INSURANCE CLAIMED

Sun (Auckland), Volume III, Issue 903, 21 February 1930, Page 13

INSURANCE CLAIMED

CONTRACT VOIDED BY WRONG ANSWER? TAKING OF PROPOSALS A writ of mandamus to compel the Mercantile arid General Insurance Company, Limited, to expend the sum of £SOO it had accepted as a fire risk on a Ponsonby house property in the reinstatement of the dwelling, which had been destroyed by fire, was sought in the Supreme Court yesterday by the Auckland City Council. An important issue raised was whether an agent was authorised to accept a proposal for insurance in blank, signed by the proponent, and to fill in the necessary particulars himself without reference to the insured. This procedure was adopted in the present case and tho insurance firm claimed that the policy was voided by the insertion ol; the letter “F,” indicating the property was freehold, whereas it was leasehold. The council claimed that on September 16, 1925, it leased a property in Totara Street and that the property was subsequently transferred to Mrs. Mary Brown, who on January 31, 1927, insured the dwelling against fire for £ 500 in the Mercantile and General Insurance Company, Limited. The house was destroyed by fire in July, 1929, and although the lessee had notified the insurance company to expend the policy money in rebuilding the house, this had been declined. The defendant firm alleged that Mrs. Brown obtained the policy cn the representation that she was the owner and proprietor of the freehold or al-. tentatively that the firm was induced to issue the policy through Mrs. Brown concealing the fact that the property was merely a leasehold. The defendant therefore claimed that the policy was voided.

Mr. Stanton and Mr. Butler appeared for the City Council and Mr. Cornish, of Wellington, appeared for the defendant firm.

An insurance inspector formerly employed by the Mercantile and General, Chas. McCullough, said that he had filled in the particulars in the proposal, and had inserted the letter “F” for freehold because he was under the impression that all Totara Street properties were freehold. He declared that the practice of getting proposals signed in blank by the proponent and filling in the particular® afterward was quite usual. He had been informed by Brown that Mrs. Brown had purchased the property and it was free.

Mr. Cornish: Bo you think that was the proper way to discharge your obligations to the company?—l saw nothing wrong in it. I had the interests of the company at heart and completed the details to the best of my ability. The witness admitted that this was his way of filling in proposals and he was under the impression that the manager knew of it. He confessed he had been dismissed from the company and had threatened the firm with proceedings, but had not gone on with them. Mr. Stanton, in re-examination, produced several testimonials to McCullough. as an insurance inspector, including one from a manager of the Mercantile and General Company.

Mr. Cornish moved for a nonsuit on the ground that the proceedings of the City Council were premature. For all the council knew Mrs. Brown had already got the purchase money for the house, in which case she would have no claim against the company. If she had not got the money slie was still entitled to it from the purchasers, and had suffered no loss. The main defence was that the insured had not complied with the conditions, one of which was that all tho questions should be answered correctly. There was no suggestion whatever of fraud against the Browns, but the contract of insurance was voided by the erroneous answer concerning the freehold.