Incomplete or false information or concealment vacates the policy.
John Scougal v. Robert Young, and Others
Date: 18 May 1798 Case No. No 13.
A merchant in Leith, in consequence of advice from, his correspondent at St Petersburgh, insured a cargo of goods thence to this country. Three days after the departure of the mail, conveying the order for insurance, it was known at St Petersburgh, that part of the cargo was lost, but the correspondent did not by next mail give information of the loss; and, if he had, owing to the former mail not arriving in course, his second letter would have been received at the same time with the order for insurance. His neglect was found to vacate the policy.
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George Scougal, at St Petersburgh, on the 30th October, 1792, wrote by post to his brother John, merchant at Leith, directing him to insure a cargo about to be sent from St Petersburgh to Leith, which belonged partly to John Scougal, and partly to a Russian merchant.
The letter was received by John Scougal on the 29th November, and he immediately effected the insurance.
On the 2d of November, part of the cargo was damaged. This was known at St Petersburgh, before the departure of the mail of that evening, which was the next after that of the 30th October; but George Scougal did not write by it, although it was afterwards hardly disputed that he then knew of the accident.
It was established by Lloyd's List, that the mails of the 30th October and 2d November arrived in Britain at the same time; and letters of the 2d November reached Edinburgh on the 29th; so that, if George Scougal had written by the mail of that day, his letter would have been received at the same time with the order for insurance.
John Scougal afterwards claimed the loss from the underwriters; and 21 of them, out of 26, having acquiesced in his demand, he brought an action against the other five before the Judge Admiral, who assoilzied the defenders.
John Scougal then brought a reduction, in which the defenders, inter alia,
Pleaded, Underwriters are entitled to every information known to the insured, at the date of the policy. Every concealment, whether it arise from design or neglect, is fatal to it; and, when the insured live at a distance from the underwriters, they are bound to communicate not only what they know at the date of the order, but every subsequent information, which there is any chance of the underwriters receiving before the policy be executed; 1782, Grieve against Young, and Others, No 9. p. 7086.; Fitzherbert against Mather, Park, p. 210. The insured are even held to have known every thing, which, from its date, might have reached them; and, in some countries, positive calculations have been introduced, as to the rapidity with which news shall be presumed to have been communicated; Magens, vol. ii. p. 2. 32. 66. 75. 88. 132. 174.; Beaw's Lex Mercatoria, p. 329.
From George Scougal's not writing, the defenders were entitled to believe, that no circumstance, affecting the policy, had occurred on the 2d of November. The pursuer is liable for the emission of his brother, who could not be ignorant of the frequent irregularities in the arrival of the mails; and, if the subsequent accounts had been such as to diminish the premium, would no doubt have written, on the chance of their being received in time to alter the terms of the policy.
The pursuer
Answered, A person, ordering an insurance, is bound to communicate the latest information at the departure of the post by which the order is transmitted. If, therefore, the order be written in the morning, when the mail goes off in the evening, it may sometimes be necessary for him to write a second time. Underwriters would frequently be defrauded, if this were not incumbent upon him. Indeed, it is the risk, as known at the departure of the post, which is undertaken by them; and, for this reason, there can be no obligation on the party desiring the insurance to communicate subsequent information. He certainly would not be bound to do so by express; and as little is he bound to act upon the chance of one mail overtaking another.
If the policy were to be vacated, wherever it was possible to give subsequent information, it would introduce much uncertainty in questions of this sort, which ought to be regulated by simple and definite rules.
The proportion of underwriters, who have acquiesced in the pursuer's demand, shews the general understanding on the subject.
The Lord Ordinary reported the cause, on informations.
The Court were, in general, of opinion, that George Scougal ought to have written on the 2d of November; and, on that ground,
The Lords assoilzied the defenders.
Reporter, Lord Craig.Act. Moodie.Alt. D. Cathcart.Clerk, Home.
Fac. Coll. No. 73. p. 166.
