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United Kingdom House of Lords Decisions
You are here: BAILII >> Databases >> United Kingdom House of Lords Decisions >> John Thomson, Jun., Merchant, Leith v. Georce Buchanan and Others, Underwriters [1782] UKHL 2_Paton_592 (13 March 1782)
URL: http://www.bailii.org/uk/cases/UKHL/1782/2_Paton_592.html
Cite as: [1782] UKHL 2_Paton_592

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SCOTTISH_HoL_JURY_COURT

Page: 592↓

(1782) 2 Paton 592

CASES DECIDED IN THE HOUSE OF LORDS, ON APPEAL FROM THE COURTS OF SCOTLAND.

(M. 7085.)

No. 136.


John Thomson, Jun., Merchant, Leith,     Appellant

v.

Georce Buchanan and Others, Underwriters,     Respondents

House of Lords, 13th March 1782.

Subject_Insurance — Concealment.—

Circumstances in which it was held that where a letter of advice is concealed from the insurer, which only refers to matters of public notoriety, known to all insurance offices, as affecting the risk in insuring a particular voyage, that such concealment will not void the policy.

Sept. 28, 1778.

The appellant insured his ship Gizzy for Gibraltar with orders to the Captain to proceed from thence to Malaga,

Page: 593↓

and back to Leith, and to inform him on his arrival at Gibraltar, in order that an insurance might be effected on the vessel from Gibraltar to Malaga, and from thence to Leith. On arrival at Gibraltar, the captain accordingly informed the appellant of this by letter, and also acquainted him “that there is as much danger in going from here to Malaga, as coming from England here. I hear that merchants at Malaga wont ship any goods on board of English ships before they hear of a convoy to take them from here. I am going to write to Ferry to-morrow by post, to hear what he thinks of it; for there is a great many ships at Malaga that is chartered, and the merchants wont ship on board of them. They are shipping on board of Spanish ships for London. I shall write my wife by next post, and by that time I shall be able to give you a more full account of things how they are.”

Upon the receipt of this letter, the appellant applied at London and Glasgow to know the premium at which they would insure the vessel, but the Mediterranean being then swarming with French privateers, none would do it but at an exorbitant premium. After a good deal of delay, an insurance was effected with the respondents in Glasgow, at the high premium of 25 guineas per cent. The policy was for £600, and bore to be on the ship from Malaga to Leith, with liberty to call at Gibraltar, it being particularly mentioned that the last advice was from Gibraltar of the 28th September 1778; that the vessel had arrived there safe only the day before, and had a cargo to discharge, and if she sailed with convoy from Malaga or Gibraltar to England, and arrived safe, 5 per cent, should be returned.

The letter of advice above quoted was not shewn to the underwriters; and on the evening of the same day on which the insurance was concluded at Glasgow, the appellant received a letter at Leith, dated from Almeira, 21st October 1778, informing that the ship having sailed from Gibraltar to Malaga on 9th October, was taken by a French privateer, off Malaga, and carried into that port. This letter was immediately communicated to the insurers, and claim made for the loss; which being refused, action was raised before the Admiralty Court for payment.

In defence to this action, it was stated that the appellant ought to have laid before them the before mentioned letter from the captain, because it contained material intelligence which ought to have been communicated, but which was

Page: 594↓

concealed, and that the letter to the captain's wife was also concealed.

The above letter was produced, and the appellant examined, who deponed that he had received no other advice as to the ship, and Lamb, the captain, and his wife were also examined as to the letter alleged to be sent to her, which turned out to be a mistake, as none such was sent.

Mar. 3, 1780.

June 20, 1781.

The Judge Admiral, after having allowed a proof, to shew that, prior to the date of the policy (26th Nov. 1778) the appellant knew of the ship having been taken as a prize, and this not having been proved, decerned against the insurers for payment of the sum insured. A suspension being brought of the Admiral's decree to the Court of Session, it came before the Lord Justice Clerk Ordinary, and his Lordship ordered informations with the view of reporting to the Court. The Lords, of this date, on considering these, “suspended the letters simpliciter.”

Against this interlocutor the present appeal was brought.

Pleaded by the Appellant.—It is quite true that the party insuring must communicate to the insurers every fact within his knowlege material to the risk, and material to guide the latter in fixing the premium at which they will insure; but it was not necessary for the appellant to communicate the contents of the captain's letter, because the facts in the letter received were matters of public notoriety, known to every insurance office in the country, and already known to the respondents, as is proved by the high premium they took. The only fact which the letter communicates is the date of her arrival at Gibraltar. It communicates no other intelligence of additional risk or danger other than that which, from the war with France, was well known to exist. And the allusion in the letter to merchants not sending their goods in English ships without convoy, was plainly intended to show how unlikely it was that the ship would get a freight at Malaga, than any danger from the enemy; but the captain was evidently hazarding his own opinion, not so much upon actual knowledge of the fact, as upon mere speculation as to the dangers, because he closes by stating that he would write to Mr. Ferry for information. But to hold that this letter does not simply refer to the French privateers, and to the dangers necessarily arising from the war in which France and Britain were then engaged, facts already known to the respondents, is to subvert the whole meaning of the letter, and the contract between the parties.

Page: 595↓

Pleaded by the Respondents.—The suppression or concealment of material intelligence, whether fraudulent or not, vacates the policy. Insurance being a contract of good faith, the appellant was bound to communicate the captain's letter (which evidently represented the risk of the voyage greater than he had expected, and was written to guide him in the insurance,) in order to allow them to judge aright as to premium at which they would or should insure. He not having done this, and not having communicated its alarming intelligence, the respondents were deceived and induced to take a more moderate view of the risk, and to charge lesser premium accordingly, by which concealment the policy is void.

After hearing counsel, Lord Mansfield moved that it be

Ordered and adjudged that the interlocutor of the Court of Session be reversed, and the decree of the Judge Admiral, decerning for the sum in the policy, be affirmed.

Counsel: For Appellant, Henry Dundas, J. Dunning.
For Respondents, Ja. Wallace, Ar. Macdonald.

 1782

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