Page images
PDF
EPUB

share, and you have accomplished a good work-to the injury of no one, but to the manifest security of all holders of L. pol. See the advantages immediately resulting! Either branch of the bus. can be disposed of—can be wound up in the event of disasterand the other branches (now distinct asso.) remain undisturbed. The withering influence of the Court of Chancery could never reach them.

It will be found ere long that the considerations here raised are not ill-timed. Legislation for ins. offices cannot be perfected till some such change as here indicated is made. It will be well for directors and managers to be prepared. The existing complex ins. offices are for the most part solid enough; yet they are not free from the dangers we have indicated. We trust never to see another complex ins. co. submitted to the Brit. public.

The Life Assu. Cos. Act, 1870, provides as follows:

4. In the case of a co. estab. after the passing of this Act transacting other bus. besides that of L. assu., a separate account shall be kept of all receipts in respect of the L. assu. and annu. contracts of the co., and the said receipts shall be carried to and form a separate fund to be called the L. assu. fund of the co., and such fund shall be as absolutely the security of the L. pol. and annu. holders as though it belonged to a co. carrying on no other bus. than that of L. assu., and shall not be liable for any contracts of the co. for which it would not have been liable had the bus. of the co. been only that of L. assu.; and in respect to all existing cos., the exemption of the L. assu. fund from liability for other obligations than to its L. pol.-holders shall have reference only to the contracts entered into after the passing of this Act, unless by the constitution of the co. such exemption already exists: PROVIDED ALWAYS, THAT THIS SECTION SHALL NOT APPLY TO ANY CONTRACTS MADE BY ANY EXISTING CO., BY THE TERMS OF WHOSE D. of seTT. THE WHOLE OF THE PROFITS OF ALL THE BUS, ARE PAID EXCLUSIVELY TO THE L. POL.-HOLDERS, AND ON THE FACE OF WHICH CONTRACTS THE LIABILITY

OF THE ASSURED DISTINCTLY APPEARS.

The Schedules of the Act are also framed with a view to the separation of the life fund from the other funds of the Co. [AccOUNTS OF LIFE OFFICES.] This must be regarded as an experiment, leading up to more complete legislation.

A most instructive decision on the point here involved has recently been given under the European Arbitration Act. The European Co., under its Deed of Sett., was required to have its assets separated into two distinct funds: one, the "Proprietors' Fund," consisting of the moneys paid up on shares; and the other the "Assu. Fund," consisting of the prems. Lord Westbury held, that the distinction between the Proprietors' Fund and the Assu. Fund must be disregarded, the assets of the Co., under whatever name they are entered, being applicable to the payment of the debts.- Vide head-note, Ruthin Guardians case, Law Times Report.

COMPLEXION.-This should be noticed as going to make up the temperament hereafter to be considered. But any peculiarities in hue which it may have derived from antecedent or present disease or exposure should be noted: whether rendered sallow by residence in malarious districts; bronzed by exposure, or Addison's disease; unnaturally florid by intemperance, or cardiac lesion; livid by imperfect aeration of the blood from whatever cause; or "compounded of alabaster and the rose" by incipient phthisis; or pallid and sodden from albuminuria and anæmia.-Allen's Med. Examinations for Life Ins. COMPOSITION FOR LIFE TO RESIDE ABROAD.-See EXTRA PREMIUMS; FOREIGN RESIDENCE. COMPOUND INTEREST.-Int. upon int., i.e. when the int. of a sum of money is added to the principal, and then bears int., which thus becomes a sort of secondary principal. Thus, if money is invested so that the int. is not paid as it becomes due, but successively added to the cap., the cap. is said to accumulate at compound int. This interesting and important branch of our subject will be fully discussed under INT. FOR MONEY. COMPOUND LIFE POLICIES.-In 1867 Mr. T. H. Baylis issued an Explanation of a New System of Money Assu., combining Life Assu. with Tontines, by means of Compound Life Policies. He says:

