took the last receipts from the Albert alone, and that his first act was to prove against the Albert.]

Rivaz's case, Albert Arbitration, 16 S. J. 590. [Lord WESTBURY.-This case appears to me the plainest thing in the world. Mr. Rivaz receives a letter in which the policyholders in the Western are requested and encouraged to become policyholders in the Albert; they are told of the benefits that will result to them. No answer to that letter is made by Mr. Rivaz, to whom it was addressed, except this answer, that he immediately went and paid his premium to the Albert, and thenceforth continued those payments; and Lord Cairns regards that, and I think with great reason, as being a practical answer to the letter.]

Kennedy's case, Albert Arbitration, Reilly's Rep.
p. 5, 15 S. J. 729;

Andrew's case. Albert Arbitration, 16 S. J. 609;
Lancaster's case, 15 S. J. 748.

[Lord WESTBURY.-In Lancaster's case, though no circular may have been sent, there was something more important than a circular, namely, the Albert intimated to the policyholder through his solicitor, that they were acting on the assumption that they were to take the policy. Then having that information, he goes and pays the Albert.]

Re Manchester and London Life Assurance Company,
L. Rep. 9 Eq. 643; 5 Ch. 640.

Napier Higgins further referred to the difficulty there would be in settling a list of contributories to the British Commercial Company, which was never registered under any Act.

Judgment was reserved. Tuesday, Nov. 5, 1872.

Lord WESTBURY.

This case is, I think, singularly devoid of every circumstance that could induce me to hold that Mr. Blundell has adopted and taken the European Society in discharge of the party originally liable to him, namely, the British Commercial Company. It appeared that the British Commercial was a company formed as long ago as the year 1821; it was an ordinary joint stock company of that day. Then, the British Nation was formed by a deed of settlement in 1855, and the case states resolutions that were entered into at meetings of the British Commercial Assurance Company, and among those resolutions it is stated that one James Mahoney was the duly appointed agent of the British Commercial Company at Castlerea, in Ireland. Afterwards a species of union or amalgamation was formed between the British Commercial Company and the British Nation Association. And I read the principal terms of this amalgamation from the deed which is dated the 31st Dec. 1864. By that deed, after reciting that the continuance of the business of the British Commercial Company separate and apart from the business of the British Nation Association, and the severance of the assets of the one company from the assets of the association having been attended with trouble, and having been prejudicial alike to both the parties, it was, on or about the 30th March 1863 considered desirable that the business and assets of the British Commercial Company and of the British Nation Association should be thenceforth amalgamated and united, and accordingly the business and assets had, since a certain day in the year 1863, been in practice amalgamated and united accordingly. The business of the British Commercial Company, therefore, was carried on as part of the

[ARBITRATION.

joint business, and not in a separate form.-Well, then, the indenture witnesseth that in pursuance of the resolutions which are recited, the British Commercial Company and their representatives transfer and dispose of unto the British Nation Association all the shares in the British Commercial Company, and all the interest and goodwill of the shareholders and proprietors therein, and all the life assurance business, and other the business or businesses theretofore carried on by the British Commercial Company. And then it is declared that these are assigned to the British Nation Association in order and to the intent that the British Commercial Company and the capital and business thereof might be henceforth amalgamated with the British Nation Association. Now I pause for a moment for the purpose of indicating here a conclusion to which I shall adhere in the process of these windings-up. If company A transfers its business to company B, the transfer in my mind involves an authority to company B to carry on that business, and that would involve power in company B to receive, in the case of policies granted by company A, the premiums payable on those policies, and they would receive those premiums by virtue of the authority impliedly given in the transfer by company A to company B. It is part of the carrying on of the business of company A. If the business is transferred, it involves all the subsisting policies. It involves the right to receive the premiums that became due by virtue of the contracts contained in those policies. If the matter, therefore, does not assume any other shape, or is not transferred into any other contract, all the premiums thenceforth paid by the policyholder at the date of the transfer to company B, the transferee company, will in the first place be considered as received by company B under that implied authority. And if company B mean to say that they have received them in another capacity, and by virtue of a new contract with themselves, and not by virtue of the original contract transferred to them, the duty of proving the new contract and of proving the new relation falls on company B. Well, the amalgamation deed goes on to state a covenant to indemnify by the British Nation Association given to the British Commercial Company; and I beg that it may be observed what that covenant to indemnify necessarily involves. It necessarily involves the fact of the continued existence of the policies and annuities granted by the British Commercial Company, their continuance and existence in accordance with the terms of the original contract. For it is against the original contract that the British Nation covenant to indemnify the British Commercial. And it is said that they will indemnify them from all actions, suits, proceedings, costs, damages, claims, and demands whatsoever, for, upon account, or in respect of, the said debts and sums of money due from the British Commercial Company or any of them, or for, upon account, under, or in respect of, any policy of assurance, grant of annuity, or other security theretofore issued or granted by the British Commercial Company. Nothing can be plainer than a transaction of this kind. The business, the property, the position, the rights of the original company are transferred to their assignee. They delegate to the assignee all the powers requisite for the purpose of carrying on the business and performing its ordinary engagements,

