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MISREPRESENTATION.

or that his principal will do something which is illegal or ultra vires.

It seems clear at any rate, on the authorities, that if the untrue representation is innocently made by the agent, even though the proposer is equally innocent, the parties are in pari delicto or perhaps it would be more accurate to say in pari ignorantia delicti, and the plaintiff cannot recover premiums (Howard v. Refuge Friendly Society, 54 L.T. 644, Harse v. Pearl Life Assurance Co., [1904] 1 K.B. 558, Phillips v. Royal London Mutual Insurance Co. Ltd., 105 L.T. 136, Evanson v. Crooks, 106 L.T. 264, 28 T.L.R. 123; Elson v. Crookes, 106 L.T. 462; Wolenberg v. Royal Co-operative Collecting Society, 112 L.T. 1036; Goldstein v. Salvation Army Assurance Society, [1917] 2 K.B. 291). The doctrine that the parties, when both innocent, are not to be regarded as in pari delicto, because the agent is supposed to be skilled in assurance matters whereas the other party is not (British Workman's and General Assurance Co. Ltd. v. Cunliffe, supra), must now be considered as exploded (Harse v. Pearl Life Assurance Co. Ltd., supra at p. 564; Evanson v. Crookes, supra, at p. 124). A fortiori, of course, if the agent was innocent and the plaintiff was aware of the illegality, he could not recover. But where the agent has fraudulently represented the assurance to be legal and the plaintiff is innocent of the illegality, the plaintiff can recover the premiums paid (British Workman's and General Assurance Co. v. Cunliffe, supra, Howarth v. Pioneer Life Assurance Co. Ltd., 107 L.T. 155, Tofts v. Pearl Life Assurance Co. Ltd., [1915] 1 K.B. 189; Hughes v. Liverpool Victoria Legal Friendly Society, [1916] 2 K.B. 482).

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Some of the tribunals in dealing both with the "legal class " and with the "illegal class " of cases have thought it relevant to discuss the question of the scope of the agent's authority. Among the legal class" of cases, the point was argued and discussed by the Court in Kettlewell's Case, ubi supra, namely by Phillimore J. in the Court of first instance, and, more faintly, in the Court of Appeal. But Bray J. seems to get nearer to the true ground of the decision, saying: "We do not decide that the defendants are bound by the agent's representations so as to make them liable for damages, for it is not necessary to decide that here. What we decide is that the defendants cannot keep the premiums which the plaintiff was induced to pay by the fraud of the agent." In the Court of Appeal, similarly, Lord Alverstone C.J. deals with the point, at p. 550, but Buckley L.J. goes to the heart of the matter, when he says: "It is well established by authority that a principal cannot retain a profit made by the fraud of his agent, whether the principal authorized the fraud or not. That is the doctrine that was laid down in Barwick v. English Joint Stock Bank, 1.R. 2 Ex., 259. This

MISREPRESENTATION.

general doctrine was thus expressed by Lord Coleridge C.J. in Swift v. Jewsbury, L.R. 9 Q.B. 301, at p. 312: Justice points out, and authority supports justice in maintaining, that where a corporation take advantage of the fraud of their agent, they cannot afterwards repudiate the agency, and say that the act which has been done by the agent is not an act for which they are liable.' The ground upon which I think the plaintiff is entitled to recover here is that by the fraud of the defendants' agent she was induced to pay them sums of money which are now in their pockets, and are profit derived by them from the fraud." In the House of Lords, as I have said, no judgments were delivered, but there is a remark made by Lord Loreburn L.C. in the course of the argument, which, I think, explains the reason for the summary dismissal of the appeal. Counsel argued: "The contract was not in the power of the agent to make and was not ratified by the appellants. A statement made outside the scope of the agent's authority is not binding on the company " and the Lord Chancellor interjected: "Do you really contend that the principal can keep the money obtained by the fraud of the agent?

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Among the illegal class" of cases the point of scope of authority was taken in Hughes' Case, ubi supra, by Phillimore L.J. at p. 493, but the fullest discussion of the agent's authority in this class of case is to be found in the Irish case of Byrne v. Rudd, [1920] 2 I.R. 1, with the result expressed in the following headnote: "The society could not be allowed to retain money which had been procured for, and received by, it under a contract which the insured had been induced to enter into by the fraudulent misrepresentation of its agent; that, even though the agent's misrepresentation involved the doing of an act which. was illegal or ultra vires on the part of the principal, he was nevertheless acting within the scope of his authority in making it, in so far, at least as to deprive the society of the right to retain any benefit under it."

It seems to me that the former part of this headnote was sufficient for the decision of the case, and that the latter part is as irrelevant as it is eccentric.

From this discussion it seems to me clear, as I have already indicated, that the basis of the decisions is the general principle that a person cannot be allowed to retain a profit obtained by his agent's fraud, and the question of the scope of the agent's authority is, for this purpose, irrelevant. If this were not so, it would be difficult to see how an order for return of premiums could be made in one of the "illegal class " of cases, since there the fraudulent act could not, it seems to me, have been within the scope of the agent's authority (see Lyons v. Martin, 8 A. & E. 512; Joseph Rank Ltd. v. Craig, [1919] 1 Ch. 1).

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There is one further matter, which must be mentioned. Section 5 (1) of the Industrial Assurance Act, 1923, provides :

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Any collecting society or industrial assurance company which issues policies of industrial assurance which are illegal or are not within the legal powers of the society or company shall be held to have made default in complying with the provisions of this Act, and where any such policy has been issued, the society or company shall, without prejudice to any other penalty, be liable to pay to the owner of the policy a sum equal to the surrender value of the policy (to be ascertained in manner hereinafter provided), or, if the policy was issued after the commencement of this Act, a sum equal to the amount of the premiums paid, unless it is proved that owing to any false representation on the part of the proposer, the society or company did not know that the policy was illegal or beyond their legal powers.

