PRIVY COUNCIL

Dominion, Volume 7, Issue 2141, 6 May 1914, Page 11

PRIVY COUNCIL

LIFE ASSURANCE GOVS APPEAL. .- IMPORTANT DECISION, A Privy Council judgment of interest and importance to insurance companies operating in New Zealand was received in Wellington yesterday. The appellants in tho ease were.the Equitable Life Assurance Society of tho United States, and the respondent was Brenda Beatrice Reed.. The Question to Decide. The only question argued in the appeal was the . effect ■of the 03rd and filth sections of tho Life Insurance Act, 1008, of New Zealand on the policy issued by the appellants to respondent. The policy was an endowment palicy. In return for tho payment of 420 12s, 6d. as a premium paid each half-year for twenty-five years, appellants agreed to pay to respondent's executors the sum of £1000 if death should take place before the expiration of the twenty-live years, and £1000 to respondent herself if she should survive that period. It was specially set cutthat certain privileges and conditions mentioned in the instrument should form part of the contract. The respondent paid tho stipulated premiums for five years, and then ceased to pay. Sho claimed that in terms of the catttract made, sho was entitled to a paidup endowment "of £200. Appellants did not dispute that this was in accordance with the terms ef the contract, hut said that their attention having been called to Section 61 of the Act of 190S, they could not fulfil their promise, but wore bound to consider the policy as still existing in the form of an endowment policy of £1000, until tho cash viiltio of £107 was eaten up in accordance with Section 63, by the premiums necessarily becoming due, and remaining unpaid, after which no' further obligation remained on tfoftiv part. An originating summons was taken out by respondent under the Declaratory Judgments Act, 1908, and subsequently the New Zealand Court-of Appeal, by a majority of four to one, upheld tin* contention of the respondent, and found her entitled to a paid-up endowment of £200. ' The question' turned on the meaning and effect of Section tA of the Insurance Act of 1903. That section is as follows:— - "No policy shall become void by non-payment of premium so long as the premiums and interest in arrear are not in excess of the surrender value as declared by tlte company issuing the same, in the answer of such company given to ■ the tenth question of the seventh schedule thereto." >• ' Privy Council's finding.

Their Lordships., according to . the judgment, have .no-doubt that this is a section intended to lay down a jhlo of public policy, and that it is impossible- for cither an asstifod or an assurer to contract himself out of it, or to waive its effect. Their Lordships arc of opinion that Section 64 has no application to the present case, because the societv. does not by the policy contract to pay any cash sWrenrfcr value The thine; which the society covenants'to Rive is not cash, nor is it to be, Riven, in,, consideration of the as-, 'Shred relieving the i ociety from • any' liability under thte policy: it is a fully' paid endowment to bo given if nnrl' when the society's obligation to pay £1000 under the policy has come to itn end by reason of the non-paj-m«it of premiums. 'What is. called the loan or cash value is net a payment which, the society makes to -buy off the liability dependent on the eontiivuaiwo of premiums paid—that is already gone--hut a payment to get off tho* liability under the paid-up endowment. Their Lordships uphold the judgment of the majority of tho New Zealand tkrart of Appeal, and add that hi-their opinion the proper course will be to declare that the policy in question had no surrender value, within tho 04th section of the Act, but that the provisions of such section are not capable of being waived by antecedent contract between theparties. Tho company's appeal was dismissed.

The Lords of the Judicial Committee of the .Privy . Council, who 'were present at the hearing of the appeal were- Lord Dmiedra, Lord Parker of AVaddington, Lord Sumner, and Lord I'armoor. The judgment was delivered by Lord Dunedin. LAND TRANSACTION. Hearing was concluded in the case Arthur Johnston Huston, of Hamilton, v. Frederick Edwin Bishop Lovelock, of Eureka, near Hamilton. This was an action for specified performance of a contract by defendant to purchase certain lands, and in return to sell certain lands, or, in default, of snecihVJ performance, for £2000 damages. The case was removed to the Court of Apocal from the Supreme Court at Hamilton. The transaction contemplated really was ono for the exchange of land. Plaintiff Huston, it was allied, .agreed to purchase from the defendant certain land at Waipuku, and certain other land at White Cliffs, taranaki, and, plaintiff alleged, the defendant agreed to purchase from the plaintiff land known as the "Wawley Islands" at Eureka. The defence was that plaintiff had misrepresented to the defendant the character and value of his (plaintiff's) land.

Tluir Honours on the Bench were the Chief Justice (Sir RobV-rt Stout). Mr.'Justice Edwards, and Mr. Justice Sim. 3»r. J. R, Reed, K.C.. with 31 r. C. L. MacDinrmid. appeared, for the plaintiff, and Dr. H. D. Bamford, with Mr. J. D. Johnston, for tho defendant.

Judgment was reserved