Although greatly improved in many respects, by alterations made from time to time, L. ins. still stands in need of improvement in an important direction, viz. that of securing sums of money to the assu. themselves, receivable at early periods during their own lives, in add. to making pecuniary provision for their representatives at death, at the same rates of prem. as are paid for ordinary

L. assu.

He then expounds the character of a "Compound Life Policy" as follows:

Where a compound L. policy differs from an ordin. L. policy is in the application of the sum assu. when it becomes a claim. Instead of being an isolated, independent contract, like an ordinary L. policy, which only secures the sum assured to the representatives of the assurer after death, a compound L. policy forms one of a class of policies belonging to members, who join their interests together in classes, for their own mut. benefit, as well as that of their families; and as each member of each class dies, one-half the sum assu. (or such other proportion as may be arranged) is paid to his representatives as a L. ins.; while the other half is divided into as many equal parts as there are survivors of the class, and paid to each of them in cash as tontines. Thus practically realizing a modification and combination of L. assu. and Tontine principles, destined, from the advantages they confer on those who thus associate themselves together, to be very extensively adopted.

A compound L. pol. is effected in the usual way, for the whole term of life, at the ordinary rates of prem., either on the bonus or non-bonus scale, as may be preferred.

If L. ins. ever again be made the subject of speculation, it would be difficult to find a more ingenious basis than this.

COMPRESSION OF THE BRAIN (from comprimo, to press together).-A diseased state of the brain, arising from compression by a portion of bone, or extravasated blood. It comprises "fracture with depression," and indentation of the skull without pressure.

COMPROMISE. An adjustment of claims in dispute by mutual concession, without resorting to the law; also a mut. promise of two or more parties at difference to refer the ending of their controversy to arbitrators. [ARBITRATION.] COMPTON, THEODORE, was trained to Ins. bus. in the National Provident, which office he left about 1840, for the purpose of founding the United Kingdom Temperance, of which he became the Act. and Sec. In 1849 he left the last-named office and became sup. of agents for the Albion (No. 1). On the amalg. of that Co. in 1857, he retired from Ins. pursuits. COMPULSORY INSURANCE.-In 1872 a remarkable case came before the Lond. Court of Bankruptcy. Viscount Parker had been adjudicated a bankrupt. The property constituting his assets consisted of a reversionary life interest in the Macclesfield estates after the decease of the present Earl of Macclesfield. The trustee was advised that if the bankrupt's life could be ins. at the ordinary rate, a large sum of money could be obtained for the benefit of the creditors by sale or mortgage of the interest; but if such ins. could not be effected, the interest would be almost worthless. Under the circumstances, the bankrupt had been requested to submit himself to a medical examination at one of the ins. offices, with a view to his life being ins.; but this he declined to do. The trustee now applied for an order to compel his attendance at an ins. office. The counsel who appeared for the trustee in bankruptcy admitted that the application was one of entire novelty; but they contended, nevertheless, that, under existing circumstances, it was perfectly reasonable. They pointed out that by the terms of the 19th sec. every bankrupt was bound to do "all such acts and things in relation to his property and the distribution of the proceeds among his creditors as may be reasonably required by the trustee, or may be prescribed by rules of Court, or be directed by the Court by any special order or orders made in reference to any particular bankruptcy, or made on the occasion of any special application by the trustee or any creditor." They cited also the 26th sec. of 31 & 32 Vict. c. 119, giving the Judges power to order a person injured by an accident on a railway to be examined.