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I cannot regard this section as precluding a person who was led to take out an illegal policy by the fraud of an agent as being limited to the recovery of the surrender value in the case of policies of industrial assurance issued before the commencement of the Act. This cause of action, I think, is independent of the section, and the fact that the section imposes a penalty on the society or company for issuing an illegal policy makes no difference (see Hughes v. Liverpool Victoria Legal Friendly Society, supra, decided on a similar section, Section 36 (3) of the Assurance Companies Act, 1909).

The present case is one of the "legal class." The evidence consists of the uncorroborated evidence of the plaintiff that in April, 1912, she was called upon by two representatives of the Company, a superintendent and an agent, who suggested that she should take out a policy for seven years (the rest of her evidence indicates that this was a slip for 12 years) and at the end of that time she would get a lump sum of £25 together with interest and bonus. The policy which was in fact issued to her was a whole-life assurance with option of conversion into endowment assurance at a premium of 28. per lunar month. The schedule on the front stated the " period after which payment of premiums MAY be discontinued "as 12 years and two lunar months, and "the sum assured subject to conditions endorsed hereon "as £25. The conditions referred to modified the sum payable within the first six months and there was an endorsement giving an immediate death benefit of £20 3s. in consideration of the surrender of a previous policy. The schedule on the back of the policy stated the additional premiums which were payable in order to convert the assurance into a fully paid endowment assurance payable at the ages therein

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mentioned. There was a surrender value after three years' premiums had been paid. She looked at the policy when she got it and saw the mention of 12 years on it, but believed that it carried out the representations. If she had not so believed, she would not have taken out the policy.

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She further deposes that in July, 1913, two representatives of the Company again called (she is not sure if they were the same two) and suggested that she should take out another policy on the same conditions as 1912." They stated it was a sort of savings bank affair and that after paying for three years she could

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draw small sums which would be deducted at the final." The policy given to her was identical with that of 1912 with the substitution of 12 years and nine months for 12 years and two months.

The proposal in 1912 was witnessed by J. Kirby, an assistant superintendent, and that in 1912 by P. S. Jones, an agent. They both declare that they have no recollection of the transaction. We may assume that Kirby was one of the two representatives in 1912, and Jones one of the two in 1913, but we do not know who the other was, we do not know who made the alleged representation on either occasion, we do not even know for certain that the person who made the representation was an agent of the Company.

Now in order to succeed the plaintiff has to establish fraud, and fraud is not a matter which can be lightly or vaguely asserted or proved.

As Lord Selborne L.C. said in Wallingford v. Mutual Society, 5 A.C. 685, at p. 697 :-

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With regard to fraud, if there be any principle which is perfectly well settled, it is that general allegations, however strong may be the words in which they are stated, are insufficient even to amount to an averment of fraud of which any Court ought to take notice.'

The material fraudulent misrepresentation, on which the plaintiff relies, is the alleged statement that she would receive £25 with interest and bonus at the end of 12 years. As far as the 1913 transaction is concerned, I do not find any evidence at all that such a representation was made. What was said, according to the plaintiff, was that she would have another assurance on the same conditions as 1912." I cannot interpret this as meaning subject to the same fraudulent misrepresentation as someone else made in 1912."

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As to the 1912 transaction, I have to point out that the alleged misrepresentation was in flat contradiction of the terms. of the assurance, which were fully set out on the proposal, which the plaintiff signed, and on the policy, which she says she read. I cannot hold that, as a matter of law,

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misrepresentations in contradiction of the terms of the written documents can be excluded, though I know of no reported case in which such a representation has been set up, inasmuch as, in my opinion, the agent's scope of authority is not relevant for the present purpose, but such a contradiction compels me to scrutinise with some care a plaintiff's assertion that she in fact relied on the representation. One is also entitled for this purpose to look at the nature of the alleged representation, which was that after a payment of 2s. per four weeks for 12 years and two months and 12 years and nine months respectively, totals of £15 16s. and £16 10s. respectively, she would receive £25 in addition to interest and bonusa truly philanthropic arrangement. But we have also a documentary test of the accuracy of her evidence. At or about the time when the earlier of the two policies had been in force 12 years and two months, namely, on June 13th, 1924, she wrote to the Company as follows: "I wish to cease payments on policy No. 82722906 taken out on 29th April, 1912, if you will kindly have necessary details seen to. I should be pleased to know the sum I am entitled to." A week later she writes again "Can you let me have information re enquiry of 13th instant. I wish the policy definitely settled," and then she gives the name of her collector. Again, on July 2nd she writes, referring to the policy, Can I possibly have information of same? I wish the policy completely surrendered, therefore I should be very much obliged to know the cash sum returnable." She was then told that the cash surrender value was £8 3s. 6d., but did not accept this and went on paying premiums till August, 1926.

The obvious meaning of the correspondence and what followed is that she wished to know what the surrender value of the policy was, now that she had completed or was about to complete the payment of premiums for the period stated in the policy, and did not want to continue, so that she might consider whether she would accept it or not. I cannot accept her explanation that she was merely enquiring about the interest and bonus on the £25 to which she thought herself entitled in consequence of the misrepresentations. There is no

suggestion in any of the letters that she was claiming the sum assured named in the policy in the belief that she was entitled to it. Nor is it reasonable to suppose that in such a case she would have gone on paying premiums for more than two years without any further protest or demand. The first time, as far as I know, that her present claim was put forward was in a letter sent to me on October 6th, 1926, which was signed by her but apparently prepared by some other person.

In all these circumstances I hold that her claim is not established.

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