(C.A.) Q.B.D.

Rivaz v. Gerussi.

1880

[6 Queen's Bench Division, 222.]

Nov. 19, 1880-(C.A.), Q.B.D.

[IN THE COURT OF APPEAL.]

RIVAZ, on behalf of Himself and Others, v. GERUSSI BROTHERS & COMPANY and T. M. GERUSSI.

Insurance, Marine-Open Policies-Declaration of Shipments at less than real Value— Concealment of material Fact-Policies set aside.

The concealment by the assured at the time of effecting a marine policy of insurance of a fact which is material to enable a rational underwriter, governing himself by the principles on which underwriters in practice act, to judge whether he shall accept the risk at all, or at what rate, will vitiate the policy, although the fact may not be material with regard to the risk insured.

The defendants effected with the plaintiff, a Lloyd's underwriter, a series of open policies for certain specified sums to cover shipments to be declared and valued as interest might appear. The policies were effected at different dates, and were to succeed each other in the order of date. The value of the shipments were declared at considerably less than their real value, so that when the later policies were effected the earlier policies were in fact more exhausted than they would appear to be from the declarations. The undervaluation of the shipments was systematically and fraudulently made by the defendants, and the fact that they had been so undervalued was concealed from the plaintiff when he underwrote the later policies:

Held, that, under these circumstances, a jury would be justified in finding that the concealment was of a fact of which it was material that the plaintiff should have been informed, in order to guide him in deciding whether he would underwrite these later policies or not or at what rate; and that on the jury so finding the plaintiff was entitled to have such later policies set aside and cancelled.

THIS was an action in which the plaintiff suing on behalf of himself and all others, the underwriters on two policies of marine insurance for £20,000 each, dated respectively the 7th of October, 1879, and the 3d of November, 1879, claimed that it might be declared that such policies [223 were obtained by fraud and concealment of material facts, and that such policies might be respectively set aside and cancelled.

One of the defendants carried on business at Patras under the style or firm of M. Gerussi, and the others carried on business in London as Gerussi Brothers & Co., and the firm M. Gerussi in the ordinary course of their business made shipments of fruit from Greece or the Ionian Isles, and consigned them to Gerussi Brothers & Co. in London for sale.

The policies the subject of this action were two of a series of four policies effected at Lloyd's by the defendants, to cover fruit and produce from Greece and the Ionian Isles. to London or Liverpool by any steamer or steamers in which such might be shipped from time to time, and which 29 ENG, REP.

73

1880

Rivaz v. Gerussi.

(C.A.) Q.B.D. were to be declared and valued as interest might appear. The first of these four policies was dated the 3d of September, 1875, and was effected by a slip signed the 24th of August, 1875. It was for £25,000, and was underwritten by the plaintiff and, with few exceptions, by all the persons on whose behalf he sued. The second policy was dated the 1st of October, 1875, and was effected by a slip on the 18th of the previous September. It was for £20,000, and by its terms it was to follow and succeed the policy for £25,000 of the 3d of September. It was also underwritten by the plaintiff and, with few exceptions, by all the persons on whose behalf he sued. The third policy was dated the 7th of October, 1875, and was effected by a slip on the 1st of October. It was for £20,000, and was to follow and succeed the last mentioned policy of the 1st of October. This third policy was underwritten by the plaintiff and by all the persons on whose behalf he sued. The fourth policy was dated the 3d of November, 1875, and was effected by a slip on the 5th of October. It was for £20,000, and was to follow and succeed the last mentioned policy of the 7th of October. This fourth policy was underwritten by the plaintiff and, with two or three exceptions, by all the persons on whose behalf he sued.

On the 5th of November, 1875, the steamer Vindomora was sunk in the course of a voyage from Patras to London by which a large shipment of currants which had been made by the said firm of M. Gerussi and consigned to Ge224] russi Brothers & Co. was lost, and a claim of £17,769 19s. Sd. was made in respect of such loss upon the policies of the 7th of October and the 3d of November, 1875, that is to say, £12,500 from the underwriters on the policy of the 7th of October, being the amount alleged to be open on that policy, and £5,270 from the underwriters on the policy of the 3d of November.

The plaintiff alleged in his statement of claim that, in investigating the claims so made on the said policies, it was for the first time discovered that the declarations and valuations made on the policies in respect of previous shipments were false and fictitious, and that previous to the loss of the Vindomora the said policies had been filled and exhausted by previous shipments insured by the said policies for very large amounts, and which had arrived safely, and that the defendants had fraudulently concealed and abstained from declaring the amounts which had been so previously insured. by the said policies, and had declared some of such shipments at a less sum than the true value thereof, and at a

(C.A.) Q.B.D.

Rivaz v. Gerussi.

1880

less sum than the value at which the same respectively had been at risk on and insured by the said policies during the respective voyages. The plaintiff further alleged that during the currency of the policies of the 3d of September and the 1st of October, and before the policies of the 7th of October and the 3d of November were effected the defendants had systematically concealed and omitted to declare on the two first mentioned policies the values of the interests from time to time insured thereby and which arrived safely, and that the said policies of the 7th of October and the 3d of November were effected for the purpose of continuing such wrongful and fraudulent practices.

The plaintiff also alleged that at the time of effecting such last mentioned policies, the defendants concealed the improper declarations hereinbefore mentioned from the underwriters, and that at the time when the plaintiff and the other underwriters underwrote such last mentioned policies respectively they were entirely ignorant of the facts relating to such declarations, and they would not have underwritten the said policies if they had known the said facts.

