INSURANCE DISPUTE.

New Zealand Herald, Volume LXV, Issue 19952, 22 May 1928, Page 13

INSURANCE DISPUTE.

TONTINE SYSTEM POLiCY.

INTERPRETATION OF CONTRACT.

TOTAL OF £6OOO INVOLVED.

[BY TELEGRAPH. —OWN CORBESPONDENT. J CHRISTCHUECH. Monday. Judgment in favour of certain policy holders in an insurance scheme promoted 20 years ago under the tontine system was given by Mr. Justice Adams in the Supreme Court this afternoon. When the case was heard before His Honor on May 11 it was stated that the tontine system was now illegal. In the original contract there were certain clauses that admitted of different interpretations. The paticular clause which forinod the basis of the case stated that should a contributor fall into arrears with his premiums for over a year his interest in the policy should lapse. This contingency had arisen, and it was argued that the persons concerned were still entitled to their shares in the fund, as the premiums they had paid had a surrender value that should keep their interests alive beyond that period. Twenty years ago a contract was entered into with a life insurance society to establish the South Island Endowment investment Fund, the provisions of which were that each subscriber should contribute a certain premium for a period of 20 years, and that should he die in the meantime, the profits accruing in his name, less the amount of the premiums paid, plus 3 per cent., should bo divided among the surviving policy holders when the common policy matured. About 200 persons subscribed to the fund. The original fund was for £35,000, and the policy matured in September last. The amount involved in the dispute was £6OOO. His Honor held that a person insured under this policy who had failed to pay his premiums for a period exceeding one year and whose policy had been protected out of the surrender value, was entitled to participate in the profits of the fund, even if such policy were transferred to the trustees of the fund. He also found that an insured person whoso bonus additions were more than sufficient to protect the policy until maturity was entitled to participate in the profits of the pool. His Honor further ruled that the trustees could not oust the jurisdiction of the Court and finally determine the manner in which moneys receivable on policies on which there were arrears of premiums of one year or more should be disposed of, nor could the trustees finally decide who were entitled to share in the distribution of the funds.