed A 1 at Lloyd's, will be struck off the list unless re-surveyed, in the fourth year from the registration. Gandy v. Adelaide Marine Assur. Co., L. R. 6 Q. B. 746. But, the peculiar danger of a new port at which the ship is insured by the policy, and, the existence of which was unknown to the underwriter, must be disclosed. Harrower v. Hutchinson, L. R., 5 Q. B. 584, Ex. Ch., reversing S.C., L. R., 4 Q. B. 523. As to the admissibility of the evidence of an underwriter or other witness, as to his opinion of the materiality of a fact concealed, or of whether the fact, if known, would have altered the terms of insurance, vide ante, pp. 165, 166.
As there must be no concealment of a material fact, so there must be no misrepresentation of any such fact. Such misrepresentation will avoid the policy, though the actual loss is unconnected with the fact misrepresented or concealed, and though there be no fraud intended by the insurer. Seaman v. Fonerau, 2 Str. 1183. In Flinn v. Tobin, M. & M. 367, Ld. Tenterden, C. J., told the jury that a verbal mis-statement of the quantity of the cargo which the ship was about to carry would not vitiate a policy on the ship unless it was fraudulent. The question, as stated by Kent (3 Com. 283), is “Whether there was, under all the circumstances, a fair representation, or, a concealment; if the misrepresentation or concealment was designed, whether it was fraudulent; and, if not designed, whether it varied materially the object of the policy, and changed the risk understood to be run. If the representation was by fraudulent design, it avoids the policy, without staying to inquire into its materiality; and if it was caused by a mistake or oversight, it does not affect the policy, unless material, and, not true in substance.” So, a mis-statement as to the name or age of the ship avoids the policy. Ionides v. Pacific Insur. Co., L. R., 6 Q. B. 674; L. R., 7Q. B. 517, Ex. Ch. But, in the case of an open policy on goods, in ships to be afterwards declared, a mistake as to the description of the ship made in the declaration is not material. S. C. In Anderson v. Thornton, 8 Exch. 425, it was held that a plea alleging a material mis-statement as to the time of sailing, fraudulently made, may be supported by proof of material mis-statement, but without fraud. If the representation is not a positive assertion, but only an expression of the speaker's opinion, expectation, or belief, this will not avoid the policy, if the assertion is made bonâ fide, and in ignorance of the untruth. Barber v. Fletcher, 1 Doug. 305; Bowden v. Vaughan, 10 East, 415; Anderson v. Pacific, &c. Insur. Co., 21 L. T., N. S. 408, P. C.; see Ionides v. Pacific Insur. Co., ante, p. 405. It is sufficient, however, if a representation be substantially correct, and it need not, like a warranty, be strictly and literally complied with. Pawson v. Watson, Cowp: 785. See as to life policies, and the distinction between marine and life policies, Wheelton v. Hardisty; & E. & B. 232; 26 L. J., Q. B. 265; cited post, p. 410. In the case of insurance of chartered freight, the non-disclosure of a power in the charterer to cancel the charter-party is fatal. Mercantile Steam SS. Co. v. Tyser, 7 Q. B. D. 73.
The slip, though not admissible in evidence as a contract, by reason of the 30 & 31 Vict. c. 23, s. 7, is, by mercantile usage, treated as the contract for insurance, vide ante
, p: 249. Hence, facts coming to the knowledge of the assured after the slip is signed, but, before the policy is delivered out, need not be disclosed to the underwriter. Lishman v. N. Maritime Insur. Co., L. R., 8 C. P. 216; L. R., 10 C. P. 179, Ex. Ch. See also Cory v. Patton, L. R., 7 Q. B. 304; and L. R., 9 Q. B. 577. So, where the assured conceals from the underwriter a material fact, when the slip is signed, and the underwriter delivers out the policy in conformity with the slip after the fact has come to his knowledge, it is a question for the jury whether the underwriter elected to go on with the policy; if not, the policy does not bind him; Morrison v. Universal Marine Insur. Co., L. R., 8 Ex. 197, Ex. Ch.; and where the underwriter stated, when he issued the policy, that he should rely on the concealment, it was held that he might do so; Nicholson v. Power, 20 L. T., N. S. 580, Ex. Ch., E. T. 1869.
In an action against a second or subsequent underwriter, it has been the practice to admit evidence of representations to the first underwriter, on a presumption that the subsequent underwriter gave credit to them. Pawson v. Watson, Barber v. Fletcher, supra; Marsden v. Reid, 3 East, 572. This rule is confined to representations made to the first underwriter, that is, the first on the policy. S. C.; Bell v. Carstairs, 2 Camp. 543. The principle of the rule was questioned by Ld. Ellenborough, C. J., in the last case, and in Forrester v. Pigou, 1 M. & S. 13.