His Honour the Hon. W. C. Spring-Rice was of opinion that the Court had no jurisdiction to make any order. Upon principle the Court would not make an order upon a bankrupt to do an act which was an entirely voluntary act on his part. The reversionary interest which had been referred to possessed a certain value, and the Court had no jurisdiction to order the bankrupt to do something whereby that value might be enhanced. He supported his view in this manner :-Suppose a bankrupt to be highly endowed by nature with various gifts, and to possess wonderful skill in singing, and a splendid voice, he might, by the exercise of those gifts, realize a considerable estate for the creditors. But would this Court make any order upon him to sing? The case had arisen in regard to a bankrupt who had a special knowledge of some secret medicine which did not appear in his book of prescriptions, and application was made to the Court to require him to disclose that knowledge; but the Court absolutely declined to order him to do so, and it was stated that there was no authority to enforce such an order. [BANKRUPTCY.] COMPUTATION OF AVERAGE.-It is a rule in the computation of general average, that the loss is to be calculated according to the law of the port of discharge. Therefore, an action will not lie in this country to recover money paid upon an average loss adjusted at St. Petersburg, according to the law of Russia, although the consignor and consignee of the goods, and the owner of the vessel, were Brit. subjects; and although by the law of England an average loss would not be payable under the circumstances. This was so held in the case of Simonds v. White, before the English Courts in 1824. [See also Smith v. Macneil, 1813.]

On the same principle, it was held in the case of Power v. Whitmore, 1815, that the insurer of goods in a foreign country is not liable to indemnify the insured (a subject of that country), who is obliged by the decree of a Court there to pay contribution to a gen. average, which by the law of this country could not have been demanded, where it does not appear that the parties contracted upon the footing of some usage among merchants obtaining in the foreign country to treat the same as gen. average; but such usage is to be collected merely from the recitals and assumption made in the decree.

In an action on a pol. for average loss, it was held in the case of Barber v. French, before the English Courts in 1779, that if the account is so complicated that it cannot be adjusted in Court, the jury, by consent of the parties, may find a total loss, the plaintiff entering into a rule to account upon oath for what part of the insured property he may recover. [AVERAGE Adjusters.] [GENERAL AVERAGE.] COMPUTATION OF LIFE CONTINGENCIES.-In the pages of the Assu. Mag. there have appeared from time to time some instructive letters on this subject, bearing more particularly upon the relative advantages of the old and new methods. Thus in vol. i. (p. 96*) is a letter from Mr. Peter Gray, On the Comparative Advantages of the Old and New Methods of Computation. In vol. viii. (p. 58), Mr. Samuel L. Laundy gives some problems applicable to the subject. In the same vol. (p. 118) a correspondent under the nom de plume of "Joshua Milne" enters upon a defence of the old method. The advantages of the new method we have discussed pretty fully under COLUMNAR METHOD. The student will find instruction in the papers now referred to.

COMPUTE. To consider; to reckon; to estimate by data; to count; to number; to rate; to calculate.

COMPUTERS.-The requirements of the science of life contingencies have enlisted the aid of many computers; although not to the same extent as some of the mechanical sciences and astronomy. Prof. De Morgan, in his art on Arithmetical Computation (Companion to the Almanac, 1844), said, "He who can easily, rapidly, and accurately add, subtract, multiply, and divide, is a computer." Mr. W. T. Thomson regards Mr. Geo. Barrett as deserving to be placed at the head of modern computers. Our article on ACTUARIAL T. will reveal the names of many others. Our art. on TABLES will contain many more. We regard Mr. Peter Gray as at the head of all living computers. COMYN, VALENS.-Mr. James Hodson says in the preface to his Valuation of Annu., 1747, "The method of putting down the ages of the several classes of people that die within the B. of Mort. (for which we are indebted to Mr. Valens Comyn) has furnished us with ample matter to found the computations upon." The merit of this has, however, been claimed by, or for, others. [BILLS OF MORT.]

CONCEALMENT.—A suppressio veri, to the injury or prejudice of another. The question of Concealment has a most special bearing in regard to ins. contracts. It has given rise to more litigation than any other single consideration. It will prob. continue to do so. It may be said that an almost especial interpretation has been given to concealment in relation to the contract of ins. ; and this not by one Judge, but by many. In ordinary contracts a suppression, in order to be deemed a fraud, must at least amount to a withholding or non-disclosure of facts which one contracting party is bound alike by the rules of law and equity to disclose to the other-facts material to the subject-matter of the contract. In ins. the doctrine has been carried further, and is made to embrace moral considerations, such as constitute good faith in its widest sense between man and man. We shall endeavour to make this clear.

