MUST BENEFIT FROM POOLED INSURANCE.

Star (Christchurch), Issue 18468, 21 May 1928, Page 4

MUST BENEFIT FROM POOLED INSURANCE.

POLICYHOLDERS WIN IN TONTINE CASE. Judgment in favour of certain policyholders in an insurance scheme promoted twenty years ago under the tontine system, was given by Mr Justice Adams in the Supreme Court this afternoon. His Honor held that an insured person who had failed to pay his premiums for a period exceeding one year, and whose policy had been protected out of surrender value, was entitled to participate in the profits of the fund, even if such policy were transferred to the trustees of the fund; also that an insured person whose bonus additions were more than sufficient to protect the policy until maturity, was entitled to participate in the profits of the pool. His Honor also 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. The plaintiffs, Robert Pitcaithly, of Christchurch, shipping agent, and Matthew Stoddart Brown, of Christchurch, solicitor, who were the trustees under the deed of settlement, were represented by Mr M. J. Gresson and Mr Archer. 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 particular clause which formed 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 involved were still entitled to their share in the fund as the premiums they had paid in had a surrender value that should keep their interests alive beyond that period. Twenty years ago a contract was entered into with thfe National Mutual Life Association to establish the South Island Endowment Investment Fund, the provisions of wffiich werei that each subscriber should contribute a certain premium for a period of twenty years, and that should he die in the meantime, the profits accruing in his name, less the amount of the premiums paid in plus 3 per cent, should be divided among the surviving policyholders 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, -which had not been *’ paid out. An originating summons for an interpretation of the terms of the contract was served on Mr Angus Donaldson, representing those policyholders whose policies had matured, and had been paid with no arrears of premium; Mr H. D. Acland, as representing those whose premiums were overdue for more than one year; Mr G. S. Thomas, representing those interested in contending that a nominee was not bound by the terms of the original deedMr Edward Aslin, of Dunedin, representing an insured person, John Bennetts, referred to in the originating summons, and Mr A. T. Donnelly, representing those insured who contended that the trustees’ decision was final under a clause in the deed of settlement. Mr Lockwood represented Mr Donaldson, and Mr Upham represented Mr Aslin, the Dunedin solicitor.