Scottish Court of Session Decisions

This case is reported ante ut supra.

By letters dated 1st and 6th December 1900 the Star Fire and Burglary Insurance Company, Limited, carrying on business in Glasgow as fire and burglary insurers offered to accept the fire risk of C. Davidson & Sons, Limited, Mugiemoss Paperworks, Aberdeenshire, to the extent of £5000 at the same rate as they were paying to other offices.

On 10th December J. B. Keith, as insurance agent for C. Davidson & Sons, wrote informing the Insurance Company that he would be glad to give them the business.

On 22nd December the Insurance Company sent Mr Keith a fire policy for £5000, trusting it would be found in order, and asking payment of the premium of £43, 1s. 1d. This policy proceeded on the narrative that C. Davidson & Sons had, “by a proposal and declaration dated the 10th day of December in the year of our Lord 1900, and which is the basis of this contract, applied to be admitted a member of the Star Fire and Burglary Insurance Company, Limited, by effecting a policy for insuring against loss or damage by fire the property hereinafter described in the schedule hereto for an amount or amounts not exceeding the sum or sums in the same schedule, and the said Company has accepted the proposal of the member;” and stated that the company thereby agreed “with the insured (but subject to the conditions printed on the back” of the policy “and to the memorandum and articles of association of the Company which are to be taken as part of this policy)” to insure the property therein described against loss by fire thereof, or any part, from 25th December 1900 to 25th December 1901 inclusive, to an extent not exceeding £5000. Under the memorandum and articles of association there was mposed on each member of the Company a liability to contribute to the assets of the Company in the event of its being wound up during the time that he was a member or within one year afterwards, for payment of the debts and liabilities of the Company contracted before the time at which he ceased to be a member, and of the costs, charges, and expenses of winding-up the Company, and for the adjustment of the rights of the contributories amongst themselves, such amount as might be required not exceeding £1.

In the correspondence which preceded the sending of the policy no indication was given that persons insuring with the pursuers had according to their rules to become members of the company, and the defenders were not aware of this until they received the policy. They had not made themselves acquainted with the form of policy issued by the pursuers' company.

On 27th December Mr Keith returned the policy to the Insurance Company, having failed to get his principals to take it up.

Thereafter the Insurance Company raised an action in the Sheriff Court at Aberdeen against C. Davidson & Sons, Limited, for £43, 1s. 1d. as the premium under the policy.

C. Davidson & Sons lodged defences, and pleaded—“(1) The terms and conditions of said policy of assurance not being in accordance with the offer by the pursuers and the acceptance thereof by the defenders, the defenders are not bound to accept said policy or pay the premium therefor, and should be assoilzied with expenses. (2) There being no consensus in idem placitum, the pursuers are not entitled to insist on performance by the defenders of the alleged contact founded on.”

On 2nd August 1901 the Sheriff-Substitute ( Robertson) repelled the defences as irrelevant and decerned against the defenders as prayed for. On appeal the Sheriff ( Crawford), on 23rd December 1901 affirmed the interlocutor appealed against.

The defenders appealed. Their argument sufficiently appears from the opinions of the Judges infra.

The pursuers and respondents maintained that on the authority of the General Accident Insurance Corporation v. Cronk, January 31, 1901, 17 T.L.R. 233, there was a concluded bargain before the acceptance of the policy, and that the plea of no consensus in idem was irrelevant, as it was the business of the defenders to acquaint themselves with the constitution of the company before entering into a contract with it, and they must be held to have applied for a policy in the form usually issued by the Company.