1884 Cook since; and applying the principles which were there laid down by the Full Court to this particular case, I am obliged to concur with their Honours that there was no evidence to go before a IMPERIAL jury, that there had been on the part of the plaintiff a reasonable compliance with the 11th condition of the policy. V. THE SCOTTISH INSURANCE Rule discharged, with costs. Attorneys for the plaintiff: Dunn & Lyons. Attorneys for the defendants: Gannon & M'Laughlin. Feb. 21. Martin, C.J., Windeyer and Innes, JJ. DEMURRER. WATT v. UNION INSURANCE COY. Fire Insurance-Concealment of material facts. Declaration on policies of fire insurance. Plea, that plaintiff had been engaged in litigation respecting the property insured, and that litigation had been determined in her favour, and the plaintiff had reasonable grounds for suspecting and did suspect that felonious attempts would probably be made to set fire to the said property by certain persons in revenge, for the plaintiff had been advised to effect an insurance against fire and to give notice to any company to whom she should apply, and accordingly made application to the N. Insurance Co., and gave such notice, but withdrew such application and afterwards made proposals to the defendants and obtained the said policies from them. Averment that the facts were material, and were concealed by the plaintiff from the defendants. Demurrer on the grounds that the alleged facts were not material, and that the plea did not state the nature of the alleged grounds for reasonable suspicion. Held, that the statement in the plea that the plaintiff "had reasonable grounds for suspecting and did suspect that felonious attempts would be made to set fire to the said property by certain persons in revenge" was a statement of a material fact which ought to have been communicated to the defendants at the time of mak. ing the proposals to effect an insurance. But Held, that the other portion of the plea, which stated that proposals had been previously made to another insurance company and withdrawn, was not of itself sufficient to vitiate the policy. Judgment for the defendants. DEMURRER. The plaintiff by her declaration sought to recover the amount of insurance policies on house property, effected by her with the defendant company. Plea 3: The defendants say that the said policies were, and each of them was, made subject to a term and condition therein respectively contained, which said condition was in the words following, that is to say:-"Basis of contract.-The basis of this 1884 WATT v. UNION Cor. contract is the proposal in writing for insurance by the assured, and if there be any misdescription of the property described in the proposal, or any misrepresentation or concealment of facts material to the risk, this policy shall be null and void;" and the INSURANCE defendants say that immediately before the sending in by the plaintiff of proposals for the said insurance, the plaintiff had been engaged in litigation respecting the right of possession to and ownership of the property insured by the said policies respectively, and the said litigation had been determined and concluded in the plaintiff's favour, and plaintiff had reasonable grounds for suspecting, and did suspect, that felonious attempts would probably be made to set fire to the said property by certain persons in revenge, for the plaintiff had been advised to effect an insurance against fire upon the said property, and to give notice to any company to whom she should so apply at the time of making application, and accordingly made an application for insurance. over the said property to the Norwich Union Insurance Company, and had given notice, as herein before mentioned, to the said company, and the plaintiff afterwards withdrew the said application and made proposals for insurance over the said property to the defendants, and thereafter obtained the said policies from the defendants herein sued upon; and the defendants say that at the time of making the said proposals, and of giving the said policies, the matters hereinbefore mentioned were facts material to the risk within the meaning of the said condition, and the plaintiff then concealed the said facts from the defendants, and did not give notice thereof to the defendants in or by the said proposals, or otherwise. Demurrer to the plea, on the grounds:-1. That it confesses, but does not avoid the causes of action. 2. That the facts stated in the said plea, and alleged to be material, are not material within the meaning of the condition in the said plea set out. 3. That the said plea does not state the nature of the alleged reasonable grounds for suspicion. Joinder in demurrer. Darley, Q.C. (Pring with him), for the plaintiff in support of the demurrer-The duty of the insurer is to communicate all N.S.W.R., Vol. V., Law. D 1884 WATT v. UNION INSURANCE Coy. material facts; but he is not bound to state any suspicion he may have affecting the risk: Bell v. Bell (1). The grounds of the plaintiff's suspicion are not set out in the plea. [The Court called upon counsel to support the plea.] Stephen, Q.C. (C. B. Stephen with him), for the defendantsThe plaintiff was bound, irrespective of the condition in the policy, to communicate the matters set out in the plea. The defendants could not have stated in their plea the grounds of the plaintiff's suspicion, as those are matters entirely within her own knowledge. She effected the insurance in order to protect herself against loss from a particular danger which she did not communicate to the persons insuring. A rumour affecting the risk is a fact, the concealment of which will vitiate the policy: Lynch v. Jones (2). The reasonableness of the plaintiff's suspicion is for the jury. Darley, in reply-The case last cited is a strong one to show the