terest and the beneficial ownership of the policy should remain in the same person, but an assignee, possessing no such interest, will be enti tled as the purchaser of the policy, to bring an action upon it, in the name of the assured, and will be protected by the insurable interest of his vendor.(x)

21. To satisfy the statute, the interest must be in the assured, that is, in the grantee of the policy, and hence the assignment of a policy after the termination of the interest, to a person who possesses an interest arising aliunde, would not give the assignee a claim upon the insurer. (y) One of the most frequent cases upon which this question arises, is that in which the policy is effected by a creditor *upon the life of his [ *25] debtor, and is assigned to the latter upon the satisfaction of the debt. In such a case, apart from the operation of the statute, the debtor is clearly entitled to the benefit of the insurance; and when he is charged with the premiums, the intention being that they should be paid by him, the policy is considered to be a security given by him to his creditor, from whom any surplus arising from it after the satisfaction of the debt, may be recovered in an action for money had and received. (2) Such a case can scarcely be considered contrary to the spirit of the statute, but nevertheless a serious difficulty arises upon the second and third sections. If the interest of the creditor at the time of effecting the insurance is insufficient to support the policy, the second section requires the insertion of the name of the party for whose benefit it is made. Does then the policy become void for want of the insertion of the name of the debtor as beneficially interested? The insertion of his name as that of the assured life can scarcely satisfy the words of the Act, and the better opinion would seem to be, that the objection is fatal, (a) unless the existence of the insurable interest at the inception of the insurance is sufficient to support it under the statute, notwithstanding the cesser of that interest. Except under the latter view the ordinary form of policy is in fact unsuited to the transaction, and ought to have been modified accordingly, by expressing the interest of the debtor, but nevertheless providing for the entire dominion of the creditor over the policy until an indorsement should be made upon it of the cesser of his interest. If the proposal specified the nature of the arrangement, it would seem that a court of equity might in many cases interfere, either by reforming the contract, as expressed in the policy, or by dealing with the case on the footing of the proposal; (b) but as the object of thus effecting the *insurance is to enable the creditor to deal with the policy as he [*26] may think fit, and give a discharge for the money assured in his own name without the concurrence of the debtor or his representatives, notice of the interest of the latter is in most cases concealed from the inWhen there is no preconcerted arrangement, and the policy is effected by the creditor at his own risk, upon a sale to the debtor after

surers.

(x) Ashley v. Ashley, 3 Sim. 149.

(y) Sadlers' Co. v. Badcock, 2 Atk. 554; Irving v. Richardson, 2 B. & Ad. 193. (z) Holland v. Smith, 6 Esp. 11.

(a) See the remarks of the Vice Chancellor in Gotlieb v. Cranch, 17 Jur. 688. (b) Collet v. Morrison, 9 Hare, 162.

the satisfaction of the debt, it seems impossible to contend that there can be any greater insurable interest in consequence of the policy being upon his life.

22. If the office has express notice of the assignment and of the termination of the insurable interest of the assured, and subsequently allows the purchaser to pay the annual premiums, there would appear to be sufficient equitable grounds for holding that a new contract is raised upon the footing of the former policy. At the same time this point has never,. as far as the author is aware, been expressly decided.(c)

23. We may here also remark, that allowing the proposition that the satisfaction of the debt discharges the insurer, it by no means follows that the converse is true, and that payment by the insurer will amount to a satisfaction of the debt, where there is nothing to raise the relation of trustee and cestui que trust between the creditor and debtor in respect of the policy. Thus, in the case of Humphrey v. Arabin, (d) it was held that a judgment creditor who had insured the life of his debtor, and had received the amount (which was less than the total debt due) from the office, could not, in a foreclosure suit by a mortgagee, whose security was subject to the judgment, be obliged to set off against the debt the sum received under the insurance, minus the amount of the premiums paid by him. In delivering judgment Lord Plunkett, after showing that the case of Ex parte Andrews was decided on the ground that the relationship of trustee and cestui que trust *had been created between [ *27 ] the creditor and debtor, observed: "This case must be decided on principle, and I must find a clear one before I can say that the debtor, who had no concern, or right, or interest in this assurance, is, by the circumstance of its amount being discharged by a third person, to be exempted from the payment of his own just debt. The argument of Lord Ellenborough, in the case of Godsall v. Boldero, rests merely on the decision of Lord Mansfield in the case of Hamilton v. Mendes; and both cases go altogether upon the contract with the assurers being a contract of indemnity. Now, this grows solely out of the enactments of the legislature, and on the contract being one which the law gives effect to, and it is a mistake to say, as has been argued in this case, that therefore the insurer is in the nature of a surety for the payment of the debt of the principal debtor. The protection of the insurer grows merely out of the policy of the law, and the particular enactment of the legislature; but with reference either to the party who gets the insurance, or with reference to the debtor, there is no one circumstance which puts him in the character of a surety for the debtor. He has no right to call upon the debtor's executors to pay the debt, and it is no concern of his whether the debtor is able to pay or utterly insolvent. It remains, then, to consider the case as between the original creditor and debtor. It is clear that the creditor has no right to call upon the debtor to make the assurance, or pay any part of the expense of it, or, if the assurance company should become insolvent, to repay him any of the premiums

