[*201] *CHAPTER III. CONCERNING NOTICE. 1. As we have already seen, it becomes necessary, after the assignment of a policy, to give notice of the transaction to the office. No time should be lost in taking this step, which should be done by serving a formal notice in writing, addressed to the directors of the company, upon the secretary or some other duly authorised officer, and obtaining an acknowledgment of the service either by letter or by an endorsement upon a duplicate of the notice. Where the rules of the company do not allow the acknowledgment of notices, the service should be personal and evidence preserved of its having been made. No particular form is requisite, provided that it clearly convey information of the claim. 2. Notice to affect a depositary must be distinct: it is not sufficient that it should be such as might lead to inquiry, and hence to the know. ledge of the fact. (a) Thus, where a policy had been assigned to a firm of solicitors, and one of the partners called at the office and made some communication to the company, the result of which was that a memorandum was entered in the books," Letters to C. & W., Chancery Lane, by Mr. C.'s order," it was held that there was no sufficient notice of any transfer of interest. Messrs. C. and W. might have been the solicitors of the assured. (b) At the same time, we shall see that when the circumstances are such as to have conveyed a clear notice of the fact to the company through its *authorised agent, it is immaterial in what manner the know[*202] ledge may have been acquired or communicated. Notice is of two sorts, actual notice, which must be proved as any other fact; and constructive or notice by construction of law, as where notice to an agent is notice to the principal, if the agent comes to the knowledge of the fact while he is concerned for the principal and in the course of the very transaction which becomes the subject of the suit. (c) 3. The question of notice is material for three purposes: namely, (1), to charge the office with negligence or fraud, where it neglects to take notice, as where after the receipt of notice it accepts a surrender of the policy from the assured, or pays the policy moneys to a subsequent purchaser; (2), to determine the priorities between consentive incumbrancers; and (3), to prevent the policy remaining in the order and disposition of the assured in the event of his bankruptcy or insolvency. 4. With regard to the two first purposes, the sufficiency of the notice seems to stand upon the same footing. If it is such that the insurers would be chargeable for negligence in accepting a surrender, it will in like manner be sufficient to render them answerable for neglect in replying to the inquiry of a subsequent incumbrancer; and this may be thought (a) Humberstone v. Chase, 2 Y. & Coll. 209. (6) West v. Reid, 2 Hare, 249. (c) Hien v. Mill, 13 Ves. 120. the test as regards the sufficiency of the notice for the second purpose. For the third, the question stands upon an entirely different footing; for although notice to the insurers will prevent the policy remaining in the order and disposition of the bankrupt, the question in each case is not whether such and such a notice was given, but whether the jury, upon the entire circumstances, consider that the policy was in his reputed ownership with the consent of the true owner. The object of the statutes is to prevent persons from obtaining credit by reason of their apparent possession of property which is not really their own. The law thus *punishes incidentally the rightful owner, for allowing his property to remain in such a position, that it may be the means, [*203] whether such is the case or not, of creating a fictitious credit in another; but when there is no such permission, or the fact of the beneficial ownership is notorious, the reasons for these enactments do not apply.(d) 5. The notice must be a notice to the company; the mere knowledge of a shareholder, or when the office is a mutual insurance office, of one of the mutual insurers, is not sufficient. (e) Upon the receipt of the notice, the insurers, that is the company, are bound to take cognisance of it, and, if they do not, may become themselves responsible; but this being the case, it would obviously be a great injustice if a liability could be founded where no authority to create the responsibility is given: hence the notice, to affect the company, must be given to the directors or managing partners, who are duly authorised to conduct its affairs, or to some agent by the constitution of the company appointed to act for them in this respect; but notice to an agent will not affect the company, unless he is duly authorised to receive it. Notice served upon the board collectively is clearly good notice, for the board represents the company; and a notice to an authorised agent is good notice, for he, in like manner, represents the company for this purpose. The principal officers of the company, such as the secretary or actuary, may be assumed to be its agents to receive notices: thus, where a letter was addressed to the secretary, by an equitable mortgagee, by deposit, in the following terms:"Sir, I am holder of the undermentioned policies, and shall feel obliged if you will inform me what sum the office will give if they are delivered up to be cancelled, with the consent of the parties"-it was held that this was a sufficient notice. (f) But the mere mention of the fact of the assignment to one of the clerks upon paying the annual [*204] premium, it not appearing that such mention was intended as a notice, or was such as the clerk would think necessary to report to his principal, was held to be no notice to the office.