Scottish Court of Session Decisions

At advising on 24th November 1932,—

Lord Justice-Clerk (Alness).—The parties to this case, which has been stated by the Industrial Assurance Commissioner, are one Elizabeth Came and the City of Glasgow Friendly Society.

The facts, as found by the learned Commissioner, are comparatively simple, but in one view of them somewhat startling. They are these: Miss Came was canvassed by a representative of the Society for industrial assurance business on 17th August 1925. At that interview there was no one present but Miss Came and Holland, the agent of the Society. Holland, it appears, left the service of the Society in 1926, and his present whereabouts is unknown. Holland suggested to Miss Came that she should assure her stepmother, Helen Taylor, and Miss Came agreed to do so. She, however, signed no proposal for a policy on the life of Helen Taylor. There is no evidence as to who signed the proposal. It is found by the Commissioner that it was not signed either by Miss Came or by Helen Taylor. I also refer to that part of finding (8) where the Commissioner says:

"The said Elizabeth Came left it to the said Holland to take the necessary steps to effect an insurance on the life of the said Helen or Ellen Taylor, and she did not at any material time know who signed the proposal or that it was not signed by the said Helen or Ellen Taylor, nor did she intend to enter into any illegal transaction."

A policy was then issued by the Society and handed by Holland to Miss Came, who retained it and paid the premiums on that policy for a period of five years to the collectors of the Society. There is no evidence that Helen Taylor ever heard either of the proposal or of the policy. It is further found that Miss Came intended, on the 17th August 1925, to take out an assurance for her own use and benefit and on her own account, and that she had no intention of benefiting Helen Taylor. In these circumstances Miss Came claims repayment of the premiums which for five years she paid on that policy to the Society.

Two main facts stand out in bold relief among those which I have stated—first, that Helen Taylor knew nothing whatever of the transaction in question, and secondly, that her signature to the proposal was a forgery.

The learned Commissioner has set out a series of questions of law to which he desires an answer. The first two questions relate respectively to the jurisdiction, concurrent or exclusive, of this Court, and to the law to be applied to the determination of the case—whether English or Scottish law. Miss Came has no interest to maintain that this Court has no jurisdiction. Nor has she any interest to maintain that the law of Scotland does not apply to the case, and she does not do so. I shall therefore assume, but I shall not affirm—because the point was not argued out before us—that this Court has jurisdiction, and I shall also assume that the law of Scotland is applicable to the transaction in question.

The main proposition advanced by Miss Came is that there is, upon the findings, no contract disclosed either between her and the Society or between Helen Taylor and the Society.

First then, I inquire, was there, on the findings, a contract with Miss Came? It appears to me that the findings of the learned Commissioner exclude the view that there was. Miss Came was canvassed by Holland and requested to assure someone else—namely, Helen Taylor—and she agreed to do so on Holland's suggestion. That was the only thing which she agreed to do. She did not agree, so far as the findings disclose, that Helen Taylor should take out a policy and should benefit under it, but rather that she (Miss Came) should enter into a contract with the Society. She intended the assurance to be for her own benefit, and it now appears that she has no benefit under the policy.

If that be so, then the policy which has been issued is not the policy for which Miss Came asked. She got something which she did not ask for, in which she has and can have no interest. The net result is that there is no contract by Miss Came with the Society to take this policy. There is no contract, because there was, between Miss Came and Holland, no consensus in idem, which is the basis of any effective contract of the kind. Accordingly, I have no hesitation in reaching the conclusion that, as between Miss Came and the Society, there was, on the findings of the Commissioner, no contract of insurance effected.

Was there a contract between Helen Taylor and the Society? It is found that she knew nothing whatever either of the proposal or of the policy, and that her signature to the proposal was forged. If the Society tried to hold Helen Taylor to that alleged contract, in my judgment she would have a complete answer to the demand. It seems to me impossible to maintain that, because someone else wrote Helen Taylor's name to the proposal, a binding contract was thereby effected between her and the Society. On the findings, in my judgment, there was no contract between Helen Taylor and the Society.

If, then, there was no contract between Miss Came and the Society and no contract between Helen Taylor and the Society, I can see no reason prima facie why the premiums paid by Miss Came should not be repaid to her. I can see no justification, on the hypothesis I have put, for their retention by the Society. There seems to me to be no answer on the merits to the demand which Miss Came makes.

