Beresford v Royal Insurance Co Ltd 1938
- Reported: [1938] 2 ALL ER 602
- Year: 1938
- Court: House of Lords
FACTS:-
The action was brought by the executors of the estate of Major Rowlandson to recover the sum of £50,000 which was said to be due under five life insurance policies issued to him by the defendants. Since June 1925, Major Rowlandson had been maintaining five policies on his life for £50,000, in respect of which the premiums payable quarterly amounted to about £450. In June 1934, he was insolvent. He had borrowed over £60,000 including over £40,000 from personal friends to finance an invention, which had been unsuccessful. In addition, he had borrowed from the respondents, on the security of the policies, the sum of £6,791. The policies at this date had no surrender value above the amount advanced, and he was unable to pay the premium. At a series of interviews with the representative of the defendants, he obtained extensions of time for payment of the premium. The last and final extension was to 3 pm on 3 August. At about 2:57 pm on that day he shot himself. Letters and interviews on that day made it clear that he shot himself for the purpose of the policy moneys being made available for the payment of his debts.
In this case there was a conflict between two grounds of public policy. The first was the duty of the court to enforce contracts and the other that no man or his estate is allowed to benefit by his own crime, or, as it may be more aptly put here, no man is allowed to insure himself against the commission of a crime. In the court of first instance Swift J, held that sanctity of contract is of paramount importance. Swift J came to the conclusion that the rules of public policy did not prevent the plaintiff from recovering, and entered judgment for the plaintiff. The Court of Appeal held that it was contrary to public policy for the plaintiff to be entitled to enforce the contract, and entered judgment for the defendants. It is the over-riding duty and inherent power of the court to refuse its aid to enforce a promise where the plaintiff has to set up his own crime or the estate of a deceased seeks to benefit from a crime of the deceased.
The case went to the House of Lords.
HELD:-
Lord Atkin found it necessary when discussing the subject of the effect of suicide on policies of life insurance to distinguish between two different questions: (i) What was the contract made by the parties? (ii) How was that contract affected by public policy? On the first question if there is no express reference to suicide it will prevent the representatives of the assured recovering. If the contract does expressly deal with suicide the rights given to the parties by the contract must be ascertained according to the ordinary rules of construction, and it is only after such ascertainment that the question of public policy arises.
This case contained an express term in the contract dealing with suicide. The relevant condition in the insurance policy was condition 4 which provides:
“If the life assured shall die by his own hand, whether sane or insane, within one year from the commencement of the insurance, the policy shall be void as against any person claiming the amount hereby assured or any part thereof.”
On true construction of the contract the insurance company expressly agreed that the company would pay the sum assured to the person upon proof of the happening event if he dies by his own hand whether sane or insane. There was a contract between the parties.
The second question addressed was whether such contract was enforceable in a court of law. Lord Atkin found it was not enforceable. The principle was stated in the judgment of Fry LJ, in Cleaver v Mutual Reserve Fund Life Assocn, at p 156:
‘It appears to me that no system of jurisprudence can with reason include amongst the rights which it enforces rights directly resulting to the person asserting them from the crime of that person.’
Lord Atkin stated in his judgement that “a man is not to be allowed to have recourse to a court of justice to claim a benefit from his crime, whether under a contract or under a gift. Deliberate suicide has always been regarded in English Law as a crime”. For these reasons Lord Atkin found that the contract in these circumstances was unenforceable as there is no right of action from your own wrong thus upholding the judgement of the Court of Appeal.
Lord Thankerton and Lord Russell of Killowen agreed with the judgement of Lord Atkin.
Lord Macmillan agreed as to enforce payment in favour of the assured’s representative would be to give him a benefit, and no criminal is allowed to benefit in anyway by his crime.
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