(g) The distinction between a notice to an agent authorised and unauthorised for this purpose, is clearly explained in a late case in the Queen's Bench. In this case, a creditor, consenting to advance a sum of money upon the security of (among other things) a policy to be effected upon the life of the debtor, gave directions to his attorney, who was an agent of the West of England office, to effect (d) Edwards v. Scott, 2 Scott's N. R. 766, 1 M. & G. 962. (e) Thompson v. Spiers, 13 Sim. 469; Martin v. Sedgwick, 9 Beav. 333, (f) Ex parte Stright, 2 D. & C. 314. (9) Ex parte Curtis, 4 D. & C. 354; Edwards v. Scott, 2 Scott's N. R. 266. the policy, and which he accordingly did in the name of the debtor, but handed it over to the creditor without it ever having come into the possession of the debtor. In an action to recover the sum assured from the office, the plea of the bankruptcy of the assured was raised; and the question thereupon was, whether the policy was in the order and disposition of the bankrupt at the time of his bankruptcy. The jury found that the agent did not mention at the head office, to those there conducting the business, that the creditor was the beneficial owner, but that the company had authorised their agent to receive notices on their behalf, and had thereby agreed that a notice to him should be as valid as a notice served upon them at the head office. A verdict was thereupon found for the plaintiff. Upon a motion for a rule to show cause why there should not be a new trial, on the ground of misdirection, and that the verdict was against the weight of the evidence, Lord Denman, C. J., in delivering the judgment of the Court, said: "It has been contended for the defendant that a notice ought to have been sent to the head office, and that a notice to such an agent as the attorney was not sufficient; and Ex parte Henessey (h) was cited. But on referring to that [*205] case, it appears that the Dublin Company expressly forbid their agents in the country to receive notices of assignments of policies; and therefore such a notice to an agent at Cork was void. But as the West of England Company are found by the jury to have given authority to their country agents to receive such notices, the case has no application. It was further contended, that the creditor communicated to the attorney in his capacity of attorney, and not as agent for the insurance office. But when the two capacities are united in one person, a notice received in one capacity, for the purpose of being transmitted in the other, is an effectual notice in both capacities."() 6. It will be observed from the last case, that a formal notice is not required, much less a notice in writing: it is sufficient if the fact is communicated.(k) It would also seem to be unimportant that any particular form of notice or transfer is required by the rules or deed of settlement of the company; the rights of the assignee and the liability of the company do not arise on contract, but from the common principles of equity, which create a responsibility in any person who knowingly and deliberately participates in the wrongful act of another. Thus, when a mortgage of shares in an insurance office was made in a form different from that prescribed by the deed of settlement, and the deed contained a clause to the effect that the company should not be bound by any trust or mortgage, and that the cestui que trust or mortgagee should have no rights but through the trustee or mortgagor, and that no transfer should be made but by a deed in writing in a prescribed form, and that in the case of a proprietor his assignee should be proprietor for all purposes, and no transfer was therefore made, but the following memorandum was affixed in the office books: "Not to be transferred: see H. and Co.'s (h) 1 Connor & Lawson, 55. (i) Gale v. Lewis, 9 Q. B. 742. (k) Tibbits v. George, 5 Ad. & E. 107; Smith v. Smith, 2 D. & M. 231. notice." On the bankruptcy of the mortgagor it was held that a sufficient notice had been given.() *7. The case of Gale v. Lewis(m) is moreover extremely import[*206] ant, as showing that the company may be affected by constructive notice; but it is not very clear to what extent the principal may be carried, nor does it necessarily follow from the case that the knowledge of the agent wherever acquired would affect the principal. On the contrary, the doctrine of constructive notice in its ordinary form of application requires that the notice should be given in the same transaction, or at least that it should have been received so shortly before the time at which the agent is acting for his principal, (n) that it must necessarily have been in his mind at the time, and hence a duty have arisen on his part to communicate it. In the case of Gale v. Lewis the notice was thus acquired, and it was the duty of the solicitor to communicate it to the company, and the mortgagee might assume that he would perform it. The present disposition of the Court is not to extend this doctrine; but it would be doing so far beyond its present limits to assume that the mention of the fact to an authorised agent at the time when he was not acting in his official capacity, and when the communication was not given to the intent that the notice should be recorded, would be notice to the company. 