Scottish Court of Session Decisions

In April, 1834, the late Mrs Catherine Paton effected with the Scottish Amicable Life Assurance Society an insurance of £500 on her life, upon the usual declaration “that the party insured is at present in a good state of health, and not afflicted with any of the aforesaid diseases, or any other disease which tends to shorten life;—and that it is hereby agreed that if any untrue averment is contained in the above statement, all claim to any benefit out of, or interest in the funds of the said society, in virtue of any policy that may be issued in relation hereto, shall be barred and excluded, &c.” Mrs Paton having died in November, 1835, and her trustees claiming under the policy, the Assurance Company brought an action against the trustees concluding for reduction of the policy. The grounds of action were thus set forth in the pursuers' revised condescendence:—“The declaration and proposal (for effecting the insurance) so lodged by the said Mrs Catherine Munro or Paton with the officers of the said society, and declaration or answers so emitted by her to the said George Wylie (medical adviser of the Assurance Company), as also the said reports (as to the health of the insured) by the said James Stevenson and Helen Munn or Kennedy, concealed or did not state important facts, and contained untrue averments, and were known to the said Mrs Catherine Munro or Paton to conceal, or not to state facts, and to contain untrue averments in regard to the state of her health, at the time of granting thereof, and previous thereto; and also in regard to her habits being moderate and temperate, or otherwise, and were of a nature tending to mislead, and did mislead, and were fraudulently intended to mislead the pursuers, as to the true state of health and habits of the said Mrs Catherine Munro or Paton, who, in point of fact, was not then in a good state of health, but was of a feeble and worn-out constitution, subject to fits, and her liver diseased, and had been under medical treatment and attendance, and was not regular and temperate in her habits and mode of living; but on the contrary, was irregular and intemperate to a very great and excessive degree, and in the use of indulging in intoxicating liquors—all which was concealed or not stated, or was misrepresented and untruly stated to the pursuers; and if the same had been fully and truly stated to them, they would not have entered into the transaction.”

With reference to the grounds of reduction, the pursuers' plea in law was as follows:—“The policy of assurance in question having been obtained and issued in consequence of mistatement or false representation, or in consequence of concealment or non-statement as to matters regarding the health and habits of the late Catherine Munro or Paton, which it was material for the pursuers to know and to be informed of truly, the policy is not valid or binding on the pursuers, and is liable to be reduced.”

The following issue for trying the question was proposed by the Jury-Clerks:—“Whether, by false statement, or undue concealment, or non-statement as to the health or habits of the late Mrs Catherine Munro or Paton, the pursuers were induced to grant the policy of insurance, No. 12 of process, dated 18th April, 1834?”

To this issue it was objected by the defenders;—

1st, That it was not calculated to try the case as stated on the record, which was not a case of innocent error or mistake on the part of the insured as to the state of her health at the date of the policy, but a case of wilful and fraudulent misrepresentation and concealment, with a view to mislead the pursuers; and that the defenders were entitled to insist that the issue should be framed in such a manner as to embrace the case as stated, and not a case which, whether relevant or not, was not raised upon the record.

2dly, That the issue was imperfect, in so far as its affirmative, if found by the jury, might comprehend the case of an erroneous statement by the party insured, only discovered to be erroneous by her being found post mortem to have laboured under a latent disease, of the existence of which she was ignorant at the date of the insurance; that there was no authority for holding that the law had made it a condition of a policy being binding, that no material fact should exist, whether known to the parties or not, which had not been communicated; that, even in the case of express warranties of health, the law attaches no such unreasonable condition to them; ¹ and it was evident that such a state of the law would render the negotiation of an absolutely secure life-insurance impossible, as there would always be the risk of something emerging of which the parties could not at the time be aware, and against which risk no calculation could be made or immunity purchased; it was requisite, therefore, that the issue should be qualified by the addition of the term “wilful,” or some such adjunct, to mark the species of false statement, or non-statement, which ought to be proved in order to avoid the policy.

It was answered by the pursuers;—

1st, That although the pursuers were bound to take an issue relevant to support the conclusion of their action, and were not entitled to take it upon matter not set forth on the record, it could not be maintained that, if the record contained a superfluity of averment, they were bound to undertake a proof of the whole of it; that they were not bound to undertake to prove more than enough to make out their case; that it was the pursuers who took the issue, and, provided they took an issue within the record, and sufficient in relevancy to support the conclusion, the defenders were not entitled to interfere; ² and, in the present case, the issue was completely within the record and the pursuers' plea in law.