If goods insured are over-valued with intent to defraud the underwriters, the contract is void, and, the assured cannot recover, even for the value actually on board; Haigh v. De la Cour, 3 Camp. 319; and, even without fraud, an excessive over-insurance may be a material fact, and, if concealed from the underwriter, the policy be void ; Ionides v. Pender, L. R., 9 Q. B. 531. So, where there were successive open policies, on goods to be declared, and the assured, fraudulently declared the goods at risk, at an under-value, on the earlier policies, the policies effected subsequently, to such false declarations, were held void, and were ordered to be cancelled. Rivaz v. Gerussi, 6 Q. B. D. 222, C. A.
Illegality.) A contravention of law by the assured, having direct relation to the subject of the risk, will vitiate the policy. Thus, where a ship was loaded in contravention of the 16 & 17 Vict. c. 107, forbidding a ship to sail from certain ports at certain times in the year with any of the cargo on
Payment.- Return of Premium.
407 deck, and the plaintiff insured the cargo with the express knowledge of the mode of loading, it was held that the plaintiff could not recover for any part of the cargo; Cunard v. Hyde, 2 E. & E. 1; 29 L. J., Q. B. 6; aliter, if the assured had no knowledge of the mode of loading; S. C., E. B. & E. 670; 27 L. J., Q. B. 408. If the master so loaded, without the knowledge of his owner, the owner may recover on an insurance of freight. Wilson v. Rankin, 6 B. & S. 208; 34 L. J., Q. B. 62; L. R., 1 Q. B. 162, Ex. Ch. So, the owner may recover, where the master has, without his knowledge, in contravention of the Merchant Shipping Act, 1854, s. 318, taken passengers on board without a certificate. Dudgeon v. Pembroke, L. R. 9 Q. B. 581.
Payment.] It is a good defence to show a custom that credit taken between the insurance broker and underwriter should be taken as payment to the assured by the underwriter, after the amount has been adjusted between him and such broker. Stewart v. Aberdein, 4 M. & W. 211. But, the assured, is not bound by such a custom, if he had no knowledge of it. Sweeting v. Pearce, 9 C. B., N. S. 534; 30'L. J., C. P. 109, Ex. Ch. An adjustment indorsed on the policy, produced by the assured, with the defendant's name struck out of it, is not evidence for the defendant that the amount so adjusted has been paid. Adams v. Sanders, M. & M. 373.
Return of Premium. A claim for a return of premium is often added to a claim on a policy; and the question of the right to recover arises on the failure of the plaintiff to establish his case on the policy.
When plaintiff entitled to a return.] If the policy is void ab initio, or where there is no insurable interest, and, this proceeds through misinformation or other innocent cause; or, where an interest is less than that insured; the premium or part of it may be recovered. 3 Kent, Com. 341. Where there are two insurances at different times, together exceeding the interest insured, the excess of premium is to be recovered from the last insurers, and not the first. Fisk v. Masterman, 8 M. & W. 165. When several insurances are effected at the same time, and before the risk commenced, they are to be taken as one policy, and the retura must be pro rata; semb. S. C.
If the risk has never commenced there must be a return; as if the ship never sailed, or, the policy is avoided by failure of warranty, without fraud. 3 Kent, Com. 341. But, if the risk has once commenced, or the policy be void for illegality, or for any fraud of the assured, there is no return. Ib.; Allkins v. Jupe, 2 C. P. D. 375, ante, p. 404; and see Stone v. Marine Assur. Co. &c., 1 Ex. D. 81. The defendant having insured a cargo for a certain vogage, effected a re-insurance with the plaintiff on the same cargo and risk after the ship had, unknown to either party, arrived safely at her destination : it was held that the premium was payable on the re-insurance. Bradford v. Symondson, 7 Q. B. D. 456, C. A. Where the policy is avoided by material misrepresentation or concealment, without fraud, the premium may be recovered, and the policy is conclusive evidence of payment of the premium. Anderson v. Thornton, 8 Exch. 425. Where the voyage and the risk are divisible, and part is not run, there may be a return of a proportionate part of the premium. As, where the voyage was from London to Halifax, Nova Scotia, to depart with convoy from Portsmouth, and when
the ship arrived at that place the convoy had sailed. Stevenson v. Snow, 3 Burr. 1237; 1 W. Bl. 318.
The defendant having paid the amount of premium into court, the plaintiff afterwards obtained a verdict on the policy for a sum less than the sum assured : the court directed that judgment should be entered only for the amount of the verdict, less the sum taken out of court. Carr v. Montefiore, 5 B. & S. 941; 34 L. J., Q. B. 21.
