A PROBATE LIFE POLICY

Taranaki Daily News, 18 May 1928, Page 9

A PROBATE LIFE POLICY

MISREPRESENTATION CHARGE •DEATH DUTIES ARE NOT PAYABLE. POSSIBILITY OF MUTUAL MISTAKE. -Allegations of false representations were made against the Colonial Mutual Life Assurance Society, Ltd., in the Supreme Court at New Plymouth yesterday, when Agnes O. B. Hicks, wife of Robert Hicks, of Hawera, sued for the return of a premium of £ll3 16s 8d paid for a “probate” policy on her life. It was suggested the agents had wrongly told her that the amount payable would cover death and succession duties on the estate of her husband, who was 72 years old, thus protecting the interests of her children. When the document arrived it contained no clauses to this effect. “It seems an extraordinary thing for a company of the standing of this society to try to force a policy on these people, who misunderstood the position,” commented Mr. Justice Reed after hearing evidence for the plaintiff. He added that he would rather the company ehould make a concession than that he should be forced into a conclusion against it. It was possible the whole thing was a mutual mistake. The agents, knowing insurance affairs well, could hardly credit these people not realising the position. On the other hand, the Hicks, not being familiar with such policies, could not understand, when they perused the policy on its arrival, why there were no clauses for the payment of death duties. Mr. J. H Quilliam, acting for the society, said he was not in a position to alter his instructions without consulting the head office in Wellington and he asked for an adjournment to enable him to do so.

This was granted, and the hearing will be proceeded with this morning. Mr. A. K. North said that briefly the grounds of Mrs. Hicks’ application were alleged fraudulent misrepresentation and failure to make a complete disclosure of the nature of the policy, which was signed on the understanding that it would contain a clause making available money for the payment of death duties on her husband’s estate. The policy contained no such provision. WHEN THE AGENTS CALLED. Three agents of the society, F. De •fongh, H. Harnish and Cotter had called at the house of plaintiff’s husband on October 25, 1927, to discuss taking out another policy. Two of the agents, Harnish and De Jongh, had been there before, as Mr. Hicks had previously taken out a number of policies. The third man was introduced as the chief agent, Cotter. The agents said they had come to talk about insurance. Early in the conversation Hicks said he had enough and was not prepared to take out any more. De Jongh then asked if Hicks would mind them speaking cf death and he replied that a man would be a fool to object to that. On hearing that Hicks was 72 years old they said it would be impossible to take out a policy on his life and they suggested taking out a “probate” policy on Mrs. Hicks’ life instead. They explained that as well as being a policy on her life, it would make available moneys for the payment of death and succession duties on her husband's estate. On being told the amount of Hicks’ <«tate, the agents said the policy should be for £2550. When Hicks mentioned that he already had five policies on his life and those of his family, Cotter said he would take the responsibility of making the policy £2OOO, instead of the £lOOO originally suggested, and a document on this basis was signed. Mrs. Hieke nad not a separate estate and there was no authority for the defence to say that ehe expected to inherit the estate. Counsel produced Hicks’ will to show that Mrs. Hicks was to receive an annuity of £4OO only. The premium on the £2OOO was £ll3 16s Bd, which meant that Mrs. Hieks would have to pay a third of her future income in premiums. During the whole of the negotiations Mr. and Mrs. Hieks were given to understand that the policy would pay probate on the estate. DOCTOR THINKS IT STRANGE. At a later date the agents suggested that a further concession would be given if Mrs. Hicks passed an Al medical examination. On going to Dr. W. M. Thomson, in Hawera, the doctor remarked to her that it was strange that a woman should be taking out such a policy, and he mentioned the matter to the agent later. Mrs. Hicks passed the

examination. On November 10 plain tiff signed a second proposal for an in crease of the amount to £2500, on ii being represented that the death duties would amount to that sum. It was submitted that the represents tione made by the agents were false an; were made with the intention of deceiving Mre. Hicks to induce her to sigr the contract. About November 27 plaintiff received the policy from the company and os perusing it Mr. Hicks found that although it was a “probate” policy it contained no reference to she moneys being available for the payment of death duties on his estate, or any indication that the moneys would be available. On December 1 Mrs. Hicks gave notice through her solicitor rescinding the contract and claiming the return of the premium. , Mrs. Hicks said she told the agents she did not want a policy. She had not informed them that she expected soon to inherit the estate of her husband, who was old and in poor health. On the contrary, he had not been ill for 15 years. De Jongh had represented to her later that the company would increase the £2OOO policy by £5-10 if she passed an Al medical examination. -DEFENCE IS COMPLETE DENTAL.” “The defence is a complete denial that anything was said at any time to mislead plaintiff or her husband,” said Mr. Quilliam. His Honour remarked that the point that struck him was why the woman should be asked to take out a “probate” policy, having no separate estate. Counsel said the agents’ assumed she would inherit the estate. His Honour asked if it were not obvious that the Hicks’ misunderstood the position, but counsel eaid that Harnish

would say that on leaving Dr. Thomson with Mrs. Hicks he made it quite clear to her that the insurance was on her life, and not on her husband’s. The allegation was really that there had been a conspiracy between the three men to defraud the Hicks.’ It would be denied that anything had been eaid that day about Hicks’ life. Two years ago the agents had found that he was too old to take out a life policy, and since then the matter had not been discussed with him.

Having previously obtained several policies from the family, the agents decided to ask for a policy on Mrs. Hicks’ life, she being much younger than her hueband. It was with . this object they had gone to the residence. Hicks’ age was never mentioned, but he was told of the desire to obtain a “probate” policy from Mrs. Hicks. This would enable the money to be lifted at her death without the delay of waiting for letters of administration. The agents worked on the reasonable assumption that Mrs. Hicks would inherit the estate.

It was clear that Mr. and Mrs. Hicks regarded this as a double-barrelled policy, payable on the life of whoever died first, despite the fact that it was only Mrs. Hicks who was medically examined.

His Honour suggested it was wrong to call it a “probate” policy. It was just an ordinary policy. While describing the name as “probably a bit of window dressing,” Mr. Quilliam said the policy was different from others in that the company would pay immediately on death, without waiting for letters of administration or probate.

His Honour raised the point that the sum could not be paid without provision being made for the payment of stamp duty.

Mr. Quilliam admitted there might be something in that point, but he had not looked into the matter.