LEGAL DECISIONS.--WILLIAM PITT, AND GODSALL AND CO.--ROMANCE OF
LIFE ASSURANCE.--THE GLOBE.--NEW COMPANIES.--THE ALLIANCE--ITS
PROMOTERS.--IMPROVEMENT OF THE VALUE OF LIFE CONSEQUENT ON THE
IMPROVEMENT IN SOCIETY--ITS DESCRIPTION.--TRIAL CONCERNING THE DUKE
OF SAXE GOTHA.--IMPORTANT LEGAL DECISION.
It has been said that corporations have no souls to be saved or bodies
to be kicked; but it may be added that they have a wild kind of justice
meted to them when they appeal to a jury. So early as 1801, this was
proved in a case of life assurance.
In 1799, a Mr. Robson, at the instance of a Mr. Kerslake, who was to
grant the former an annuity, proposed his life for insurance to the
Westminster Insurance Company. The usual forms were passed through, the
usual undertaking entered into that the assured was in good health,
his age being only twenty-three, and the policy was issued by the
office. In three months he died. The Westminster Society made inquiries
which perhaps they should have made before, and those inquiries
discovered that Mr. Robson had been labouring for some time under
what is popularly known as a tendency to consumption; that in 1797 he
had suffered from hæmorrhage in the lungs, but had recovered; that in
February, 1799, though he had another similar attack in a more violent
degree, he had said nothing about it, opening the policy on his life
in March. In the autumn he took cold, fell into a rapid decline and
died. There was clearly a predisposition to disease, and though it is a
very important consideration, whether a policy once open should not be
indisputable, yet until this is so, there is in a case like the present
but one view to be taken. The company rightly refused to pay, and an
action was brought to compel them.
“Who shall decide when doctors disagree?”
One party swore there were no symptoms which indicated consumption.
The other took their oaths that consumption was inevitable with such
symptoms. In vain Lord Kenyon charged the jury in favour of the
Westminster, the jury knew better than his lordship, and had no notion
of a policy being opened without being discharged, whatever the deceit
might be. They decided against the company. Another trial was sought
and granted, but in vain. The new jury maintained the principles of the
old, and the company lost its money and gained the vituperation of the
unthinking.
The great minister of the past century died insolvent, and from this
arose one of those actions, which at once confirm a law and establish
a principle. In 1803 William Pitt was indebted to Godsoll and Co.,
his coachmakers, upwards of 1000_l._ To secure some part of this in
the event of his demise, they assured his life for seven years with
the Pelican Company, for 500_l._ at the rate of 3_l._ 3_s._ per cent.
In 1806, three years after this, the premier died without sufficient
assets to meet his liabilities. The greatness of his services to
the country, the fact that he had died in debt being a proof of his
self-abnegation, demanded an acknowledgment, and the state very
properly determined to pay his creditors. This was not sufficient for
the coachmakers; an immediate claim was made by them for payment of the
500_l._ assured. As Godsoll and Co., however, had received the entire
amount of their bill when Mr. Pitt’s other debts were discharged, the
Pelican refused to pay, on the ground that their insurable interest
in the life of the deceased had been terminated by the payment of his
debts, and that as the insurance was to meet a special debt, since
discharged, they could not recover.
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 500_l._ 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 100,000_l._ 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 21,000_l._ 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.
The increased number of offices had the tendency to extend public
information, and to draw the attention of many who had hitherto thought
nothing on the subject. The original object of life assurance was
simply to enable a person to secure to his family the receipt of a
certain sum at his death. But by 1825 it was applied to a variety of
purposes; assurances were effected by creditors on the lives of their
debtors. If money were borrowed for a year the life of the borrower was
assured. In marriage settlements, where the capital would pass from the
husband at the death of the wife, an assurance was effected on the life
of the latter. “In every form,” says Mr. Gilbart, “the system seems to
produce unmingled good. It promotes habits of forethought and economy
on the part of the assured; it tends, by the accumulation of saving, to
increase the amount of the national capital.”
The knowledge connected with the population was constantly increasing;
and, though it was imperfect enough, still it was in advance of our
previous information. In 1801 an approximation was made to that of
London, which was supposed to be 864,845; and when it is remembered
that Captain Graunt, so early as 1664, calculated it at 384,000, the
numbering of the people in 1801 was no small benefit. In 1811, when a
second census was taken, the population was stated to be 1,009,546; and
a further increase was declared in 1821, when the population showed
itself as 1,225,694. These calculations were not effected without
difficulty, and many objections were made by good but narrow-minded
men, who, from press and from pulpit, did not fail to remind our rulers
that David was rebuked by the prophet, and punished by God, for
attempting to do that which they had done.