Life Insurance. Many of the cases and authorities on marine policies apply equally to policies on lives and against fire; but, the contract of life assurance is, in consideration of a lump sum or of periodical payments, to pay a sum certain upon the death of a given life, and is not a contract of indemnity, like that of marine and fire policies. The pleadings sufficiently point out the nature of the required evidence.
Form of policy.] It does not appear ever to have been decided that an agreement for life insurance need be expressed in a policy or reduced to writing. The statute 14 Geo. 3. c. 48, s. 2, enacts that it shall not be lawful to make any policy on the life of any person or other event, without inserting in such policy the person's name interested therein, or for whose use, benefit, or on whose account such policy is so made or underwrote. The Stamp Act, 1870, s. 118 (which replaced the earlier statute, 16 & 17 Vict. c. 59, s. 6), requires every person, receiving or taking credit for any premium or consideration for any contract of insurance, to make out and execute a stamped policy of such insurance, within one calendar month from the receipt of the premium, under a penalty of 501. This section was passed for the better securing the payment of the stamp duty, and rather negatives the idea that 14 Geo. 3, c. 48, s. 2, supra, was intended to avoid agreements for life insurance not in writing.
By the Married Women's Property Act, 1882, (45 & 46 Vict. c. 75), s. 11, "A married woman may, by virtue of the power of making contracts hereinbefore contained, effect a policy upon her own life, or the life of her husband for her separate use, and the same and all benefit thereof shall enure accordingly. A policy of insurance effected by any man on his own life, and expressed to 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 life, and expressed to be for the benefit 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 to his or her debts.” The section enables the insured to appoint a trustee or new trustees of the policy by a memorandum in writing and the receipt of a trustee duly appointed, or in default of notice to the office, the receipt of the legal personal representative of the insured shall be a discharge to the office. See Holt v. Everall, 2 Ch. D. 266 C. A.; In re Adam's Policy Trusts, 23 Ch. D. 525, decided on 33 & 34 Vict. c. 93, s. 10.
As to stamp duties, vide ante, p. 247.
Assignment of policy.] The Policies of Assurance Act, 1867 (30 & 31 Vict. c. 144), s. 1, enacts that " any person or corporation now being or hereafter," vide post, p. 409“ becoming entitled by assignment or other derivative title to a policy of life assurance, and possessing, at the time of action brought, the
Assignment of Policy.--Interest.
right in equity to receive and the right to give an effectual discharge to the assurance company, liable under such policy, for 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.”
By sect. 3,“ no assignment made after the passing of this act” (20th August, 1867), “ of a policy of life assurance shall confer on the assignee therein named, his executors, administrators, 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 purport 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.”
By sect. 4, assurance companies are, in policies issued after 30th of September, 1867, to specify the principal place or places of business at which notices of assignment may be given.
By sect. 6, every assurance company, to whom notice of the assignment of any policy shall have been duly given, shall 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 or de facto, the manager, &c., of the assurance company whose acknowledgment it purports to be, shall be conclusive evidence, as against such assurance company, of their having duly received the notice to which such acknowledgment relates.
An agreement for assignment is not an assignment within this Act. Spencer v. Clarke, 9 Ch. D. 137.
The J. Act, 1873, s. 25 (6), ante, p. 282, contains a general provision with reference to the assignment of choses in action.
Interest.] By stat. 14 Geo. 3, c. 48, ss. 1, 2, a policy on lives or other events is unlawful and void, unless the person on whose account the insurance is made has an interest, and the name of the person interested, or for whose use or benefit, or on whose account, it is made, be inserted therein. If A., having no interest in B.'s life, causes him to effect an insurance in his own name, but at A.'s expense, and for A.'s benefit, this is a fraudulent evasion, and the policy is void under sect. 1. Waineuright v. Bland, 1 M. & Rob. 481 ; Shilling v. Accidental Death Insur. Co., 2 É. & N. 42; 26 L. J., Ex. 266. See also S. C., 27 L. J., Ex. 16. Every one is presumed to have an insurable interest in his own life, and if he insures, whether for life or a limited time, his executor is not bound to show any interest beyond this. Wainewright v. Bland, supra. So, it is said, where a wife insures her husband's life. Reed v. R. Esch. Assur. Co.,
Peake, Add. Ca. 70; and now see 45 & 46 Vict. c. 75, s. 11, ante, p. 408. But, where a wife was entitled to a legacy on attaining 21, and her husband insured her life in her name, to secure the amount of the legacy, which was then advanced to him, it was held that the policy was void, as it did not state that the husband was the person having the present interest therein ; although the ultimate benefit might be for the wife. Evans v. Bignold, L. R., 4 Q. B. 622. A creditor has an insurable interest in his debtor's life. Anderson v. Edie, Park Ins., 8th ed. 914–15. And, in general, the interest which the insurer is required