with this case I have abstained from entering into the question of fraud, as I do not believe that any actual fraud was intended; but, in having taken this course, I must not be understood to give any countenance to the notion that insurance companies, issuing policies under such circumstances as occur in this case, would not be liable in equity on the ground of fraud. The cause of fraud is more strong for the interference of the Court than the case of mistake. Lord Eldon refers to the distinction in cases when the duty of perfecting the instrument rests on the party who is to become liable under it; and the distinction is clearly well-founded in principle, and I believe supported by authority.(t) But the mistake must be evidenced by undoubted proof,(u) sufficient to satisfy the conscience of the Court, or of a jury, if sent to a jury; and it is only after great consideration that such a case should be sent to a jury, and such a course was termed by Lord Eldon a very dangerous way of proceeding." (v) *CHAPTER VI. [*96] INSURANCES AGAINST ACCIDENT.-INSURANCE AGAINST THE BIRTH OF ISSUE.-FIDELITY OR GUARANTEE POLICIES. 1. THERE are moreover other contracts, not strictly life insurances, or ordinarily so considered, but more or less partaking of their character, which are occasionally undertaken by life offices, or which, analagous thereto in their nature and the laws by which they are governed, have called into existence companies for their especial purposes. Such are insurances for the payment of gross sums of money upon death occurring by accident, and of compensation of a limited amount when severe but non-fatal injuries are received; contracts for the payment of money upon the birth of issue of any particular persons, and guarantee policies, as they are termed, or agreements by which the company becomes surety for the fidelity of persons employed in offices of trust, and which latter contract is sometimes associated with an ordinary life insurance,—a single sum of the amount insured forming the limit of the company's liability. 2. Insurances against accidents are indeed in principle strictly life insurances, with a condition that the claim shall only arise in the event of death occurring in a particular way. The original form of these insurances appears to have comprehended railway accidents only; but the contract, thus suggested, has been extended so as to include those which may arise from any other cause. Again, since of the numerous severe accidents which are continually happening, but a few are actually fatal, (t) Collett v. Morrison, ib. Parsons v. Bignold, 15 L. J. Ch. 379. policies are issued providing in addition a limited *compensation, [*97] in the form, in the more ordinary case, of a payment for medical expenses, and a weekly allowance until a cure is effected. In all such cases the premium varies with the risk and occupation of the assured, commencing at a small sum where death by railway accidents is alone intended, and increasing where compensation for partial injury is to be also given, and again where accidents of all kinds are included, and in like manner where in the latter case compensation is also added. In some companies, moreover, the further contingency of loss of limb or sight, is taken as an alternative to that of death for the payment of the assurance moneys. In making the proposal a declaration is made in the same form as for a life insurance, the particulars concerning which information is required in addition to the description of the assured for his identification, being as to his occupation, and how long it has been followed by him, and whether he has ever been afflicted with epileptic or other fits, coupled with the general question, "Whether there is any circumstance or information touching his profession, business, occupation, or habits of life, with which the directors ought to be made acquainted, as rendering him peculiarly liable to accidents." Occupation is, of course, a very important element of the risk; hence, in fixing the rates this point is considered of primary importance, and the assured are divided into different classes with rates varying according to the hazards of their respective employments. On the question of occupation there seems to be almost the only point of dispute likely to arise as peculiar to this kind of insurance. A policy effected by a person under his then description, who had at that very time an intention of entering on a more dangerous occupation, but which, nevertheless, he studiously concealed, would be clearly fraudulent, if not provided for by the general question; but a bona fide change, not anticipated when the policy was issued, would not, it is conceived, avoid the policy, unless a special provision to that effect was contained in it. *3. The insurance of a sum of money upon the contingency of [*98] the birth of lawful issue of specified persons, is of more rare occurrence, but of importance from the magnitude of the sums which are generally involved in it. This risk may be either coupled or not with some contingency, dependent upon the duration of human life; such as the attainment of a particular age by the issue. The more common case is that in which a tenant for life, under a settlement, is entitled to the reversion in fee simple, subject to an estate tail in his