an intent to make a novation. It was clear that the animus was required; but it was doubtful at what time, and how you were to look for the animus, et quasdam de hoc præsumptiones alii in aliis casibus introducebant, and different lawyers in different cases were in the habit of introducing certain presumptions upon the point, namely, when the animus arose. Ideo nostra processit constitutio, therefore our decree has gone forth; que apertissime definivit, which has most plainly defined tunc solum novationem fieri, that at that time only was there to be considered as made a novation of the prior contract, quoties, as often as, hoc ipsum, this very thing, expressum fuerit, shall have been expressed-not from presumption-shall have been expressed inter contrahentes, between the contracting parties, quod convenerunt that they had met together propter novationem for the purpose of making a novation, prioris obligationis of the prior contract; alioquin, otherwise manere et pristinam obligationem that the old contract would remain, et secundam, and that the second contract, ei accedere, was to be added to it, ut obligatio maneat ex utrâque causâ, in order that the duty, the obligation, might remain from either cause, from either source. It would be difficult to find words to more exactly express the difficulties that were then felt, the ingenuity by which certain presumptions had been introduced, how the presumptions varied in various cases, and the necessity in the mind of Justinian that there should be a definite rule on the subject, which should exclude presumption. And accordingly he made that rule, which the Legislature has embodied in its enactment, that no novation should be arrived at by presumption, but that it must be arrived at by written evidence of the intention of the party. Now this is the old law. If you take the word the law should accompany the word and the application thereof. You have taken the word novation

and adopted it. Take, therefore, the rules by which novation, for the sake of general utility, was originally held to be governed. Now, I mean to adhere to that, although I cannot legislate to the extent of saying that I will require a writing. But I will require evidence of an intention to make a new contract as plainly as if it were expressed in writing. I do not adopt the language of the statute in all cases to the extent of requiring a writing, because I can conceive a case of this kind which happened, I think, before Lord Cairns. A company, which was the assignee of another company, and had power to grant new contracts in lieu of the old, wrote to an old policyholder, offering him a new contract. The policyholder did not return any answer in writing to that, but he immediately went and paid his premiums to the company that made the offer. Lord Cairns held, and very justly, that that was to his mind an acceptance of the offer. And I think also with him that it was as plainly accepted by the thing done, as if the acceptance had been expressed in writing. Now there is no difference between us on the principle of law that governs these cases. Lord Cairns held it to be a question of novation, and that novation was a question of fact. I hold, also, that novation is a question of intention, and that an intention is a fact that must be proved. I will not admit of presumptions or inferences, as the media from which I will infer that intention, any more than Justinian did, when he referred to

[ARBITRATION.