But it was suggested that a plea of bar falls to be sustained against her. It was conceded, I understood, by Mr Carmont in argument that Miss Came would have had a good claim if it had been timeously stated, and were well founded in fact, on the ground that she did not get what she contracted to get—that she got something other than she expected or desired or asked for. But Mr Carmont maintained that, after the lapse of five years, the claim, which was good at the beginning of that period, was barred by mere efflux of time. I have always understood that the plea of bar rests upon and has prejudice as a necessary ingredient. The only prejudice which can be suggested, on the findings in this case, is the disappearance of Holland. I am not satisfied for a moment that prejudice resulted to the Society from the disappearance of Holland and his consequent omission to give evidence. I decline to make any such assumption. There is no finding to that effect. If I were allowed to speculate, I should be disposed to think that the Society might have been worse off had he been present than it has been in his absence. However that may be, it is sufficient for the decision of this part of the case to say that there are no facts and circumstances before us which would entitle us to sustain a plea of bar.

If all that be so, it seems to me that the necessity for answering a number of the questions put by the learned Commissioner is superseded. I propose to your Lordships that we should deal with these questions in this way—that we should find it unnecessary to answer questions 1, 2, 3, 4, and 5, and that we should answer question 6 in the affirmative. That, I think, would dispose of the case. Before parting from it I should like to add that, if the Society desired a decision on any question of principle, they have selected, with singular infelicity, as a test case one which arises from a transaction tainted with crime.

I propose to your Lordships that we should dispose of the case in the manner which I have suggested.

Lord Hunter .—As we heard no argument on behalf of Miss Came upon questions 1 and 2, I do not think that we ought to give any specific answer to these questions. It would be particularly inadvisable for us to give an answer to the effect that the Court of Session was the only Court which could deal with such questions as have arisen in this case. On the other hand, this is not a case where the Court is entitled ex proprio motu to refuse to hear the case. I think we are entitled, on the contrary, to assume that the Scottish Court has got jurisdiction to deal with the questions which have arisen.

The material question that arises in this case is whether or not Miss Elizabeth Came is entitled to get a return from the City of Glasgow Friendly Society of certain premiums of assurance which she paid to them.

On the findings pronounced by the Commissioner before whom the question in dispute came—I suppose it has not yet been decided—I am of opinion that there was no concluded contract between Miss Came and the Society. In those circumstances I do not think that the Society have given any reason, either in law or in equity, why they should refuse to return the premiums which have been given to them without any equivalent, or indeed any consideration at all, on their part.

It is found in the case that, on 17th August 1925, Miss Came was canvassed by an agent of the Society, who persuaded her to enter into an assurance, or what bore to be an assurance. The assurance was to be over the life of her stepmother. On the findings, which are quite clear, it is stated that it was Miss Came's intention to take out an assurance for her own use and benefit and on her own account, and she had no intention of benefiting Helen Taylor. From the further findings it appears that Miss Came left the matter of preparing the proposal form, in virtue of which a policy was to be issued, to the agent of the Assurance Society. Accordingly, a proposal form was prepared in the name of Helen Taylor. It now turns out that Helen Taylor knew nothing about this policy, and the signature to the proposal is a forged signature. We are not told who forged the signature, and I suppose it is not known who actually did so. But I confess a considerable feeling of surprise that, when it came to the knowledge of the Society that the proposal proceeded upon a forged signature, and that the person in whose name it ran knew nothing about it, they should offer any obstacle at all to the return of the money obtained in such circumstances from Miss Came. It appears to me a clear case where, Miss Came having received no consideration for these premiums, her demand in law for the return of them by the Society is unanswerable. If that view is correct, then the answer which your Lordship has suggested to question 6 is sufficient for disposal of the case.

At the same time, as I have formed a definite view on two of the other questions presented to us, I think it advisable that I should express that opinion. On this branch of the case I assume that Miss Came got what she wanted—namely, a policy over the life of Helen Taylor for her own benefit. In my opinion such a policy as that is an illegal policy. It is, I think, on the authorities to which we were referred—at all events on the principle on which these decisions are based—clearly struck at by the provisions of the Act 14 Geo. III. cap. 48. Miss Came had admit- tedly no insurable interest over the life of Helen Taylor, and I think that the circumstance that a device has been adopted in order to make it appear that the real insuring party was not Miss Came but Helen Taylor does not in any way remedy the essential flaw in such a policy and such a transaction. I think it would be unfortunate that anything should be said by this Court that would encourage the spread of a practice—if such a practice does exist—among industrial insurance companies to get people to give small subscriptions in the way of insurance premiums over someone in whose life they have no insurable interest. I should therefore, for my own part, be perfectly prepared to answer question 3 (a) in the affirmative, and, on that answer being given, I should have no hesitation in answering question 3 (b) also in the affirmative. That question arises upon the construction of section 5 of the Industrial Assurance Act, 1923, which in effect provides that, if an illegal policy has been entered into, the owner of the policy is entitled to treat the policy as void, and to recover the premiums that he or she may have paid.