own issue (if any) by the particular marriage, and is desirous of mortgaging the estate without burdening his life-interest with the premiums of insurances on his own life. In such a case, after the lapse of a considerable number of years since the marriage, without the birth of a child, the probability of issue is very small, and seems a fair subject of insurance. The principal element for consideration is evidently the age and state of health of the lady, and the risk depends so much upon the circumstances of the particular case, that no general law can be said to prevail by which it may be estimated. It may, however, be convenient to cite some cases in which the Courts have presumed that women have been past child-bearing at parti cular ages. In Leng v. Hodges (Jac. 586), the presumption was raised at 69; the money being paid out of court on the party's own recognisance to refund in the event of children being born. In Fraser v. Fraser (Jac. 586, note), the same course was taken when the age of the woman was 55. In Miles v. Knight (12 Jur. 666), at 68. In Brown v. Pringle (4 Hare, 124), the presumption was raised at 66. In Dood v. Wake (5 De Gex and Smale, 226), at 65. In Brandon v. Woodthorpe (10 Beav. 463), at 63. On the other hand, in re Overhills Trusts, 17 Jur. 342, (V. C. S.,) is an authority that the Court will not presume that a married woman, aged 49, cannot have children; and by a great authority, it is stated as a fact, that a woman aged 60 bore a child.(a) *4. When the contingency insured against, is not only the birth of children by a particular marriage, but includes children [*99] by any future marriage of a male, whose wife, to whom he has been married for some years without the birth of a child, is still living, the risk appears to depend almost entirely upon the life of the wife. There is scarcely any age at which the presumption arises that a man becomes incapable of begetting children. In Trover v. Trover, (2 My. & K. 677,) it seems to have been thought that there was no such presumption at the age of 80; nor in Lushington v. Boldero, (15 Beav. 1,) at 95. It would seem, moreover, that on such an insurance a moral risk might arise, exceeding the ordinary risk of a subsequent marriage taking place. Such an insurance might create a spurious desire of having children in the mind of the party, more particularly in a case of partial insanity; and it will be remembered that marriage taking place immediately before the birth of a child is sufficient to legitimatise it. When the contingency includes the birth of issue of a future marriage of a female, some weight must be given to the fact, that it by no means follows, that because there has been no issue by the first marriage there should be none by a second; and it is believed that cases have occurred in which there have been unfruitful marriages followed by a divorce, after which both parties have had issue by subsequent marriages.(6) The principal difficulty in effecting such insurances seems to be, that few companies are empowered by their deeds of settlement to undertake them, so that notwithstanding the issue of the policy the assets of the company granting it might not be liable to pay the money in the event of the contingency taking place. This is a very important [*100] question, as to which inquiry should be made by the assured before paying his money, unless he be content to fall back upon the personal security of the directors alone, who would not, it would seem, be entitled to be indemnified by the other shareholders. 5. The onerous nature of the office of surety, the severe effect of the obligation when enforced, and yet the comparative rarity of cases in which the necessity to enforce it arises when the fidelity is alone guar (a) Co. Litt. 40 b. (b) And this the author is informed has been the case where a sentence of nullity of marriage has been pronounced by the Ecclesiastical Court on the ground of impotentia quoad hanc. As to such suits, see Anonymous Case, 17 Jur. 628; Greenstreet v. Cumyns, 2 Phil. 10, 3 Curt. 16. anteed, naturally suggested it as one which might be conveniently sustained by a public company for profit. Yet the business of such companies is at present in its infancy, and apparently beset with difficulty; for however simple the mere guarantee of honesty may appear by the necessity of the case, it is continually resolving itself into the far more difficult question of the guarantee of commercial credit or at least of solvency. This is obviously the case when the relation between the employer and the employed is such that the account between them assumes the form of a debtor and creditor account, and a deficiency ceases to be felonious. 