8. When the agent is himself the party pledging the policy, it may be assumed that from the nature and justice of the case a general license to receive notices would not include notices respecting his own policy. The onus, moreover, of giving the notice is on the assignee, and his omission to give it to any other person than the assignor would seem to be expressly within the doctrine of Dearle v. Hall, (o) that the neglect to give notice is giving credit to the assignor or borrower. And the same principle would apply when the agent was the assignee. His omission to record the assignment would seem to raise an equal equity in favour of any subsequent incumbrancer. *9. Whether notice to a single director is notice to the company is not perhaps very easily determined. Notice to one of [*207] several trustees is sufficient at least during his lifetime for all purposes, for the fund could not be distributed without his assent; but this reasoning does not hold good as regards a single director. In most cases, moreover, he would have no agency to bind the company by his individual act. Nevertheless, he is one of the managing body, and it may be assumed to be his duty to record a notice given for that purpose. In one case in bankruptcy,(p) the bankrupt, being one of the directors of a life office, deposited his policy effected in that office with his bankers as a collaterial security for advances, one of the bankers being one of the auditors of the assurance office; and it was held that there had been sufficient notice of the transfer of the bankrupt's interest in the policy. This case, however, it is submitted, cannot be relied on; the onus of giving the notice lay with the bankers, and an auditor is certainly not the (7) Ex parte Masterman, 2 Mont. & Ayr. 211. (m) 9 Q. B. 742. (o) 3 Rus. 24. agent of the company for the purpose of receiving notice of assignment, even assuming that, if he were so, his knowledge in such a case would be constructive notice to the company. 10. Where a policy has been mortgaged to secure a particular sum, and notice has been given, it would seem proper that a fresh notice should be given upon a further advance between the same parties, to prevent a subsequent incumbrancer, who has notice of the first mortgage only, claiming priority over the further charge. But as regards the question in bankruptcy, it is not necessary that when a policy has been deposited by way of security a distinct notice should be given of each consecutive advance, and that notwithstanding a change in the firm of one of the parties prior to the later advances; and the law would seem to be the same as regards successive liens, where the company has received a notice that the deposit is to secure a running account. [*208] When the policy is, moreover, pledged by a purchaser from the assured, it would seem that the office will still be the party to whom the notice should be given. These latter propositions appear to have been determined in a late case in bankruptcy. A trader deposited two policies with his bankers, with a memorandum in writing explanatory of the transaction, to secure a running account. One had been effected by him on his own life, the other, effected on the life of another person, had been assigned to him by the assured by way of mortgage only. Notice of the deposit was given to each of the insurance offices, but not to the mortgagor, of the latter policy. The depositor then took his son into partnership with him, and the documents remained in the custody of the bankers, upon the understanding that they were to be a security for the balance due to them from time to time from the new firm. No further notice was given; and the bankruptcy ensuing, the question was, whether the policies were in the order and dispo sition of the elder bankrupt, except as to the debt due from him alone, at the time of the change of the firm. The Chief Judge of the Court of Review was of opinion, that, as to the first policy, although no notice of the variation of the agreement had been given to the office, it was nevertheless not in the order and disposition of the bankrupt, that being effectually prevented by the prior notice rendering it impossible to deal with the policy without inquiries. (9) He also expressed a similar opinion without regard to the second policy; and this would seem to follow, for no person could with safety deal with the mortgagor without inquiry at the office, and he would then ascertain the lien; but there is some little difficulty in following the reasoning of the argument and decision, so far as it rests upon the principal laid down in *Jones v. Gib[*209] bons, (r) which was a case of the transfer of a mortgage of real estate without notice. Perhaps it may be thought that the decision may stand without that authority. 11. An important question may be raised as to the duty of the insurers, in answering questions concerning the notices received by them, (9) Ex parte Barnett, 1 De Gex's Cases in Bankruptcy, 194. (r) 9 Ves. Jun. 410. |