distinction between the failure to communicate a fact to the insurers, and the failure to communicate a mere rumour. [SIR J. MARTIN, C.J. In Lynch v. Dunsford (3), Bayley, J., says: "The assured's agent is blameable, not for not communicating the rumour, but for not communicating to the underwriters a fact material with reference to the rumour, which fact was within his knowledge, so as to enable them to apply it to the rumour, and exercise their judgment accordingly."] It is not enough that the person insuring should have reasonable grounds for suspecting the existence of anything that would affect the risk; the defendants should state in their plea the fact of the existence of any rumour, or the facts which led the plaintiff to have the suspicions of danger to the property. [SIR J. MARTIN, C.J. In Bufe v. Turner (4), the fact that a fire was smouldering next to the house insured was not communicated to the insurer.] (1) 2 Camp. 475. (2) 2 Taunt. 37. (3) 14 East. 494. (4) 6 Taunt. 328. 1884 WATT v. UNION Coy. SIR J. MARTIN, C.J. There is no case exactly like this reported in the English reports, but there are some cases, in which the question decided was similar to this, reported in the American reports. Although we are not bound by the American cases, and INSURANCE they are not of the same authority as the decisions of the English Courts, yet it is customary to cite them in England as well as Martin, C.J. here, and the decisions of some of the American Courts have weight, by reason of the learning of the judges and the manifest soundness of their decisions. In insurance cases especially it is usual to refer to the American decisions as of considerable authority. The leading principle in these matters is thus stated in a note to 1 Holt's Nisi Prius Reports, 287.-" Upon these principles of good faith which should govern all contracts of insurance, the assured is bound to communicate every species of intelligence that he has, which may affect the mind of the underwriter in either of these two ways: 1. As to the point, whether he will insure at all; 2. As to the point, at what premium he will insure." The writer is there speaking of marine insurance, but the same principles apply to other contracts of insurance; there must not be any concealment of a material fact relating to the risk undertaken by the insurance company, and anything that would operate on the mind of a reasonable man so as to induce him to consent to, or withhold his assent from the effecting of an insurance over any premises, must be communicated to the person undertaking the risk. In all the cases referred to, and in other cases in which the same principle is laid down, what the assured is bound to communicate are facts affecting the risk, not mere rumours. That expression is used in Carter v. Boehm (5); and in Arnould on Marine Insurance, p. 535, vol. I (3rd edition), the same principle is thus stated:-"Loose rumours, indeed, which have gathered together no one knows how, need not be communicated; and intelligence may be so general, and its application to the subject insured so doubtful and remote, that the assured need not communicate it, though it may possibly turn out to have related to the subject insured." Two cases have been cited, one an American case and one an English case, where a question was whether some intelligence respecting the risk ought to have been communicated to the insurer. In one (5) 1 W. Bl. 594. 1884 WATT V. UNION Coy. case the premises had been on fire on two or three previous occasions, and it was difficult to account for these fires; there was something mysterious about them. The fact of these fires INSURANCE having taken place was not communicated to the insurance. office, and it was held by the American Court that there had been an improper concealment of a material fact. So in the English case, another house in the immediate neighbourhood of the house insured had taken fire and was burnt down, but it was supposed that the fire had been quite extinguished. In that state of things the owner of the adjoining house, after the fire was supposed to have been extinguished, went to insure his premises, and did not say anything about the fire which had occurred in the neighbouring house. The house insured having been burnt, it was held that an improper concealment had been made of a material fact. In this case now before us, there are no facts stated as to any person, described by name or designation, saying that he would set this place on fire or threatening to do so; but what the defendants say is this:-First, that there was litigation between the plaintiff and another person respecting the premises insured, and that as the result of such litigation, the plaintiff recovered the premises; then the plea goes on to say—“ and that plaintiff had reasonable grounds for suspecting, and did suspect, that felonious attempts would probably be made to set fire to the said property by certain persons in revenge." There is a positive statement by the defendants that the plaintiff had reasonable grounds for suspecting that the premises would be set on fire, and although no names are mentioned and it is not stated what the threats were, there is a statement made that the plaintiff had reasonable ground for suspecting, and that she did suspect that the house would be set on fire. Those are facts which the defendants would have to prove at the trial, namely, that the plaintiff had reasonable grounds for suspecting, and further, that she did suspect that the house would be set on fire. If that be so, if the plaintiff had this reasonable ground, and believed that the premises would be set on fire, it appears to me that those are facts which ought to have been communicated to the insurance company, and that, on failure by the plaintiff to do so, the policy is bad. |