HIRE-PURCHASE SYSTEM

Dominion, Volume 19, Issue 238, 22 June 1926, Page 3

HIRE-PURCHASE SYSTEM

LOSSES ON RESALES POSITION OF INSURANCE COMPANIES An action under an insurance policy of a somewhat unusual nature was determined in the Supreme Court by Mr. Justice Ostler when he gave judgment for Leyland Motors, Ltd., against the Southern Union General Insurance Co. of Australia, Ltd., for <£2oo 10s. 2d. costs. The facts as stated were that on April 11, 1924, the manager of Leyland Motors, Ltd., wrote to th© insurance company suggesting that it (the insurance company) should issue policies insuring Leyland Motors, Ltd., against threefourths of any loss it might sutler through having to take repossession of and to resell any vehicle sold by it under a hire-purchase agreement. It was suggested that the premium should be at the rate of three-quarters per cent, per annum calculated each year on the amount owing. It was further suggested that a policy should be issued m respect of each ’ new truck so sold, and also in respect of all trucks then sold under hire-purchase agreements on which more than a third of the total price was then outstanding. The insurance company accepted the suggestion, and the details were arranged between the managers of the two companies. A man named R. J. Little, of Kumara got into arrears with his payments, and Beyland Motors, Ltd., had to retake possession of and resell his vehicle. At the time they took possession. Little was owing them £1223 Ils.. lid., including £26 ss. paid for insurance. Leyland Motors, Ltd., resold the truck for £930, and claimed from the insurance company £220 3s. lid., being threequarters of the difference between the amount owing to them by Little and the price realised on the resale, the insurance company, in refusing to accede to the claim, contended that al the insurances effected with it, or alternatively all insurances in respect of existing hire-purchase agreements, forced one entire contract with Leyland Motors Ltd., and that, therefore, any non-disclosure of a material fact m *egard to any of the agreements in respect of which' Leyland Motors made a proposal would give the insurance company the right to avoid every insurance effected. . . ~ _. ‘T am clearly of opinion, eaid His Honour in his judgment, . that this contention is unsound. It is true that for convenience sake only one formal policy was issued, which contains the terms agreed upon by the parties, but the intention of the parties, as shown by the terms of the policy, was that each insurance effected should form a separate contract. . . The eighth condition provides that separate receipts shall be issued for each hire-purchase agreement declared under this policy. The sixth condition provides that in the event of ‘any declaration under this policy being terminated’ the assured shall not be entitled to any refund of premium paid in respect of such determination. This being the case, in my opinion, each contract must bo separately considered. If there was any non-disclosure of a material fact in re. spect of any hire-purchase agreement, that, in my opinion, would only attect the insurance granted in respect or that particular contract. Defendant company is' not entitled to avoid the contract in respect of Littles agreement because of non-disclosure ot a material fact with regard .to any of the other twenty existing hire-purchase agreements, in respect of which separate contracts of insurance were made. That being the case, defendant company can only avoid its contract in respect of Little’s hire-purchase agreement if it can show that in that case there was non-disclosure of a material fact or facts.” His Honour gave judgment for Leyland Motors Ltd. for <£22o 3s. lid., being the amount claimed less <£26 ss. paid for insurance, which amount His Honour held plaintiff could not recover in the action. ' At the hearing Sir John Findlay, K.C., and Mr. H. Johnson appeared for Leyland Motors Ltd., and Mr. O. C. Mazengarb for the insurance company.