2dly, That, in other respects, the issue was proper for the trial of the case and according to received practice; that hypothetical cases were not to be anticipated; and, with reference to the issue, the proposition in law maintained by the pursuers was, that if there be facts really existing, material to be communicated, tending to influence the insurance, or to lead to enquiry which might tend to influence the insurance, the non-communication of such material facts, whether fraudulent or not, whether there had been any active concealment of them or not, and even although there may have been no false statement at all, will afford a sufficient ground for voiding the policy. ³

The Lord Ordinary reported the matter to the Court on minutes of debate, adding to his interlocutor the subjoined note. ^*

_________________ Footnote _________________

¹ Ross v. Bradshaw, 1 Blackstone, 312— Willis v. Pool, 2 Park, 650— Watson v. Mainwaring, May 6, 1813, 4 Taunton, 763.

² Borthwick v. Ralston's Trustees, July 21, 1837 (ante, XV. 1306).

³ Lord Lyndhurst's charge in Duckett v. Williams, quoted in Forbes v. Edinburgh Life Assurance Company (ante, X. 456).

* “This case has been taken to report, not from any difficulty which the Lord Ordinary felt as to the question, but because the dispute relates to the terms of an issue which, when argued in the present form, should generally be disposed of by the Court in which the Judge sits, who will probably preside at the trial.

“The issue, as framed, is satisfactory to the pursuers; but the defenders object to it, because, upon a literal construction of its terms, it is possible that some juries might return a verdict adverse to the defenders, though upon a state of the facts which ought not to infer an annulment of the policy. For while the question is put, ‘Whether the pursuers were induced to grant the policy libelled on by false statement—or undue concealment—or non-statement as to the health and habits of the late Mrs Munro?’—the defenders express an apprehension that this might comprehend the case of an erroneous statement as to the health of the party insured, judging from the symptoms and feelings of the party while in life, if it appeared from the post mortem examination that the seeds of any mortal disorder existed in a latent and undiscovered state in her system. Hence the defenders propose, that the issue should be qualified by the addition of ‘ wilful,’ or some such adjunct to mark the species of false statement or concealment, which ought to be proved in order to void the policy.

“If any such alteration of the issue as is proposed were necessary to guide the jury, perhaps it might be conceded, in order to obviate any risk of error from a straining of the words of the issue. But at present, it appears to the Lord Ordinary, that the objections of the defenders to the issue are visionary and groundless. When a policy is objected to on the ground of falsehood, it necessarily implies a wilful falsehood; or if the ground of challenge insisted on be the concealment, or non-communication of material facts, it must be the wilful suppression of something within the knowledge of the insured, or of those professional persons who are consulted by her, or by the office; and not a latent and unknown disease, only ascertained by dissection after the death of the patient.

“No doubt the pursuers do not very frankly disclaim the opposite doctrine; but whether they do or not, it would, it is thought, be a most novel and astounding proposition in life insurance, to hold that a policy could be vacated by a discovery made on a post mortem examination, that the person insured had an internal disease making sure progress towards his destruction, though developed by no symptoms discernible either by himself, or by any medical attendant of ordinary skill within his sphere. It is apprehended that that is just one of the contingencies which life insurance is intended to protect individuals, or rather their families, against; and that the insurers, from the nature of the case, take the risk of all latent diseases which notoriously and proverbially create much of the uncertainty as to the duration of life.

“Accordingly it does not appear that any Judge or jury, in cases of this description, have indicated any doubt on this question to justify the objections and argument of the defenders. On the contrary, when Lord Lyndhurst, in the well known case of Ducat v. Williams, directed the attention of the jury to the inquiry, whether there had been misrepresentation, or even non-communication of material facts, it is implied in his whole charge that his Lordship meant facts within the knowledge of the party making the insurance. It rather appears that it would be throwing doubt on a point which it would be even dangerous to moot to give any other issue than that which has hitherto been sustained, as proper and relevant in similar cases with the present.

“It may be proper to observe, however, that there is a slight difference between the issue in the present case, and in the late case of the North British Insurance Office against Ralston, tried before the Lord President in July, 1837. In the latter case the question put only comprehended misrepresentation and concealment, whereas in the present case it is farther asked if there was a non-statement as to the health and habits of the insured. But possibly the latter inquiry was not asked in Ralston's case, or might not arise on the record. Looking, however, to the doctrine laid down by Lord Lyndhurst in Ducat's case, wherein his Lordship laid very particular emphasis on the non-communication of a material fact, the Lord Ordinary thinks that this question (when desired) ought in general to be put to juries in questions of this nature.’

After some discussion,