the uncertainty and difficulty that clouded the subject as long as it was possible to introduce those presumptions, and he superseded the presumptions by a plain and direct rule. Whenever therefore there is a transfer of business by one company to another, and a policyholder of the first company afterwards goes and pays the second company, the act is equivocal. He may pay the second company, regarding them as the assignees of the business of the first, and as authorised by the first to receive the premiums, or possibly, if the transferee company has power to grant him a new policy identical with the old, he may intend to pay the premiums to the new company with a view of standing in the same relation to them, that he previously stood in to the old company. But that intention must be proved; it cannot be inferred from the heading of the receipt. The obligation-the onus probandi-the duty of proving, lies on the company that alleges a novation. It is a question of intent to be evidenced in the clearest manner, and, unless that intent is evidenced, the simple payment of the premiums will be referred to the old contract, and the old rule which will be considered as still kept up by the assignee of the business, who by virtue of that transfer has a right to receive the premiums on old policies, as authorised by the company granting those policies. These are rules which, I think, tend to solve most of the questions that have been presented. But that would be hardly necessary in the case I have before me to decide, namely, Blundell's case, because in this case the materials for raising a novation are of the most evanescent character. Mr. Blundell originally contracted his policy with an agent of the British Commercial Company, a gentleman of the name of Mahoney, who had an office as agent of the British Commercial Company, at a place called Castlerea, in Ireland. After the union of the British Commercial Company with the British Nation Association, Mr. Mahoney kept on the same office without any alteration. After the union of the British Nation with the European he continued in the same office and apparently in the same character. Mr. Blundell knew no other person than Mr. Mahoney, he went to Mr. Mahoney originally, and he continued to go to Mr. Mahoney and to pay him until the end. There is nothing at all to ascribe to Mr. Blundell even a knowledge of the fact of the union of the companies, and, in point of fact, that he should have had such knowledge is entirely excluded by the case, for the case states as a fact that the claimant never received or had any notice whatever of either of the circular letters, which, on the occasion of the transfer to the British Nation were, it is said, sent to the policyholders, and on the occasion of the transfer of the British Nation to the European were also sent to the policyholders. Even the knowledge that might have been conveyed by those circulars was not possessed by Mr. Blundell, the present claimant. He went, therefore, and paid his premiums as before, and this highly technical mode of reasoning is resorted to for the purpose of imputing to Mr. Blundell, who knew nothing, constructive and implied knowledge. It is said that he took on the last occasion from Mr. Mahoney a receipt, which was in this form:

European Assurance Society.

Policy No. 8779.
Received this 2nd day of April, 1867, the sum of nineteen

pounds and nine pence, being the payment of twelve months premiums and interest from 27 March, 1867, for an assurance on the life of the Rev. R. Blundell effected by the before-named policy.

Now the "before-named policy" is the policy in the margin, numbered 8779, which was the original number of the policy when granted by the British Commercial Company. It is very true that that number may have been entered upon the receipt for the purpose only of denominating, indicating, and causing easy reference to the policy, the premium on which is represented to have been thus received. Well then, was told in argument, this receipt is headed European Assurance Society, and it was the duty of this policyholder to have ascertained how the receipt got to be so entitled, and if he had inquired as he might, said the counsel, and ought to have inquired, he would have learnt that the European Society sprung from the British Nation Association, and he would have learnt that the British Nation Association was nothing in the world more than a company that absorbed and consolidated his original company, and then he would have arrived at the fact that he was dealing with the European Society, and was not dealing with any agent of his original company. Now I must entirely repudiate any notion of dealing with men on such principles. Men coming to deal with a plain contract shall be considered as understanding the contract to be what it purports to be, and I will not deprive them of this knowledge and impute to them this kind of constructive notice, to the annihilation of the original contract to which they trusted, unless it be proved to me that they knew perfectly with whom they were dealing, and unless it be proved to me that they did apply to the new company, as being the company that had absorbed their original contracting party, and the company that was able to grant them a new policy and to enter into a new contract, and that they paid the money with the intent and object that that new contract should be entered into. That is precisely what I find here. It is expressed in the Latin very well. Says Justinian, You shall prove to me quod propter novationem prioris obligationis convenerunt. You shall prove to me that they met together for the purpose of novating, of substituting for the former contract a new contract. Therefore, if you could show to me that when Mr. Blundell went to the old accustomed office of Mr. Mahoney, Mr. Mahoney told him : "Oh! Mr. Blundell, I have got a new character, I am no longer the agent of the British Commercial Company, but I am the agent of the European Society. Nay, I am a very Proteus, because there was another transformation, I was first an agent of the British Commercial Company, and then became the agent of the British Nation Association, and now I am the agent of the European Society; do you mean to enter into a new contract with the European Society ?" Why, then, Mr. Blundell would have been aware of what he

was about. Then the parties would have met propter novationem; and then if Mr. Blundell had said "Yes; I will adopt the European Society. I will pin myself on to the skirts of the European Society, and I pay you this money of mine in the capacity of their agent," that would have been a different thing. But there is nothing of the kind here. He went there believing that Mr. Mahoney was, as in fact he was, still an agent of

[ARBITRATION.