(c) Webster v. Webster, 17 Jur. 315, V. C. S.; Edge v. Duke, 18 L. J. Ch. 183. (d) 1 L. & G. Cas. tem. Plunkett, 322.

JULY, 1853.-3

that he has paid. The debtor, on the other hand, has no right to call upon the creditor to make any assurance, or to keep it alive when made. He knows not whether it has been made or not; it is a contract with which he has no concern or privity; and I cannot find any principle or authority for holding that he should, by anything growing out of that contract, be discharged from the payment of his just debt which he has

[*28] neither discharged *nor satisfied, nor caused to be discharged or

satisfied."

24. When the policy becomes void, according to the doctrine in Godson v. Boldero, by reason of the failure of the insurable interest, it has been held that if an action is brought upon it by the assured, a bill in equity to restrain the action, and have the policy delivered up, may be sustained by the insurers; they are entitled to this relief, and not only to a nonsuit, or verdict in the action; (e) but until the claim is made, and upon the mere cesser of the insurable interest, it would seem that they are not entitled to file such a bill.(ƒ)

25. Where a policy has been effected on the strength of a redeemable interest, the cesser of that interest, after the sale and actual assignment to a purchaser, will not entitle him to bring an action to recover the consideration and the premiums paid by him. This was decided in a case where the interest was a redeemable annuity, and the policy was sold on its redemption. The purchaser was a solicitor, and evidence was given of the practice of the company to pay the sums assured by policies notwithstanding the determination of the insurable interest.(g)

26. In all the cases already cited upon the Act, it is clear that a distinction has been taken between mercantile policies and policies of insurance, contemplated and allowed by it on the one side, and wagering insurances, condemned by it on the other. (e) When, therefore, by a recent statute(h) it has been enacted, "That all contracts or agreements, whether by parol or in writing, by way of gaming or wagering, shall be null and void; and that no suit shall be brought or maintained in any court of law or equity for recovering any sum of money or valuable *thing alleged to be won upon any wager, or which shall have [*29] been deposited in the hands of any person to abide the event on which any wager shall have been made;" it may be assumed that policies, where the assured has an interest, will be unaffected by it; but, on the other hand, it may be thought that those in which the assured has no interest are so, since the words of the 14 Geo. 3, where the assured "has no interest, or by way of gaming or wagering," may amount to a statutory definition of such a policy as a wager. This latter Act is not retrospective,(i) but as it extends to Ireland, wagering policies can no longer be effected there; but it will not operate so as to extend the enactments of the earlier statute to that kingdom; and hence it may perhaps, still happen that a policy, valid in its inception, but one which, in England, would be avoided by the extinction of the interest of the assured, may, nevertheless, continue in force in Ireland.

India and London Life Assurance Company v. Dalby, 15 Jur. 982, V. C. K. B. (ƒ) Thornton v. Knight, 16 Sim. 509. (g) Barber v. Morris, 1 Moo. & R. 62. (h) 8 & 9 Vic. c. 109, s. 18. () Doolubdass v. Ramloll, 15 Jur. 257. (P. C.)

Whether contingent contracts, not ordinarily considered insurances, but of the nature of post-obit bonds, and the like, are within the act, may possibly be discussed; but the same arguments which excepted such contracts from the operation of the earlier act, would seem equally to except them from the latter as not being such transactions as it was the intention of the legislature to prohibit.

CONCERNING THE PROPOSAL, AND HEREIN OF THE DECLARATION, WARRANTIES, AND REPRESENTATIONS.