The defendants denied that the declarations or valuations in respect of previous shipments were false, or that previously to the loss of the Vindomora the said policies [225 had been filled or exhausted by previous shipments, and they denied generally all the said alleged concealments and fraudulent practice, or that at the time when the policies of the 7th of October and the 3d of November were underwritten there were any facts relating to such declarations or otherwise which ought to have been but were not disclosed to such underwriters.

The cause was tried at the London Michaelmas Sittings, 1879, before Field, J., when the jury found, inter alia: First. That the defendants declared some of the shipments prior to the Vindomora at less sums respectively than the value at which the same shipments had been at risk and insured by their policies. Secondly. That the defendants made such declarations falsely and fraudulently, and that such declarations were material to the subscription of the policies of the 7th of October and the 3d of November, 1875, and that the plaintiff and those for whom he sued were thereby induced to subscribe them. Thirdly. That the defendants concealed and abstained from declaring the amounts which had been on risk and insured by their policies; and Fourthly. That it was material to the risk taken by the underwriters to be informed of the matter so concealed and abstained from being declared.

Rivaz v. Gerussi.

1880

(C. A.) Q.B.D.

The learned judge after these findings ordered judgment to be entered for the plaintiff.

The defendants appealed.

Sir H. James, A.G., Benjamin, Q.C., and Romer, for the defendants: The plaintiff is not entitled to judgment. There was no misrepresentation by the defendants at the time of effecting the policies the subject of this action, and that distinguishes this case from that of Sibbald v. Hill ('), on which Field, J., relied when he ordered judgment to be entered for the plaintiff. The only concealment was the concealment of an intention to pay too little premiums. To vitiate a policy the concealment must be of facts material to the risk insured. The opinion of Duer is, "that those facts only are necessary to be disclosed which, as material to the risks 226] *considered in their own nature, a prudent and experienced underwriter would deem it proper to consider:" 2 Duer on Insurance, p. 390. There was no such concealment here. The amount at which the previous policies had been filled could have no effect on the risk insured, that is to say, whether the cargo would arrive safely, nor would the knowledge or not of such a matter be at all regarded by the underwriter when he subscribes the policy. The findings of the jury as to this are therefore immaterial. Stephens v. Australasian Insurance Company (2) shows that the declaration of the shipment may be altered at any time, even after her loss. In Ionides v. Pender () the goods were largely overvalued so as to make the risk a speculative one, and therefore it was a matter which would necessarily affect the mind of an underwriter as to entering or not into the policy. [BRETT, L.J.: In delivering his judgment Lord Blackburn did not accept the rule as laid down by Duer, but took in preference that in 1 Parsons on Insurance, p. 495.]

The defendants, of course, must rely on the doctrine as stated by Duer. This action, moreover, is not by the assured to recover a loss, but is an action by the underwriters to set aside the policies, and as, if that were done, the parties could not be placed in the position they were before entering into the policies, at most there ought only to be a readjustment according to the true value.

Butt, Q.C., Webster, Q.C., and J. C. Mathew, appeared for the plaintiff, but were not called upon.

BAGGALLAY, L. J.: This action has been brought by certain underwriters for the purpose of having it declared that two several policies of marine insurance, which were open (2) Law Rep., S C. P., 18; 4 Eng. R., 296. (3) Law Rep., 9 Q. B., 531; 10 Eng. R., 159.

(1) 2 Dow., 263.

Rivaz v. Gerussi.

1880

(C. A.) Q.B.D. policies, on shipments to be subsequently declared, were obtained by fraud and concealment of material facts, and to set them aside. There is a prayer in the alternative to take an account of what might have been at risk, but in my view of the case it is immaterial to consider that alternative form of relief. The circumstances under which this action was brought appear to be as follows: A series of policies were obtained at Lloyd's to cover fruit and other produce from *Greece and the Ionian Islands, shipped to Liverpool [227 or London in the autumn of 1875. There were four open policies; the first two dated the 3d of September and the 1st of October; the two subsequent policies, as to which the present action is brought, were dated the 7th of October, and the 3d of November, but based upon slips signed upon the 1st of October and the 5th of October, 1875, respectively. On the 5th of November, 1875, a steamer named the Vindomora, appears to have been sunk in the Thames, having a large and valuable cargo on board. A claim was made in respect of that loss, and that led to the institution of the present action. It appears to have been the practice of the present defendants in declaring upon the policies which they had effected to make those declarations for less amounts than the prices at which it was admitted they ought to have been made. The consequence was that at the time when the third or the fourth policy was effected, the earlier policies were, in fact, exhausted to a much larger extent than was disclosed. It would appear from the findings of the jury, on the questions submitted to them, that the declarations actually made were brought to the attention of the underwriters. The answer to the second question is, the defendants made such declarations falsely and fraudulently, and such declarations were material to the subscription of the policies of the 7th of October and the 3d of November, and the plaintiff was induced thereby to subscribe them. The third finding is, the defendants concealed and abstained from declaring the amounts insured by the policy, and the fourth finding, that it was material to the underwriters to be informed of the risks so concealed and abstained from being declared. There was a non-disclosure of facts which were found by the jury to have been material to guide the underwriters in arriving at the determination whether in the first place they would accept the risk at all, and next, the price at which they were disposed to take it. It appears to me impossible to say in the face of these findings, that there was not a non-disclosure of a material fact within the meaning