He was an

the British Commercial Company. agent of the British Commercial Company,

because after the business of the British Commercial Company had been transferred to the British Nation Association, the British Nation Association continued him in the same capacity, and he was an agent still of the British Commercial Association because when the British Nation Association transferred their business to the European Society, the European Society continued him in the same capacity. Well then, if we find a case in which the parties have met for the purpose of making a novation, in which the company alleging a novation has a clear right to grant a new contract in the same terms as the original, and when it is clear that they offered to the policyholder to give him that new contract in lieu of the old one, when it is clear also that upon that offer being so made the policyholder, with a knowledge of the facts, paid his money eo intuitu, that it might be received by virtue and on the footing of the new contract, and not of the old, then there can be novation. Men's dealings will rest on a basis of certainty if we exclude presumptions and implications and constructive information, and allow them to have their rights regulated by what they believed and what they knew and what they had a right to adhere to, until they voluntarily relinquished that right and accepted in lieu of it something else. Now, rightly or wrongly, I have clearly stated to you the plain common-sense principles, which are not only common sense, but are warranted by the highest considerations of law, by which I shall guide myself in questions of this kind under this arbitration. I may observe, by the way, although it is a little pedantic to notice it, that it is a very incorrect use of the word novation. The civil law tells you that the word ought to be delegation, which is a particular species of novation, and in that sense the British Commercial Company would be the delegating company, the delegated company would be the British Nation Association or the European Society, the term implying that the company originally contracting delegates to its creditor, that is offers to delegate to him, another contracting party, and in those cases it is laid down in the Pandects that you must have the clearest proof of the concurrence, complete knowledge, and mutual consent of all parties, both the company that delegates, the company that is delegated, and the creditor who accepts the delegated company in lieu of the original company. I say, therefore, that these principles are warranted by common sense, and that they are justified by the highest authority. There is no difference be tween myself as to the mode in which I view these cases in principle, and former judges; but I have the advantage of reviewing them by the light thrown upon them by the enactment to which I have referred (35 & 36 Vict. c. 41), and I have the advantage of being able to trace that enactment to its source in the civil law from which all this doctrine was derived, and I guide myself by the rules that were then established for the express purpose of excluding those difficulties and uncertainties which were found to arise when proceeding upon presumptuous and imputed knowledge and inferences of intention, instead of adhering to the rule that the intention must be proved and manifested in the most definite manner. In the case of Mr. Blundell, I hold that there is no ground whatever for imputing to him an acceptance of the

EUROPEAN ASSURANCE]

European Society in discharge of the British Commercial Company, and I hold him, therefore, to be a policyholder of the British Commercial Company, and entitled to all his rights as such.

Costs of the applicant allowed out of the assets of the British Commercial Company.

Solicitors for the applicant, Baxter, Rose, and Norton.

Solicitors for the official liquidator of the British Commercial Company, Mercer and Mercer.

Saturday, Nov. 2, 1872.

ROYAL NAVAL AND MILITARY SOCIETY'S CASE. Life assurance company-Amalgamation of companies Winding-up-Deed of settlement-Amalgamation deeds-Interpretation of deeds-Trust fund.-Property transferred, on an amalgamation, by one insurance company to another, not impressed with a trust in favour of policy holders of transferor company.

The deed of settlement of the R. Life Assurance Company contained provisions, whereby the directors might, on the dissolution of the company, obtain from some other company an undertaking to pay all the policies, &c., of the R. Company, and might transfer to such other company so much of the property of the dissolving company as should be agreed upon as sufficient, with the future premiums, to enable the company from which the undertaking might be obtained to comply therewith. The company was dissolved in accordance with these provisions, and part of its assets was transferred to the E. Society, which entered into the required undertaking.

In the subsequent winding-up of the two companies it was contended by the R. Company that the funds transferred were impressed with a trust in favour of the policyholders of the R. Company, but it

was

Held that the funds were merged in, and formed part of the general assets of the E. Society. The R. Company's deed of settlement was interpreted not to impose such a trust, and upon the interpretation given to the deeds of assignment and amalgamation, the funds were to belong to the E. Society absolutely in consideration of their covenant to pay the policies, &c., of the R. Company.

