The life of the Duke of Saxe Gotha, after the fashion of the Germans half a century since, was said to have been a dissolute one, and by 1825 had debilitated his constitution. He had lost the use of his speech, and whatever mental faculties he had originally possessed, became materially decreased. Private reports to the directors hinted at these material circumstances, “little as they were believed to have an influence on his natural life.” No hint of the kind, however, escaped the friends of the assured, and the directors, trusting to the honour of the duke more than as traders they ought to have done, granted a policy. One year after, Death, respecting not the person of his highness, seized him for his prey, and it was discovered that a tumour, of some years’ standing, had pressed upon his brain and caused his decease.
With only one year’s premium received, the office found this claim very unpleasant, and refused to pay. They said the mental state of the duke had not been mentioned, that they were ignorant of his loss of speech, and they fought very vigorously against discharging the policy. The question which rose was, whether it was necessary to give special information which was not asked; whether, in fact, a truthful answer to all queries was not enough. When the trial came on, the verdict was given for the office, because, according to Mr. Justice Littledale, it was the duty of the assured in every case to disclose all material facts within their knowledge: “In cases of life assurance, certain specific questions are proposed as to points affecting all mankind. But there may also be circumstances affecting particular individuals which are not likely to be known to the insurers, and which, had they been known, would have been made the subject of specific inquiries.” However legal this might be, it was scarcely equitable. The directors had insured the life of this gentleman, knowing, from private information, that his career had been gay, and his constitution debilitated, and they ought, on every principle of justice, to have been compelled to pay their obligation.
In the same year another very important decision was arrived at. A gentleman assured the life of his son in the Asylum for 5000l. After the payment of two years’ premium the son died, and the office refused to honour the policy, because the father had no insurable interest in the life of his son. When the case was tried, the grounds on which the counsel endeavoured to prove an insurable interest were, that the father had expended a large sum in maintaining and in educating the deceased; that if a man had an insurable interest in his own life, he certainly had in that of his son; that a father might have many valuable rights and expectations depending on it which he could only protect by an insurance; that, by the statute of Elizabeth, if a father became poor in his old age, and his son was capable of maintaining him, he was bound to do so, and therefore the chance of the father being maintained in his old age was decreased by the death of his son.
The special pleading evident in this line of argument was not calculated to be successful. But though a strict interpretation of the act might justify the refusal to pay, it does not appear that such a decision is strictly equitable.
The reason which induced the office to refuse payment may possibly be found in the fact that only two years’ premium was received, and that, as a young office, they were galled at having made an unfortunate bargain. But there does not seem justice in the interpretation of a law which decides that a father has no interest in the life of his son, although there are many reasons to justify it as expedient. Yet so it was ruled; and this decision affected property to the amount of half a million. Mr. Justice Bayley, in giving judgment, said: “If a father, wishing to give his son some property to dispose of, made an insurance on his son’s life, not for the father’s own benefit, but for the benefit of his son, there was no law to prevent his doing so; but that was a transaction quite different from the present; and if the notion prevailed that such an insurance as the one in question was valid, the sooner it was corrected the better.”
CHAP. XII.
GOVERNMENT ANNUITIES—OPINIONS CONCERNING THEM—GREAT LOSS TO THE STATE.—MR. MOSES WING’S LETTER.—MR. FINLAISON.—NEW ANNUITY ACT—ITS ADVANTAGES TO JOBBERS.—ENDEAVOURS TO PROCURE OLD LIVES.—ANECDOTES CONCERNING THEM.—PHILIP COURTENAY.
Up to the year 1808 there was no mode of investing money in life annuities at once safe and profitable. Although the assurance were also annuity offices, yet, at this period, only three of any standing were in existence, and the public had seen and suffered so much from the failure of various joint stock companies, that they regarded all new societies with a proper degree of jealousy. At the time above named there had been a speculative excitement in the money market, followed by a disastrous panic. Many companies had been compelled to wind up their business, and others, having no business to wind up, had been left to their fate. And of annuities granted by private persons, the public had a well-founded horror; for the persons who had chiefly granted them were bankers, stock-jobbers, and mock millionnaires, who had often been swept away by panics on the Stock Exchange. In 1809 complaints were instituted that persons wishing to make provision for themselves or their families had no certain fund on which such annuities could be secured, and the ministers were made aware of many infamous practices which often plunged whole families into ruin. The Government, therefore, determined to become dealers in life annuities, and in the very outset made a considerable and almost fatal mistake. The tables of mortality known as the Northampton were the chief basis on which the various life assurance companies founded their premiums; and, by a singular error, the state adopted the same basis on which to grant annuities for life; but as the most intelligent men of the day were employed in calculating and constructing tables, the Government was scarcely to blame, particularly as they sought no profit, entering into the undertaking solely from a consideration of its advantages to the community.