Scottish Court of Session Decisions

On July 10, 1005, Francis Walter Allan, shipowner in Glasgow, and others, trustees and executors of the late Thomas Glen, calico printer, Glasgow, raised an action against the Lancashire and Yorkshire Accident Insurance Company, Limited, 5 West Regent Street, Glasgow, to recover, with interest from April 24, 1897, the sum of £500, contained in a policy of insurance against accident, dated October 8, 1895, which had been effected with the defenders by the deceased William James Glen, civil engineer, Main Street, Donegal, Ireland. The insured was drowned on April 24, 1897, and by his holograph settlement, dated March 2, 1890, he bequeathed to his father Thomas Glen his whole means and estate. Thomas Glen applied to the defenders for payment of the sum due under the policy immediately after the death of the insured, without effect, and died in 1898 without having raised an action against them.

The policy contained, inter alia, the following condition :—“(10) The right to recover payment of any capital sum insured under this policy shall be forfeited and extinguished on the expiry of six months from the date of the accident, and the right to recover payment of the weekly compensations shall be forfeited and extinguished on the expiry of nine months from the date of the accident, on the completion of which periods the liability of the company in respect of such accident shall cease and determine, unless within these periods a settlement with the insured or his representatives has been agreed upon, or his claim referred to arbitration, or, in the

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absence of notice from the company requiring the matters in difference to be referred to arbitration as within provided, legal proceedings have not been taken by the insured against the company in respect of such claim.”

The defenders, inter alia, pleaded—“(1) The right to recover under the policy founded on having lapsed, and being barred by the terms of the policy, the action ought to be dismissed.”

On November 4, 1905, the Lord Ordinary ( Dundas) pronounced the following interlocutor—“Sustains the first plea-in-law for defenders, dismisses the action, and decerns: Finds the defenders entitled to expenses against pursuers,” &c.

“ Opinion.—Mr William James Glen, who was insured with the defenders, conform to policy dated 8th October 1895, was drowned on 24th April 1897. It seems that he left a holograph settlement conveying his whole means and estate, which would doubtless include his claim, if any, against the defenders, to his father Thomas Glen, whom he also appointed to be his sole executor. Mr Thomas Glen is also now deceased, and the pursuers, who are the trustees and executors under his trust-disposition and settlement, now sue the defenders upon the policy above mentioned. The only question which I have to consider at this stage is whether or not the pursuers’ claim is barred by the terms of article 10 of the conditions annexed to and forming part of the policy. The substantive purpose of article 10 is clearly to establish in favour of the company a six (or a nine) months’ limit, after the expiry of which the right to recover under the policy is to be forfeited. But three exceptions to this limitation follow, presumably in favour of the insured, which are thus expressed … ‘unless within these periods a settlement with the insured or his representatives has been agreed upon, or his claim referred to arbitration, or … legal proceedings have not been taken by the insured against the company in respect of such claim.’ The first and second of these exceptions are intelligible enough, but they do not apply to this case. The question is as to the meaning of the third exception, and whether it can be held so to apply. The pursuers’ counsel maintained that the words used were in themselves unambiguous and intelligible, however difficult it might be to account for their presence, looking to the scope of the article as a whole, and that the Court must therefore construe this exception as meaning that, by the simple expedient of refraining from legal proceedings against the company for six months from the date of accident, an insured might safely delay making any demand upon the policy short, I suppose, only of the period of the long negative prescription. I do not think that I am bound to adopt this reading of the policy, and I decline to do so, because the construction suggested seems to me to be absolutely irrational, and would result in the defeat, by this third exception, of the substantive purpose and effect of the entire article. If it were legitimate to conjecture, one might well suppose that the words of the third exception may have originally been prefaced by an ‘if,’ and that the draughtsman observing that the word ‘unless,’ stood before the preceding exceptions, deleted the ‘if,’ and failed, per incuriam, to strike out the ‘not’ which follows shortly after. But taking, as I think that I am bound to take, the words as they stand, I confess that I am unable to put any intelligible or effective meaning upon them, and it appears to me that the exception must be simply held pro non scripto. The pursuers’ counsel contended that if this view was adopted the whole of article 10 of the conditions must be read out of the policy and totally disregarded. I cannot agree with this contention. In my opinion, if the language of the third exception is, as I think it is, unintelligible, and must be held as of no effect, the substantive portions of article 10 still stand good, with the result that the sum insured under the policy is forfeited and extinguished, and the liability of the company has ceased and determined on the expiry of six months from the date of the accident, unless (which has not here happened) a settlement had been agreed upon, or the claim referred to arbitration. In my opinion, therefore, the first plea-in-law for the defenders falls to be sustained, and the action dismissed with expenses.”

The pursuers reclaimed, and argued—Looking to the terms of the policy the main purpose of this contract of insurance was to bind the company to pay within a certain time a sum of £500 to the legal representatives of the person insured in the event of his death. This obligation was qualified by a time limit expressed in article 10. This time limit was again subject to three qualifications or exceptions. The third of these, which was here in question, read literally, took the pursuers outside the bar imposed by the time limit. Taken by itself the qualification could only have one meaning, the language being quite unambiguous. If on the other hand the clause in question were held to be meaningless, then the whole of article 10 must be read out of the policy, since the company intended to impose a qualified time limit, and it was impossible to discover what one of the qualifications was. Such stipulations in a contract of insurance should be absolutely clear, failing which they fell to be read against the company.

Counsel for the defenders were not called upon.