Annals, Anecdotes and Legends: A Chronicle of Life Assurance

by of the Bank of England John Francis

On the one hand, Godsoll and Co., possessed an insurable interest at and from the time of the opening the policy, to the death of Mr. Pitt. On the other, the assurance being for a special purpose, to procure the payment of a debt otherwise discharged, there could be no justice in paying it twice. The company therefore offered to return the premiums, but refused to pay the policy. There was an immense amount of special pleading by the counsel of Godsoll and Co. to make the worse appear the better cause. It was contended that, having had the necessary insurable interest up to the death of Mr. Pitt, the after payment of his debts did not vitiate their right; that, in other words, having paid the premiums for a special purpose, which purpose was effected, they ought to receive their 500l. instead of being satisfied with the return of the mere premiums. It was now to be resolved whether, under any form or by any subtlety of argument, the statute which said so distinctly an insurable interest was necessary, could be broken through.

Had Godsolls carried their point, every creditor might have insured the life of his debtor and received a double payment of his debt. Every tradesman in London might have speculated on his customers’ health, and the act which was to destroy gambling policies, would have been practically repealed. The judgment of Lord Ellenborough, when he gave the decision in favour of the Pelican, is worth transcribing.

“The interest which the plaintiffs had in the life of Mr. Pitt was that of creditors, a description of interest which was held to be an insurable one. That interest depended on the life of Mr. Pitt in respect of the means and of the probability of payment which the continuance of his life afforded to such creditors, and the probability of loss which resulted from his death. The event against which the indemnity was sought by this assurance, was the consequence of his death as affecting the interest of these individuals assured in the loss of their debt. This action is, in point of law, founded upon a supposed damnification of the plaintiffs, occasioned by his death existing at the time of the action, and being so founded, it follows that if before the action was brought, the damage was obviated by the payment of his debt to them, the foundation of any action on their part on the ground of such assurance fails. And it is no objection to this answer that the fund out of which their debt was paid did not originally belong to the executors, as a part of the assets of the deceased; for though it was devised to them aliunde, the debt of the testator was equally satisfied by them thereout, and the damnification of the creditors, in respect of which their action upon the insurance contract is alone maintainable, was fully obviated before their action was brought. Upon this ground, therefore, that the plaintiffs had in this case no subsisting cause of action in point of law, in respect of their contract, we are of opinion that a verdict must be entered for the defendants.”

In one of the eastern possessions of this country, there resided a lady who, when gold was sought there by adventurous men, and when young ladies were regularly educated for the Indian matrimonial market, had left England on an expedition of this character. Her craft and cunning would have insured success, had not her beauty, which is described as exceedingly great, been a sufficient guarantee. She was consigned to the care of a lady who had gone out on a similar adventure herself, and who then held a somewhat high position in her own circle. The arrival of the young adventuress as a new article was marked by a succession of amusements: whispers of love and offers of settlement were not wanting, though, being ineligible, they were disregarded, until she became acquainted with a civilian reputed to be very wealthy, and known to be rather old. This gentleman she married. Unhappily, the wealth was only reputed; and the stormy indignation of the young beauty when she discovered her error,—when she found her requests for new carriages were disputed, and for new jewellery were refused,—somewhat astounded the indolent Anglo-Indian, who had been the woo’d rather than the wooer, and been married rather than he had married. So soon as she discovered that she had wedded a poor instead of a wealthy man, and that all her care and cunning had been in vain, she grew gloomy, dark, and discontented; but at last, on representing to her husband that she would be comparatively penniless if he were to die, accompanied by blandishments which were the more welcome from their rarity, he procured an insurance on his life, from the agent of a London company, for some thousands.

Among others attached to the household of this gentleman was a native domestic, who at first had received the authority of his new mistress with discontent, for until she came he had been paramount. But it was not long before he succumbed, being suspected of a warmer attachment than could be reconciled with the connection of servant and mistress. There were many whispers circulated concerning them, in the dissipated circle in which the lady moved; though so long as open decency was preserved, the manners of the time allowed a considerable latitude; and rather than disturb the dolce far niente of their indolent and luxuriant existence, they were content to give her the benefit of the doubt. It was not long before symptoms of decaying health—“the liver disease,” said the doctor, for every thing was then and there so called—began to appear in the insured man. Whether he declined to apply for leave of absence, or whether some backstairs influence was used to prevent it, is uncertain; at any rate, he still kept at his old quarters, dying gradually away, wasted by slow disease. During this period, the behaviour of his wife was exemplary: his pillow was smoothed, his medicine was administered, his cough was hung over by her: and if she left him for a time, the Hindoo, gliding about like a shadow, was ever by his master’s side, to complete what his mistress began. It was noticed, however, that the patient seemed to suffer, rather than desire so close a connection; and to shrink from, rather than claim such attention. This, however, was thought little of, being attributed to an irritability of temper arising from disease.