An argument was presented to us that, in this case, Miss Came could not found upon that provision, because the policy was not her policy but Helen Taylor's policy. Well, Helen Taylor, so far as appears, does not even yet know that this policy is in existence. She has certainly never acquired any right to it either because she requested Miss Came to effect the policy for her or because she received any assignation thereof from Miss Came. I take it, therefore, that, if there was a policy contract entered into between Miss Came and the Society, Miss Came is the owner of the policy within the meaning of section 5 of the Act of 1923, and is therefore, on that ground—the policy being an illegal policy—entitled to recovery of the premiums she has paid.

As regards question 4 (a), I am not quite sure that it is material that that should be answered, but I should be quite prepared to find that, in the circumstances of the case, the policy does not constitute any valid contract at all according to its terms. As I understand the situation, no one is in a position to make any claim under that policy, and the circumstance that the Society say that, if Helen Taylor were to die tomorrow, they would be willing to hand over the amount to her representatives, does not, in my opinion, in any way cure the defect which exists in connexion with the whole transaction.

As regards question 4 (b), that branch of the question, I think, also falls to be answered in the affirmative. If the opinion I have already expressed is sound, then Miss Came has got nothing for what she gave to the Society.

It is not necessary to answer the fifth question, but, of course, it goes without saying that the result of the opinion I have expressed is that it is unnecessary for Miss Came to reject the policy. I do not think there is a policy for her to reject; but, if it is necessary, I think she is entitled to do so, because the circumstances disclosed in this case are circumstances which make it clear that the Society have no right whatever to claim that they are entitled to retain the money they got from Miss Came.

Lord Anderson .—I agree that the specific questions put to the Court should be answered as your Lordship has suggested. I should, however, have decided the matter in favour of Miss Came on a ground which is not directly suggested in any of the questions. That ground is short and simple, and, in my opinion, unimpeachable. I should have held that Miss Came was entitled to repayment of the premiums on the principle of causa data causa non secuta; in other words, as Miss Came did not get from the Society what she desired to obtain, I should have decided that there was never any contract of assurance between her and them. What did Miss Came desire to get? She wished to obtain a policy of assurance which would be of value to her, and under which she would benefit. She did not wish to pay premiums for the benefit of the representatives of her stepmother, Helen Taylor. That being the kind of policy which Miss Came wished to get, what did the Society give her? They gave her a policy to which she was a stranger, under which the assured person was Helen Taylor, and which to their knowledge would benefit or advantage Miss Came to no extent whatever. The Society must be held to have known that the policy handed to Miss Came would be of no benefit to her, and, if she was the owner of the policy, that it was an illegal policy under the Life Assurance Act, 1774, and one which she had not contracted to take.

On this short ground—that Miss Came did not obtain what she had contracted to get—I should have given an affirmative answer to question 6, and found Miss Came entitled to repayment of the premiums.

Lord Murray .—In regard to the first two questions, upon which no issue was joined, I have nothing to add to what has already been said by your Lordships.

On the merits, the whole case turns on the answer to be returned to question 6. It is not, and in my judgment cannot be, disputed that this question falls to be answered in the affirmative if there is not and has never been any contract entered into between the claimant and the Society. In this event the whole premiums paid by the claimant have been paid and received without consideration in the sense of our law, and the claimant is entitled to repetition.

