INSURANCE OF CARS

Northern Advocate, 22 May 1928, Page 3

INSURANCE OF CARS

LOOSELY FILLED-IX PROPOSAL,

MAGISTERIAL DECISION

COMPANY LOSES CLAIM

A most interesting decision in a

j ease affecting owners of motor cars I and their dealings with vendors and j insurance companies lias been delivI ered by Air F. 11. Levien, S.M. The case in point, which was heard jin the Whangarei Magistrate’s Court, j was an action by the New Zealand Insurance Company to recover £37 8s Li from R. G. Menzies and others, the amount being the unpaid premium in respect of .a comprehensive motor I ear insurance policy issued by the | plaintiff company at the request of defendant. The proposal form was signed on November 2.‘ 5, 11) 2f >, by the defendant Menzies. a motor car agent and salesman of Cleveland cars tor Messrs Y\ hite and Co., of Auckland. He sold a car to another] defendant, Davies, a taxi-proprietor, who gave his old car in part paymeat to the company. The balance was covered by a hire purchase agreement and collateral promissory notes drawn in their favour and endorsed over to the Trades Finance Company, of Auckland. Menzies’ interest in the lure purchase agreement was also assigned to the company, and both endorsed the promissory notes. Hire purchase agreements were forwarded to the Trades Finance Company. However, before the latter company would pay the balance of purchase price to Messrs White and Company it was necessary to hand to the Finance Company a comprehensive policy, T,he New Zealand Insurance Company’s agent at Whangarei called upon defendant, who sighed a proposal on November 23, 1926.

Menzies was interested in the issue of Ihe policy and the handing of i+ to the Trades Finance Company, for payment of his commission of approximately £2O was dependent upon the happening of those events.

On the original proposal form, i signed by Menzies, after the words “owner’s full name” appeared “Trades Finance Company (uiij>aid vendors)” and opposite the words “private address” appeared “Lionel Campbell Davies.” Under the heading of “Benefits” at the top of the proposal form, and throughout* the form references were made to “Class I cars, class 2 and 3 cars.” There was no indication on the proposal nor was there any evidence to show what the classifications referred to were. Again the proposal referred to comprehensive premiums (as per chart) and “third part only (as per schedule F),” yet, no chart or schedule of any kind appeared on the proposal. No evidence was given to show what these’ words might moan. When the proposal reached the plaintiff company’s office additions were made to it with red ink and pencil the addition of the words “R. G. Menzies (unpaid vendor), Whangarei,” also by the addition of “10” in the space reading “excess”—only loss in excess of £lO to be paid. A further endorsement was: “Policy to the Trades Finance Cay tj North Auckland Farmers’ Coop., Whangarei, no commission.”

An annexnre was also made to the proposal after it reached the plaintiff -company's office. This annexnre did not appear to have any material bearing upon the merits of the claim. The policy issued in pursuance of the proposal names Menzies as the unpaid vendor and Davis as purchaser. It excluded any claim for damage under £lO. It included under seetioa (b) eertain conditions under which the N.Z. Insurance Company held itself liable to pay compensation in respect of bodily injury and damage to property. The conditions are not included in any manner in the proposals. The policy further requested the insurer to read the “conditions” set out on the policy, yet the plaintiff company had handed the policy without any endorsements of any description to the Traders’ Finance Company, which was not mentioned or referred to therein.

One of these conditions set out that “No claim shall attach to tills policy if the interest in the car pass from Hie insurer unless the sanction of the company is obtained and signified by endorsement upon flu- policy by or on behalf of the company.” At the time the proposal was signed and the policy issued -Menzies had no iusniable interest in the car. A

“certified true copy of agreement” proposal from plaintiff’s office had been put in as evider.ee at the hearing. It was not an exaggeration Li state Hint it was no more a copy of the original proposal than one newspaper is of another because they both contained Items of news in common. The Magistrate ionnd as follows:--

"(1; That at the time of signing; the proposal the defendant had no insurable interest in the ear insured. He had parted with possession and had endorsed over to the Traders’ Finance Company his interest in both the hire purchase agreement and the promissory notes. It appears however tliat it is not open to the insurer to raise the defence that he had no insurable interest at the time of signing the proposal (Hadden v. Brydon 1599 1 F 710). The absence of insurable interest could only be pleaded in defence of the insurer (Peter Laws of Insurance, 10th edition, 39).

“(2) That the proposal and the policy, or in oilier words the offer and acceptance in the contract for insurance are not idendical in terms. To what extent they differ has already been pointed out (Peter Laws of Insurance, 10th Edition, 20—23). The exclusion of any ‘hiss’ up to 210 in respect of. any accident to the car is a material alteration in a car insurance of £220, more especially in these days of frequent motor accidents. The amendments or additions to the policy were not brought to the notice of any of the defendants as a counter-offer by the plaintiff company, The defendants had a right to conclude that the policy in respect of which a premium was payable would accord with the proposal. I can show no authority at my disposal that ] throws upon the defendants the onus j ;;f making themselves acquainted with the terms and conditions of a

j policy which to the knowledge of the j plaintiff coiqpany never passed I t’nrough their hands for perusal asj sigiimcut. endorsement or otherwis' 1 (vide conditions 4c in policy). Even | had the defendants perused the pol- | icy there is some authority for stating that the position would not have been altered (Braund v. Mutual Life and Citizens Assurance Co., 192.1, N.Z.L.R. 129). “The history of this case shows a degree of laxity and a want of appreciation of the grave issues that may arise in respect -of insurance contracts. There is scarcely a commercial contingency that cannot be insured against. Under such circumstances proposal forms should and can be made reasonably comprehensive and unequivocal. If ‘classes of cars.' ‘charts,’ ‘schedules,’ etc., are referred to on the face of a proposal, the meaning and scope of such conditions should he ascertainable from the proposal itself. The case of Slickman v. Lancashire and General Assurance Coy.. Ltd., 1927, C.T., 263, shows upon what apparently small issues a company’s liability under a police may bo avoided. If insurance companies are to escape the very severe strictures the learned lords passed in the case quoted some serious consideration should be given to the perfecting of the system of insurance, through all steps 'from proposal to policy. Both in equity and law the defendants for reasons stated are entitled to judgment with costs against the plaintiff company.”