THIS was a question as to whether the assets of the Royal Naval and Military and East India Company Life Assurance Society, which had been transferred to the European Society in 1866, were impressed with a trust in favour of the then existing policyholders of the Royal Naval and Military Society, &c.

This society was established under a deed of settlement, dated the 1st January 1839, which contained the following provisions for the dissolution of the company:

Clause 172:

That it shall be lawful for an extraordinary court of directors, specially called for the purpose, to enter into a resolution recommending the dissolution of the company, and upon such dissolution being so recommended, the same extraordinary court of directors shall call an extraordinary general court for the purpose of taking into consideration the propriety of dissolving the company, and if at such extraordinary general court a resolution shall be entered into for dissolving the company, then the court of directors shall call a second

[ARBITRATION.

extraordinary general court for the purpose of confirming or rejecting such resolution for dissolving, and such second extraordinary general court shall be holden within the space of fifty days after the resolution for dissolving shall have been entered into at the first extraordinary general court; and if such resolution for dissolving shall be confirmed at such second extraordinary general court, then from the time of such confirmation the company shall be dissolved and the business thereof shall be concluded.

Clause 173:

That immediately upon the dissolution of the company the court of directors shall, out of the funds or property of the company, pay and satisfy all immediate claims and demands on the company arising from assurances, annuities, or other contracts or engagements, and shall (but subject and without prejudice to the provision hereinafter contained) obtain from the directors or managers of some other assurance company or society an undertaking to pay and satisfy all or any such as the court of directors may think proper of the remainder of the claims and demands on the company arising from assurances, annuities, or other contracts or engagements, when and as the times for the payment and satisfaction of the same shall respectively arrive, and shall cause to be transferred to some of the trustees of such other assurance company or society so much of the funds or property of the company as shall be agreed upon between the contracting parties as sufficient, with the premiums that may become payable in respect of all or any of the existing policies, to enable the company or society from whose directors or managers the undertaking shall have been obtained, to comply therewith, and shall make such arrangements with the said directors or managers with regard to the said undertaking as the court of directors shall in their discretion think fit, and shall cause to be done and executed all such acts, deeds and things as in the opinion of the court of directors shall be necessary or advisable for carrying the said arrangement into effect. Provided nevertheless that the court of directors shall be at liberty to continue, for such period as they may think fit, the business of the company so far as regards all or any of the remainder of the claims and demands on the company arising from assurances, annuities, or other contracts, and the receipt of premiums, and the benefits of any contract with the company, and to make and carry out such arrangements with bankers and others for managing the business so continued as to the said court shall seem fit, and to invest such bankers and others with all proper powers in regard to the matters and things committed to their charge or management, and from time to time to vary or rescind any such arrange ments, and to revoke, or vary, or enlarge any such powers, and after every or any such rescinding or variations, to act in the matter according to the original powers intended to be hereby conferred on the said court, and to make such allowances, by way of recompense for their care and trouble, to such banker and others respectively, as the said court shall think proper, and likewise upon the discontinuance of the business in regard to any of the remainder of the said claims and demands, premiums and benefits, to act in relation thereto, and the policies and contracts from which such premiums and benefits respectively shall result, in the manner first authorised by this clause, and if any funds or property of the company shall remain, after answering the several purposes aforesaid, the court of directors shall cause the same, or so much thereof as shall not consist of money, to be sold, got in, or otherwise converted into money, and shall cause the moneys arising from the said remaining funds or property, or of which the same shall consist, to be paid and distributed, at such time or times as they shall think fit, to and amongst the proprietors and other holders of shares in the capital of the company, according to their respective rights and interests therein; and notwithstanding the dissolution of the company, these presents and the provisions herein contained, and all powers, privileges, rights, and duties of the proprietors and other holders of shares, including the powers to call and hold extraordinary general courts, and to call for and enforce the payment of further instalments on shares, shall, until all claims and demands shall have been respectively satisfied, and provided for as aforesaid, and until a final division shall have been made of the residue, if any, of such moneys as aforesaid, remain and continue