It is estab. by the law of every mercantile state, and the uniform decisions of the Courts at Westminster, that the suppression or concealment of material intelligence respecting a matter of ins., whether fraudulent or not, vitiates the pol.-Vide judgment in the case of Thompson v. Buchanan, 1782.

Mr. Justice Bailey laid down this principle in the case Lindenau v. Desborough, Sec. of Atlas Ins. Co., before the Courts in 1828, viz. :-In all ins., whether on ships, houses, or lives, the underwriter should be informed of every material circumstance within the knowledge of the insured; and the proper question is whether any particular circumstance was in fact material-not whether the party believed it to be so.

In the case of Dalglish v. Jarvie, 1850, Mr. Baron Rolfe stated the law of concealment in relation to ins. as follows:

In cases of ins. the party is required not only to state all matters within his knowledge, which he believes to be material to the question of ins., but all which in point of fact are so. If he conceals anything which he knows to be material, it is a fraud; but, besides that, if he conceals anything that may influence the rate of prem., which the underwriters may require, although he does not know that it would have that effect, such concealment entirely vitiates the pol.

The case before the Court on this occasion was not an ins. case, but a question of copyright.

In was in 1766, in terminating the litigation in the now famous case of Carter v. Boehm, that Lord Mansfield delivered that judgment which can never pass into oblivion so long as the practice of ins. continues. We can give but a few passages of it here:

Ins. is a contract upon speculation. The special facts upon which the risk is to be computed lie most commonly in the knowledge of the insured only. The underwriter trusts to his statement, and proceeds upon confidence that he does not keep back any circumstances within his knowledge to mislead the underwriter into a belief that the circumstance does not exist, and to induce him to estimate the risk as if it did not exist. The keeping back such circumstances is a fraud, and therefore the pol. is void. Although the suppression should happen through mistake, without any fraudulent intention, yet still the underwriter is deceived and the pol. is void: because the risk run is really different from the risk understood and intended to be run at the time of the agreement. The poĺ. would be equally void against the underwriter, if he concealed anything: as if he insured a ship on her voyage, which he privately knew to be arrived; and an action would lie to recover the prem. The governing principle is applicable to all contracts and dealings. Good faith forbids either party, by concealing what he privately knows, to draw another into a bargain from his ignorance of that fact, and his believing the contrary.

He then reviews the other side of the question:

upon.

But either party may be innocently silent as to the grounds open to both, to exercise their judgment There are many matters as to which the insured may be innocently silent. He need not to mention what the underwriter knows-scientia utrinque par pares contrabentes facit. (The law will not assist an improvident purchaser, nor will it interpose where both the contracting parties were equally well informed as to the actual condition of the subject-matter of the contract.) An underwriter cannot insist that the pol. is void, because the insured did not tell him what he actually knew, what way 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 underwriters need not be told what lessens the risk agreed, and understood to be run, by the express terms of the pol. He need not be told general topics of speculation: as, for instance, the underwriter is bound to know every cause which may occasion natural perils-as the difficulty of the voyage, the kind of seasons, the prob. of lightning, hurricanes, and earthquakes. He is bound to know every cause which may occasion political perils; from the rupture of states, from war, and the various operations of war. He is bound to know the prob. of safety, from the continuance and return of peace; from the imbecility of the enemy, through the weakness of their councils, or their want of strength.

The question must therefore always be, "Whether there was under all the circumstances, at the time the pol. was underwritten, a fair statement or a concealment; fraudulent if designed, or though not designed, varying materially the object of the pol., and changing the risk understood to be run.'

[ocr errors]

Notwithstanding this generally admitted principle, concealment continues to be one of the most fertile sources of litigation in connexion with ins. contracts.