It is agreed that no contract of assurance, within the ordinary meaning of that term, was ever entered into between the Society and the claimant—that is to say, a contract whereby the claimant was herself insured, or was vested in any jus crediti against the Society. The Society's case (I state it first merely for convenience of statement) is that a contract for assurance of a third party, Helen Taylor, was, however, entered into between the Society and she claimant, whereby the third party became insured and vested in the rights and entitled to any benefits thence arising, the claimant contracting to pay the premiums. In support of this contention they found upon a policy of insurance issued by the Society (a copy of which is annexed to the case), and which purports to be a life policy in favour of the said Helen Taylor. It is, of course, essential to the Society's case that this alleged contract of insurance should itself be binding upon the Society as in a question with Helen Taylor or her representatives, otherwise any consideration for the claimant's payment of premiums again disappears. The claimant, on the other hand, denies that she ever entered into any such contract for assurance of a third party, and that the only contract with the Society to which she consented was one whereunder she herself was the insured, party, and of which she was to have the benefit. The whole question at issue appears to me to resolve into a question of fact, which falls to be determined by the Court upon the several findings presented in the case stated by the Commissioner. I need not resume the findings in detail.

The claimant's contract with the Society, if any, was entered into on 17th August 1925, on which date an agent of the Society proposed to her "to assure her stepmother, Helen Taylor, and she agreed to do so." The claimant signed nothing and took no further share in carrying out the transaction, Holland undertaking to do what was necessary. Holland filled up the proposal form on the information received by him from the claimant, Helen Taylor being therein stated to be the proposer; somebody forged Helen Taylor's signature; and on receipt of the proposal the Society issued the policy in question in favour of Helen Taylor. Helen Taylor knew nothing of either the proposal or the policy, and, for aught that appears, she still knows nothing of the matter. The Society then, through Holland, delivered the policy in question to the claimant and received from her the first premium. She continued paying premiums to the Society's collectors till 1930, when she intimated her present claim for repetition. It is stated in the case that the claimant, at the date of the transaction with Holland, in fact intended to take out an assurance for her own benefit, and had no intention of benefiting Helen Taylor. It was pointed out on behalf of the Society that the case contains no express finding that she made known her intentions to Holland. This is true. But, if necessary, I have no difficulty in inferring that she did so. The fact that the Society delivered the policy to the claimant is quite inconsistent with the view of the contract maintained by the Society. If the contract had been in truth a contract for the assurance of a third party, it would have been the Society's duty to deliver the policy to the party so insured. The inference is clear, in the absence of other explanation, that Holland delivered the policy to the claimant because he knew quite well the intention was that any assurance was to be for her benefit.

Upon a fair construction of the findings I hold that the only consent ever given by the claimant was to a contract of assurance for her own benefit, and that she gave no authority to Holland to conclude a contract on her part with the Society for assurance of a third party.

It is, I think, common ground that, had a contract been entered into in the terms authorised by the claimant, it would have been struck at by the Act of 1774 as a wagering policy. But the proposed wagering policy was never effectually completed, there being no consensus in idem. In the above view of the facts no question of legality or illegality can arise.

I am further of opinion that, on the facts stated, it is quite clear that no binding contract has been created between the Society and Helen Taylor. Apart from a forged signature, it is manifest that the declarations in the application contained in the proposal are in material particulars untrue; and the truth of these statements is by the policy declared, in usual form, to be a condition of any liability of the Society. It is nothing to the purpose for the Society to say that they are willing to pay, if and when called on by Helen Taylor or her representatives. The point in the present connexion is whether they are under liability to do so.

It was suggested in support of the Society's argument that some jus qucesitum was created in favour of Helen Taylor. That is not, in my opinion, tenable. A contract of insurance entered into between A and B for the benefit of a third party may be quite legal, but no jus qucesitum can ever arise to the third party if there has been no intimation to the third party with the assent of the contractors. The contract, until this has been done, is revocable either by the joint assent of the contractors or by one or other of them. The claimant has here intimated her right to revoke the contract, if any such there be.

In my opinion, accordingly, the claimant's contention in article (14) of the case should be sustained to the effect that no contract of (or for) assurance between herself and/or Helen Taylor and the Society has ever existed. It follows that, in my opinion, question 6 should be answered in the affirmative. In this view it is unnecessary to answer questions 3, 4, and 5.

If, contrary to the view I have expressed, any question of the illegality of the contract entered into by the claimant should be held to arise, I am of opinion that the claimant would nevertheless be entitled to succeed in virtue of the provisions of section 5 of the Act of 1923; for on this hypothesis the claimant would be "the owner of the policy." Even apart from this section, I think that, on several grounds which I take to be well settled in our law, the claimant's demand for repetition might still be well founded. But it is unnecessary to discuss these.

I agree with your Lordship in the chair that no facts and circumstances are before us which would warrant us in sustaining the Society's plea of bar.