The health of London was also improved. It was estimated that the
introduction of vaccination had increased the mean duration of human
life about 3-1/2 years. There had been a great advance in medical
skill. Discoveries in chemistry had been brought to bear upon disease.
The arrangements of our hospitals had enabled students to graduate
under men of distinguished attainments; the discipline of the medical
school had been increased; and, though ignorance was often in the
ascendant, and quackery was encouraged as a revenue to the state,
men--somewhat different to those who were licensed to kill in the
days of Fielding and of Smollett--were employed in invigorating the
constitutions and prolonging the lives of their fellow-countrymen. We
must not also forget, that by 1825 a vast improvement had occurred
in the manners and habits of social life. Our fathers still remember
their visits when the bottle kept so constant a round that few remained
sober; when to be asked to a dinner-party was to be asked to get
intoxicated; when two and three-bottle men boasted their acquirements;
when the wild orgy disgraced humanity, and the wild debauch destroyed
life. We of the present day boast of this improvement to our children,
and whatever new vice may have usurped the place of the old, it is,
at least, less open in its defiance, and less baneful in its results.
When Petty first published, the streets were confined, cleanliness
was disregarded, refuse and offal accumulated in the highways, and
ventilation was laughed at. There may still be many receptacles of
filth in London, but they do not meet us in our daily avocations. The
kennels of Southwark do not run blood two days in every week, as they
did in the last century; nor are hogs “bred, kept, and fed,” in our
populous neighbourhoods. If, therefore, there were any thing in the
advance of chemistry, in draining, in ventilation, in more wholesome
living, in the absence of open debauchery, it followed that there
would be a considerable decrease in the rate of mortality. From 1700
to 1780, the deaths averaged about one in thirty-eight of the existing
population. But in 1790 it became about one in forty-five, in 1800
one in forty-eight, in 1810 one in fifty-four, and in the ten years
preceding 1820 one in sixty, in England and Wales.
But though these important facts had gradually become known; although
it was also clear that people lived longer; that the wealthy classes
attained a greater age than the indigent; that the value of a lady’s
life, commercially, and not in the spirit of gallantry, was superior to
that of a gentleman; it could scarcely be said to be acted on. So late
as 1819, Dr. Rees suggested the importance of specifying the sexes, and
discriminating them in the burial registers, advising also that the
numbers of both sexes dying of every distemper in every manner and at
every age should be specified. “This would afford the necessary data
for ascertaining the difference between the duration of human life
among males and females, for such a difference there certainly is much
in favour of females.”
The tables on which the rates of the companies had been founded, had
given the continuance of life at a far lower estimate than time had
proved it to possess. The enormous success of the original societies
had proved this; and, by 1821, it was generally understood that the
Northampton table was only an approximation to the truth. This table
was chiefly in use until the Carlisle table of Mr. Milne gradually made
its way, up to which period the following were the principal sources
whence information was derived:--
A Record of the Births and Burials in Breslau from 1687 to 1691.
London Bills of Mortality from 1728 to 1737.
Register of Assignable Annuities in Holland from 1623 to 1748.
Lists of the Tontine Schemes and the Necrologies of Religious Houses in
France.
Mortality of Northampton for forty-six years prior to 1780.
” of Norwich thirty years prior to 1769.
” of Holy Cross thirty years prior to 1780.
” Warrington for nine years.
” Chester for ten years.
” Vienna, Berlin, and Brandenburgh.
” Seven enumerations of the entire population of
Sweden.
” of similar materials from the Canton de Vaud.
Notwithstanding these varied materials, and although they were quoted
as authorities for maintaining a high rate of premium, the societies in
existence were well aware that their rates were fixed on too ascending
a scale. They had found unexpected sources of profits in lapsed
policies; they had estimated an employment of their money at 3 per
cent., and, at the very lowest calculation, their receipts had averaged
4 per cent. Nor was this likely to diminish, for there can be no doubt
that laws as unerring as those which govern health govern the annual
value of money. In 1810, Mr. George Barrett had presented to the Royal
Society a new mode of calculating life annuities. This the Society
declined to publish, but that which was refused by a public body was
adopted by a private individual, and Mr. Bailey gave it to the world
in the appendix to his valuable work on “Annuities.” The method of
Mr. Barrett was extended and improved by Mr. Davies, in 1825, in his
tables of life contingencies; a proof that the Royal Society had made a
mistake in refusing to publish the contribution of Mr. Barrett.
In 1830 it was decided that a policy was vitiated because the person
insured had only answered the questions demanded, and had not stated
all the features of his case. The following is a digest of the
circumstances:--
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 5000_l._ 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.”