The rationale of the subject has been very clearly put by Mr. Bunyon, in his Law of Life Ins., as follows:

The insurers, it may be assumed, prior to the contract, are entirely ignorant of the premises upon which it may be founded, and must depend for them upon the insured; his statements are therefore the basis upon which the contract proceeds, and their truth as to all material points is essential to its validity. It is important to observe that the principle upon which the maxim caveat emptor [let a purchaser beware] is founded does not apply to the contract of ins. Not only must the party proposing the ins. abstain from making any deceptive representation, but he must observe the utmost degree of good faith, uberrima fides [most abundant faith]. Not only is he required to state all matters within his knowledge which he believes to be material to the question of the ins., but all which in point of fact are so. . . . . An entire disclosure must then be made of all material facts known to the insured; and not only so, but all representations made by him as to material facts must be substantially correct; and to this may be added, that where a representation amounts to a warranty, it must not only be substantially but literally true.

The principle being admitted, and the reason and justice of it being understood, still questions as to what constitutes concealment continue to arise; and as these must vary with the varying nature of the bus., we propose to note some of the leading authorities and cases under each of the leading branches of ins.

Gambling Ins-One of the earliest cases of alleged concealment which came before our Courts under an ins. contract arose out of what is now regarded by our law as a gambling ins., but which were of very common occurrence here for several centuries. [GAMBLING INSURANCES.] The Governor of a fort in the East Indies made an ins., "interest or no interest," against the capture of that fort by any foreign enemy. The fort was taken by the French. An action being brought in our Courts against the underwriter, he defended on the ground of concealment: showing, first, that the Governor did not disclose the state and condition of the fort; second, that he did not disclose that the French were likely to attack the fort; third, that he did not disclose that the French had entertained a design to take the fort by surprise the year before, of which he had before effecting the ins. obtained knowledge. On two occasions the English Common Law Courts found for the plaintiff, the Governor. The case then passed into the Court of Equity, but we believe never came to a hearing. It was on the occasion of an application for a new trial, in 1766, that Lord Mansfield delivered that famous judgment from which we have already quoted.

Marine Ins.-In this branch of ins. there is not only great opportunity, but likewise great temptation, to concealment. It is satisfactory to note, however, that here-and we assume equally so in other branches where the rule can apply-obligations against concealment operate equally on both parties to the contract. Bynkershoek, who wrote learnedly upon the question of marine ins. during the last century, lays it down as a principle that if an insurer, at the time of underwriting a pol., knows that the ship or goods are safe arrived, his concealing it is equally fraudulent as if the insured knew and concealed the fact that an accident had happened.

Weskett said, 1781:

Concealment of circumstances in matters of ins., especially in time of war, is so constantly practised, the temptations to it are so great, and the impositions, indeed the robberies, to which insurers in England are daily subject, are so various and enormous, that I venture to say that without some such methods of prevention, detection, and punishment as have been intimated in the preliminary discourse [of the work quoted], the condition of an insurer in the city of Lond. will become, notwithstanding his utmost skill, prudence, and precaution, beyond measure perilous and

remediless.

In marine ins. the basis of the contract between the underwriter and the insured is, that the latter will communicate to the former information of every material fact of which the insurer has, or in the ordinary course of bus. 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 ins. This was so held in the recent case of Proudfoot v. Montefiore, 1867.

In the case of Shirley v. Wilkinson, 1781, it was held by Lord Mansfield that where facts, not disclosed by the broker in a representation of the state of the ship, appear material to the jury, though they did not to the broker, who merely on that account abstained from mentioning them, the ins. is void.

In the case of Lynch v. Hamilton, 1810, it was held, that it is the duty of the insured not only to communicate to the underwriter items of intelligence which may affect his choice, whether he will ins. at all, and at what prem. he will ins., but likewise all rumours and reports which may tend to enhance the magnitude of the risk. Thus, if a pol. be effected on a ship or ships, and the insured, knowing their names, does not communicate them, the pol. is void; such an ins. being tantamount to a representation that he does not know by what ships the goods will come.

It will be seen that the question of materiality of the concealment frequently arises. Thus in the case of Weir v. Aberdeen, 1819, the following were the facts:-A vessel having sailed, and put back to the Downs, and then sailed again, and laboured and strained much from being overloaded, and then put back a second time: upon an application to the underwriters for liberty for the ship to go into port to discharge part of her cargo, it was only communicated to them that the ship was too deep in the water:Held, that as the subsequent loss had not in any degree arisen from her having been so strained and laboured, the communication of that fact was immaterial, and that the communication made was quite sufficient.