6. When application is made to a company for a guarantee, a proposal or declaration is made both by the applicant and the employer, in which a minute disclosure is required of the relative positions of the two parties and the circumstances of the former. Although the forms of proposal vary, the following appear to be the principal points of inquiry; namely, the applicant, (1) as to his age; (2) and condition and the state of his family; (3) whether he is a householder; (4) whether he has any other business or calling than that in which the security is required; (5) the particulars of his employment for a term of years prior to the application; (6) whether he is himself security for any other person; (7) whether he has ever made any previous application to any guarantee company, and if so, the result and the terms of acceptance, if accepted; (8) the particulars of his private property, whether in possession, reversion, or expectancy, and whether incumbered or not, and of his income from other, *sources; (9) the amount of his pri[*101] vate debts and other liabilities; (10) whether he was ever bankrupt or insolvent or compounded with his creditors, and if so, the particulars. Replies to other questions are, moreover, required from the employer, or as to some of them in some companies from both parties, namely, (11) as to the capacity in which the applicant is engaged, or to be engaged; (12) his duties and responsibilities; (13) the largest sum at any time to be held in his hand, and for how long a period; (14) whether any stock in trade be entrusted to his custody for sale; if so, its probable value and description, and how often stock will be taken by the employer; (15) the checks used to secure accuracy in his accounts, how often they are balanced, and whether the balance is then immediately paid over; (16) whether there is any outstanding account or cash balance then due from him, and whether there has been any previous default or irregularity in his accounts; (17) the manner in which the applicant is to be remunerated, and the amount and nature of his allowance; (18) the amount of the security required; (19) whether any other security is to be given; (20) the time during which the applicant has been engaged in the particular employment, and why the security is thus required; (21) whether it has been a rule with the employer to require security from the parties previously holding such employments; (22) if so, the amount and particulars; as also of any defalcations which may have occurred. In addition to these statements by the applicant and employer, references are required to persons of respectability, 4 to whom the applicant has been personally known for some years, and who can testify to his integrity. 7. From these questions it will be observed that their object is to ascertain, in the first place, the exact position of the applicant, and how far his circumstances, whether arising from past transactions, or from the benefits derived from his present employment, are such as to prevent his being attacked by any more than ordinary temptations to dishonesty. Secondly, that sufficient checks are *employed to secure his exactness, and that the negligence of the employer is not of [*102] itself a temptation to improper conduct on his part; thirdly, that the requirements of security does not arise from any want of confidence on the part of the employer, and that there have been no circumstances of such a nature as to elicit it, and particularly that the accounts are then correct; so that, by the process of carrying on a balance, the company may not be made ultimately liable for past deficiencies. Accurate statements on those points are absolutely necessary for the security of the company; but, on examination, they will be found, as in the case of a proposal for an ordinary life policy, for the most part but the expression of the common rules of law upon this subject, or a limitation of the liabilities thereby implied. 8. In this contract, as in that of life assurance, the company relies upon the representations of the parties, and the observance of perfect good faith on their part is a condition precedent to its validity. A misrepresentation, or even a concealment of any material fact, which if known to a society, might have prevented it from undertaking the risk, will render the suretyship contract invalid.(c) Hence it is important that the points considered generally material should be defined, and this is done by putting the preceding questions in the proposal. If, however, there, were any material fact arising on a particular proposal not referred to in any of such questions, the general rule of law would require that it should be mentioned. 9. Again, in order to support the contract, perfect good faith must be preserved by the obligee as to all subsequent transactions, and the relative positions of the parties must be preserved; any act on the part of the employer which has the effect of altering the possession of the surety, will discharge the latter, (d) in mere debtor and creditor transactions *even such an act, as having no further effect, may ope[*103] rate to give further time to a debtor without the consent of the surety.(e) Hence, a fraudulent concealment of an embezzlement by the employer would discharge the company, or the release of a specific security, should such be given, in respect of the same transaction in which the surety is liable,(f) whether he is aware of its existence or not,(g) or of any other (c) Owen v. Homan, 3 Mac. & Gor. 378; Espey v. Lake, 16 Jur. 1106, (V. C. T.;) Stone v. Compton, 5 Bing. N. C. 142. See cases cited, 2 Leading Cases in Equity (Tudor), 712. (d) Bonar v. Macdonald, 3 H. L. Ca. 226. Padwick v. Stanley, 9 Hare, 627; Cross v. Sprigg, 2 Mac. & Gor. 113. (f) Watson v. Alcock, 17 Jur. 482, (V. C. S.) (g) Peel v. Tatlock, 1 Bos. & Pul. 419; Goring v. Edmonds, 6 Bing. 99. See cases cited Burge on Suretyship, 353. |