In due time the unhappy man died; the insurance money was claimed by the widow, and paid by the insurers. The household was broken up, and the widow came to England. For a few years she lived in great luxury, indulging expensive tastes on the money she had received, until only a few hundred pounds were left in the hands of her bankers. Being a woman of such remarkable beauty, it is somewhat surprising that she had not married a second time in accordance with the extravagant and voluptuous tastes, which her residence in the East had engendered. Instead of this, she formed an acquaintance with a young man of inferior position; a proposal of marriage followed, and she induced him to offer his life for insurance, undertaking to pay the premiums out of her own funds. The banker with whom her money was lodged was amazed when he heard what she was about to do, and made some inquiries of an old East Indian, who was then in England, concerning her former life. The replies of this gentleman, although cautious, were sufficient to point the lady out as a very doubtful character; and whether, on this, a hint was given to the intended bridegroom is uncertain, but that gentleman declared off; and the condition of the insurance not being complied with, the dark purpose was foiled. A few months after other offices were applied to, with proposals for an insurance on the life of a young relative of the same lady, accompanied by a reference to the gentleman who acted as her banker. Inquiries were necessarily instituted as to the reasons for insuring, but no sufficient cause could be shown. It was found, too, that she had no money to pay more than one insurance; and, coupled with the reports which were afloat concerning her first husband’s death, a very dark purpose was assigned to her present movement. Awkward questions were raised—information was received, which pointed to her as the poisoner of her husband, and to the Indian servant as an agent in the infamous deed. A prompt negative was given to her application for insurance; and whether conscience aroused her to a sense of her frightful position, or whether she saw her way to success on the continent or in India, is uncertain. She drew her money from her agents, and disappeared for ever from the society in which she had glided like an incarnation of evil.

Up to 1800, six offices only were in existence. The Globe, however, followed in 1803, being founded by Sir Richard Glyn; and though purely proprietary, answered the requirements of the time. When it endeavoured to obtain a charter, the vested interests rose against it, using the same arguments to prevent its establishment, which the Globe itself has since brought against the formation of the new companies in 1850. It may be noticed that this insurance bill was introduced by Lord Henry Petty[16], descended from that Sir William Petty whose services in the cause of vital statistics have already been mentioned. Sir Charles Price, Sir William Curtis, and Mr. Grenfell, opposed it in behalf of the Royal Exchange and London Assurance Companies, on the ground that it would be an infringement of their rights. On behalf of the Globe, it was argued that competition was necessary—that the population and trade of the country had vastly increased since 1720—that a large amount of insurance was effected out of England, for want of chartered companies—and, above all, that the Globe would give 100,000l. to the public. The last consideration carried the point, and the Globe was chartered. In 1805, a movement began in these institutions, occasioned by a great excitement in the money market. In 1806, in 1807, and 1808, eight new offices more were established; and from that year to 1821, out of a great number which were proposed, commenced, and failed, eight additional companies maintained their ground. In 1823, four; in 1824, seven; in 1825, four; and in 1826, three more were added to the list, making, by that year, a total of 41.

There was room, in 1825, for an augmentation of companies. The population of London in 1821 was 1,225,694; of these very few had assured their lives; and if a city like London were behind in this matter, it may be supposed that the inhabitants of the rural districts were difficult to impress with its importance. Up to 1825, assurance could not be said to have made much advance—certainly not in proportion to the general advance of commerce. There had, indeed, been much to alarm the public as to the safety of life institutions. From 1806 to 1826 more companies had been broken up than had been successful. In the first-named year only 9 were in existence; since which, out of 30 which were commenced, 20 were compelled to abandon their business.[17] Some went down in total insolvency; others lost a large portion of their capital; another set of directors paid the Provident Life 21,000l. to take their risks off their hands. Very extravagant promises had been made by these companies. One gentleman announced of the Union Life, “that every feature of its plan was marked by superior liberality and with a decided contempt of all the petty advantages which swell the profits of other offices.” A second society, the Provincial Union, offered to take lives at 10 per cent. under others; while another, with a spirit of “extra superior liberality,” would do it at 20 per cent. less. Of course such as these were never meant to last; but it was said, “they are persevered in until everything is consumed, while the chief actors laugh in their sleeve and enjoy their profits as long as the bubble lasts, and impunity when it bursts.”

Among the companies which were started in 1825, and which attracted attention from the importance of its promoters, was the Alliance. In its marine capacity it broke down the charters of the old corporations, and was at once successful, not from any special merit, but because it numbered among its members the representatives of the first city firms. It may be added, that, among them, four men more alike in the one desire of making money, but more dissimilar in tastes, pursuits, and habits, were never before united. These were John Irving, Baron Goldsmid, Moses Montefiore, and Samuel Gurney. The first of them, John Irving, affected West End company and aristocratic tastes, by virtue of the friendship of the House of Rutland. He was familiar with men in Lothbury who were never able to meet his eye in Hyde Park. He knew many a merchant on ’Change whom he could not recognise in St. James’s. “He shakes me by the hand in the City,” growled Rothschild to a friend; “but he can never see me in Piccadilly when he is walking with a duke.” Moses Montefiore, the huge capitalist, and Isaac Goldsmid, the hereditary financier, are familiar to the reader. The last on the list is Samuel Gurney, whose simple garb of russet brown and unassuming speech, contrast as much with his great wealth, as his massive, masculine, and almost leonine face does with his single-minded and benevolent character. These were the men who gave at once success and security to the Alliance.