1. THE insurers, it may be assumed, prior to the contract, are entirely ignorant of the premises upon which it may be founded, and must depend for them upon the assured; his statements are therefore the basis upon which the contract proceeds, and their truth as to all material points is essential to its validity. It is important to observe that the principle upon which the maxim caveat emptor is founded does not apply to the contract of insurance. Not only must the party proposing the insurance abstain from making any deceptive representation, but he must observe the utmost degree of good faith, uberrima fides. Not only is he required to state all matters within his knowledge which he believes to be material to the question of the insurance, but all which in point of fact are so. If he conceals anything which he knows to be material it is a fraud; but, besides that, if he conceals anything which may influence the rate of premium, which the underwriter may require, although he does not know that it would have that effect, such concealment entirely vitiates the policy.(a) An entire disclosure must then be made of all material facts known to the assured;, and not only so, but all representations made by him as to material facts must be substantially correct; and to this may be added, that where a representation amounts to a warranty it must not only be substantially but literally true.

*2. The question, whether any fact should be communicated depends upon whether it is in itself material, and not upon the [*31] opinion of the party whether it is so;(b) for policies are entered into upon an implied contract, that everything material shall be disclosed by the assured ; (c) equity requiring that the two parties should contract pari passu, which can only be the case where the knowledge of the assured is so communicated. The contrary doctrine would tend to a suppression of information, as it would be impossible, or at least extremely difficult, to prove that the party withholding the information thought it of importHere, nevertheless, we find a limit to the obligation, for however

ance.

Dalglish v. Jarvie, 2 Mac. & Gor. 243.

Lindenau v. Desborough, 8 Barn. & C. 586. (c) Moens v. Heyworth, 10 M. & W. 155.

important a fact may be, although the assured may be responsible for making an incorrect representation concerning it, he cannot, of course, be prejudiced by omitting to communicate information which he does not possess; were it otherwise he would no longer contract pari passu with the insurers.(d)

3. The first step in practice towards effecting an insurance is, to make a formal statement in writing of certain facts relating to the age and health of the person whose life is to be assured, and which are ordinarily, and in all cases, esteemed essential to be communicated. This statement is called the declaration. It is generally, either expressly or by reference, embodied in the policy, and the terms of it, where unconditional and stated as facts, are then in legal language warranties, and must be strictly and literally true: their correctness is a condition precedent to the responsibility of the insurers; and, since it is competent to parties to make their contracts dependent upon any conditions which even caprice may suggest, and the very fact that the statement is formally made is evidence that in their opinion it was of some weight, in such a case it *becomes impossible to estimate its relative weight, and whether

[*32] it was or was not an inducement to the persons to enter into the

contract. The question as to how far the fact or circumstance was material, or the contrary, does not then enter into the consideration. It is simply sufficient, and ought to be sufficient, observed Lord St. Leonard's, (e) to avoid the policy that any one thing warranted is not true.

A misstatement in a warranty is therefore fatal, although arising from the most innocent mistake, or from false information afforded by others, or mere inadvertence, and as much so as if made with the most wilfully fraudulent intention. Neither is there any real hardship in this rule, for no person is entitled to state that as a fact which is not actually within his knowledge; and if he does so, it must be at his peril.(f) It is not imperative that he should do it; on the contrary, when he does not possess positive evidence, he should preface his statement with some such words as, "to the best of my belief," in which case it becomes no longer a warranty, but it is sufficient that he believes it to be true.(g)

4. All the information required is not, however, contained in the declaration, but other statements are made by the proposer, and references are given to the medical attendant of the person whose life is to be assured, and to private friends, who are supposed to be able to give valuable information to the insurers. He also, in most cases, appears personally before the directors or their agent, to answer any inquiries that they may think fit to put, and to be examined by their medical adviser. The statements then made by the proposer, or by the party examined, or the referees, in answer to the inquiries of the insurers, are considered to be representations made by him, or on his behalf, and form a portion of the premises from which the insurers draw their conclusions

[33] either to accept or reject the proposal, and by which they are

guided in fixing the rate of premium, and adjusting the conditions of the

(d) Swete v. Fairlie, 6 Car. & P. 1.

(e) Anderson v. Fitzgerald, 21 Law T. 248, (House of Lords.)

(f) Dougl. 247-260. (9) Stackpole v. Simon, Parke, 932, 8th edition.