INSURANCE CLAIM.

New Zealand Herald, Volume LXVII, Issue 20495, 21 February 1930, Page 16

INSURANCE CLAIM .

ACTION AGAINST COMPANY.

DENIAL OF LIABILITY*

TROUBLE OVER LETTER "F." DETAILS IN THE PROPOSAL. The letter " f," alleged to have been wryngly inserted in an insurance proposal, gave rise yesterday to prolonged argument in the Supreme Court, involving a sum of £SOO. The letter "f " was used to indicato that the property insured was freehold, and becauso it was a city corporation leasehold, tho insurance company denied liability when a firo occurred. An admission was made that tho particulars in tho proposal, including tho Jptter " f," had been filled in by an insurance inspector without consultation with the proponent, who had signed it before it was filled in. Mr. Justice Smith heard the case. Tho plaintiff was the Auckland Municipal Corporation (Mr. Stanton and Mr. Butler), and the defendant tho Mercantile General Insurance Company (Mr. Cornish, of Wellington, and Mr. Glaister). The property concerned was a bouse in Totara Street, I'onsonby, which tho City Council leased in September, 1925, to

Mary Brown, wife of Alexander Brown, marino engineer. In January, 1927, the house was insured for £SOO against fire, and in June, 1929, it was totally destroyed by fire. The plaintiff asked for a writ of mandamus against the insurance company compelling it to expend tho insurance money in rebuilding and reinstating tho house. At the request of tho defendant company, Mr. Stanton called witnesses for cross-examination. Tho first of these, Aloxander Brown, said his wife had sold lease of the property to a Mrs. Smith. Ho had not made any claim on Mr. and Mrs. Smith since the fire, and did not know anything about whether thoy woro bound to make good the loss. His wife, through her solicitors, had applied to tho company for- payment of £SOO. The insurance was initiated by his going to see Mr. McCullough, insurance inspector, and it was ha who fixed the amount to bo in Berted. Preparing Proposal. Charles Michael McCullough, insurance inspector, said that in making out tho proposal for Mrs. Brown he put in the letter "I" to indicate freehold. He had come to the conclusion that tho property was freehold, and thought that there wero only freehold properties in Totara Street. The. method ho followed of completing proposals himself was tho usual one adopted by tho office. Mr. Brown told him that Mrs. Brown, had purchased the place, and that it was free. It was quite a usual thing for an insurance proposal to bo completed without reference to the proponent if the circumstances wore well kiicAvn. Mr. Cornish: Do you conceive that that was the way to serve tho interests of your company ? Witness replied that ho saw npthing "wrong with it. Ho would not say that he told the district manager that this was his way of filling in proposals, but ho thought the manager knew it. He had been dismissed from the company. He had threatened proceedings against the company, but had not gone on with them. He had been employed by half a dozen other insurance companies, and the practice of filling in proposals as he had indicated was quite common. Ho made a practice of filling in particulars after tho signature when ho knew tho facts well. Mr. Stanton, in re-examination, produced several testimonials to McCullough as an insurance inspector, including one from a manager of the Mercantile anfi General Company. Legal Argument.

Mr. Stanton said the defence was an affirmative one, alleging that Mary Brown had misrepresented an essential fact in stating that the property was freehold, whereas it was leasehold, and that therefore the policy was null and void. It was for tho Company to establish the untruthfulness of Mrs. Brown's answer. Mr. Cornish said it was for Mr. Stanton to establish first of all that tho company owed any money at all. „ Mr, Cornish moved for a nonsuit, on the ground that the proceedings of the City Council were premature. For all thoy hnew Mrs. Brown had already got tho /purchase money for the house, in which ca,se she would have no claim against the company. If she had not got the money sho was still entitled to it from tho purchasers, and had suffered no loss. Tho main defonce was that the insurod had not complied with the conditions, one of which was. that all the questions should he answered correctly. There was no suggestion whatever of fraud against the Browns, but the. contract of insurance , was voided by the erroneous answer con- ' cerning tho freehold. Further legal argument will bo heard this morning.