Scottish Court of Session Decisions

This was an action of reduction by the Life and Health Assurance Association, Limited, against John Yule, milk purveyor, Partick, concluding for the reduction of a policy of insurance on the ground of misstatement in the proposal in terms of which the policy was issued.

A proof was led, which disclosed the following circumstances:—In the end of July 1901, Robert Wylie, the pursuers' local agent, called on the defender and asked him to insure with the pursuers against claims made for personal injury or injury to property caused by the vehicles or horses attached to them belonging to the defender. The defender agreed to insure for £200 at a premium of £3. The defender was busy in his shop at the time, and told Wylie to write out the proposal himself and that he would sign it. Wylie produced and filled up a proposal form framed by the Assurance Company and containing certain questions to be answered by the insured. The fourth query in the proposal was—“Has any accident happened in connection with the vehicles or horses now in use, or with the drivers now in your service? Give full particulars.” To this query Wylie without asking the defender any questions filled in the answer “No.” At the bottom of the proposal was the following declaration—“I declare that the above questions have been answered correctly and fully to the best of my knowledge and belief, and I agree that this declaration and the answers above given will be the basis of contract between me and the company, and I agree to accept a policy subject to the usual conditions prescribed by the company and to be endorsed on the policy.” Thereafter the defender signed the proposal without reading it over.

Prior to the date of the proposal two accidents had happened, one in connection with a horse and another in connection with a vehicle still in use by the defender at the date of the proposal. On 6th January 1900 a horse and vehicle belonging to the defender backed into a railing, causing damage

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thereto. The horse concerned in this accident was still in defender's use at the date of the proposal. On 4th October 1900 a horse and van belonging to the defender knocked down a man, the wheel passing over his leg. The van employed on this occasion was also in defender's use in July 1901. Wylie deponed that he knew of this last accident, having insured the defender against it with another insurance company called the Law Accident Insurance Company, but that he considered the accident so trivial that he did not put it down in the proposal.

Following on the above proposal, a policy of insurance dated 1st August 1901 was issued to the defender. The eighth condition of assurance on the back of the policy was as follows:—“If there shall be any misstatement in or intentional omission of a material fact from the proposal for this insurance, … this policy shall be void, and the premiums paid shall be forfeited to the association.”

On 25th March 1902 the defender intimated a claim under the policy against the pursuers on account of an accident which occurred on 13th February 1902.

The pursuers declined to admit liability, and raised the present action of reduction, contending that the misstatements in the proposal vitiated the policy.

The defender maintained (1) that the misstatements were immaterial, and (2) that they had been written by the pursuers' own agent.

On 21st July 1903, the Lord Ordinary ( Kincairney) pronounced the following interlocutor:—“Finds that the answer to the question 4 in the proposal for the insurance libelled, signed by the defender, was untrue and was a material misstatement, and that the policy following thereon is therefore reducible: Therefore reduces the said policy, finds and declares in terms of the conclusions of the summons, and decerns.”

Note.—[After a statement of the facts set forth in the narrative.]—“I understood that the pursuers do not impute fraud or wilful falsehood to the defender. They only say that the statements were false in fact. They contend that the misstatements, or either of them, in the proposal vitiate the policy and lay it open to reduction. The defender submitted that the misstatements had not that effect, and I think he rested his argument on two grounds.

In the first place, he maintained that the misstatements were immaterial, and could not have affected the pursuers' judgment as to the risk which they undertook. He referred to Bell's Prin., sec. 474, and to Porter on Insurance, p. 168. It appears to me that on this point a distinction is to be taken between misstatement and non-disclosure, there being no question of fraud; for it is not difficult to suppose an insurer may without much or any fault omit to mention circumstances which may appear to him unimportant. But there can be no such excuse for misrepresentation, and I think it is a very hard thing to hold a misrepresentation in a proposal for a policy immaterial. The question would not have been put had it been considered immaterial. The second accident was in itself slight. No great damage was done; only a small portion of a railing was broken. But the fact that the defender used a horse which got so much out of control as to back into a railing with such violence as to break it might well be thought by the put suers to be worth considering. The third accident was, I understand, in itself more serious, but not more indicative of danger in the future. I think that the erroneous answer to the fourth question, although merely negative, falls within the category of misstatement and not of non-disclosure. The defender cannot account for the statement by his omission, inadvertence, forget-fulness, or ignorance, because, as will immediately appear, he says that he never read the questions at all.

The defender's second answer is this, that he neither wrote nor dictated the answers, but that they were written by the pursuer's canvassing agent, Wylie, without any information from him.

Now, I rather think that this was so, and certainly I consider Wylie's conduct in a high degree reprehensible. He wrote the answers, not, I think, caring a great deal whether they were true or false, but yet with a loose kind of notion that they were true. I do not think he meant to deceive or was conscious of saying what was false; he simply did what very unfortunately so many people do—he carelessly asserted in his answers more than he knew. The blame is not very much less than the blame of conscious falsehood, but it does not seem possible to hold that the pursuers, as Wylie's principals, can be held liable for an act of this sort.

It was certainly the defender's duty to read the questions and answers and the declaration before he signed them, and I hold that no man can escape liability for a deed which he has signed merely by the allegation that he did not read it. That wholesome principle was asserted and illustrated in a very valuable case quoted by the pursuers' counsel— The New York Life Company v. Fletcher, 117 United States Reports, 1885, p. 519. The principle of judgment in such cases appears to be that answers to questions of that sort in insurance cases are held to be conditions of the contract of insurance, and that the declaration amounts to a warranty. The following authorities were referred to:— Weems v. Standard Insurance Company, August 1, 1884, 11 R. (H.L.). 48; 21 S.L.R. 791; Cruickshank v. Northern Accident Insurance Company, 21st November 1895, 23 R. 147, 33 S.L.R. 134, in which, in somewhat special circumstances, the judgment was against the company; Reid & Company v. The Employers' Accident Company, June 28, 1899, 1 F. 1031, 36 S.L.R. 825; and Seaton v. Heath, 1899, 1 Q.B. 782, reversed Seaton v. Burnand, February 27, 1900, 16 Times L.R. 232.

On the whole, I am of opinion that this case must be classed among those in which

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a policy of insurance has been held to be voided by a misstatement in the proposal.”

The defender reclaimed, and argued—(1) The two former accidents were not material. They were hardly worthy of the name of accidents. (2) Wylie was the agent for the pursuers, and acted on their behalf when the insurance proposal was filled up. He had acted as the agent for the Law Accident Company when the insurance of August 1900 was made, and knew of the accident which occurred in October 1900. He, acting as the pursuers' agent, must therefore either be held to have thought the former trifling accidents immaterial and not sufficient to vitiate the policy, or he must be held to have made the misstatement, and the defender was not responsible for it— In re Universal Non-Tariff Fire Insurance Company, 1875, L.R. 19 Eq. 485; Cruickshank v. Northern Accident Insurance Company, Limited, November 21, 1895, 23 R. 147, 33 S.L.R. 134. This last case went even further than the present, because there the misdescription was dictated by the insured, and yet it was held not to invalidate the policy.

Argued for the pursuers and respondents—(1) The misstatements were material. (2) The defender had asked Wylie to fill up the proposal. Wylie therefore when doing so acted as the agent for the defender. There was no evidence that Wylie knew anything about the accident in January. It was the duty of the defender to read over the statements in the proposal before he signed it, and he must be taken as having adopted them— Biggar v. Rock Life Assurance Company [1902], 1 K.B. 516. The case of Cruickshank ( supra) was distinguishable, as there the insurer's agent had all the means of information in his possession, having seen the insured walk across the floor.

At advising—