In the case of Greenwell v. Nicholson, 1837, the facts were as follow:-A person at Sunderland effected a pol. of ins., and said no accounts had been received of the ship. His counting-house was at Belfast, and at the time of saying this, accounts had been received there, though this was unknown to him:-Held, that this statement was not false or fraudulent.

In the case of Pimm v. Lewis, 1862, where it was a condition of the pol. that it should be void if the ins. should omit to communicate any matter material to be made known to the ins.-Held, by Baron Martin, that this meant some matter not only material, but also unknown to the insurer; and that it did not apply to something which it might well be presumed was well known to the insurer or his agent.

In the more recent case of Bates v. Hewitt, 1866, it was held, by the Lord Chief Justice Cockburn, that a person proposing a marine ins. is bound to communicate every fact within his knowledge that is material; though, if a particular fact is known to the underwriter at the time, he cannot afterwards set up as a defence to an action on the pol. that the fact was not communicated; but if a material fact is not communicated, which, though known to the underwriter once, was not present to his mind at the time of effecting the ins., the non-communication affords a good defence to the underwriter; and it is not enough for the insured to show that the particulars supplied by him, coupled with the underwriter's previous knowledge, would, if the underwriter had given sufficient consideration to the subject, have brought to his mind the material fact not communicated.

There is yet another, and still more remote, phase of Concealment, as set forth in the following cases:

In the case of Fitzherbert v. Mather, 1785, it was held, that any person acting by the orders of the insured, and who is in anywise instrumental in procuring the ins., is bound to disclose all he knows to the underwriter before the ins. is effected.

While in the more recent case of Proudfoot v. Montefiore (1867), already quoted, it was held, that an agent, whose duty it is, in the ordinary course of bus., to communicate informa tion to his principal as to the state of the ship and cargo, ought to do so by telegraph, where that mode of communication is in general use; and if the agent omits to discharge this duty, and the principal, being thus left in ignorance of a fact material to be communicated to the underwriter, effects an ins., the ins. is void, on the ground of concealment or misrepresentation.

In the case of Morrison v. Universal Marine, before the Court of Exchequer in 1873, it was held: There is no rule or presumption of law, either in principle or upon authority, that underwriters are acquainted with the contents of Lloyd's list, so as to relieve a person proposing to ins. from the duty of communicating to them a material fact known to him before the completion of the ins., and pub. in Lloyd's list.

In this last decision the same principles have been followed as in the cases of Xenos v. Wickham and Corry v. Patton; but these hardly conform to the dictum of Lord Mansfield, in some of the judgments already quoted.

Life Ins.-Questions of Concealment too often arise in regard to contracts of L. ins. ; and as the concealment here generally consists of facts within the knowledge of the person seeking ins., and too often the subject of concealment constitutes the motive for ins., the Courts have been very sensitive on the point, and have carried the doctrine of Concealment to its full limit in favour of the offices. Our cases are selected, as far as possible, to meet the varied points of practice. It must always be remembered that the varying conditions of L. offices are apt to introduce apparent inconsistencies in cases extending over a long period of years.

About 1760 an action was brought on a pol. made on the life of Sir James Ross for one year from Oct. 1759 to Oct. 1760, warranted in good health at the time of making the pol. Sir James died of a malignant fever within the period of the ins. It afterwards appeared that Sir James had received a wound in the battle of La Feldt, 1747, in his loins, which occasioned a partial relaxation or palsy, so that he could not retain his urine or fæces, and which was not mentioned to the insurer. All the physicians and surgeons who were examined for the plaintiff swore that the wound had no sort of connexion with the fever; and that the want of retention was not a disorder which shortened life for he might, notwithstanding that, have lived to the common age of man; and the surgeons who opened him said that his intestines were all sound. There was one physician examined for the defendant, who said the want of retention was paralytic; but being asked to explain, he said it was only a local palsy, arising from the wound, but did not

« PreviousContinue »