EFFECT OF ADJUSTMENT NOTE OF LOSS.

It may sometimes happen, when a loss occurs, that underwriters dispute the validity of the policy; or they may, in ignorance of any objection applying to it at the time, sign an adjustment note of the loss. Where such an adjustment note is endorsed on the policy, and signed by the underwriters, this is considered equivalent to a note of hand or promise to pay, and amounts to an admission of all the facts necessary to be proved by the insured; and it gives a right to recover, subject to any exceptions which are competent to elide payment.—(Hog v. Gouldney, N. P., Beawes 308.) But this adjustment note is not entirely conclusive against the underwriter. He may overcome it by showing that it was signed in ignorance of certain circumstances which annulled the policy, such as concealment, or misrepresentation, or fraud. (Rogers v. Maylor, at N. P., Park 194; Sheriff v. Potts, 5 Esp. Rep. 96 S. P.; De Garron v. Galbraith, at N. P. after Trin. 1795, Park 194, 7th edn.; Herbert v. Champion, 1 Camp. 134; Shepherd v. Chewter, 1 Camp. 274.)

It appears, therefore, to be a settled point, that the effect of such a signed note adjusting the loss does not bar the insurance company from afterwards objecting to pay the loss, if good grounds transpire, before the actual payment of the loss has taken place. Thus, Lord Ellenborough laid it down in Herbert v. Champion, 1 Camp. 134-" There are two questions here to be considered: 1st, As to the conclusiveness of the adjustment; 2dly, As to the materiality of the

letter. 1st, The cases are clearly distinguishable where, upon a dispute, the money is paid, and where there is only a promise to pay. If the money has been paid, it cannot be recovered back without proof of fraud; but a promise to pay will not in general be binding, unless founded on a previous liability. What is an adjustment? An admission, on the sup

position of the truth of certain facts stated, that the assured are entitled to recover on the policy. Perhaps, if properly stamped, it might be declared a promissory instrument. Here it is a mere admission ; and there was no consideration for the promise it is supposed to prove. An underwriter must make a strong case after admitting the liability; but until he has paid the money, he is at liberty to avail himself of any defence which the facts or the law of the case will furnish."

Lord Ellenborough laid down the same doctrine in Shepherd v. Chewter, 1 Camp. 278; also note to that case; Buller v. Harrison, 2 Cooper 565; and the same doctrine was confirmed in the Court of Session in Losh, Wilson, and Bell v. Martin, 28 Nov. 1856, S. and D., p. 101.

CHAPTER XVI.

PREMIUM.

THE policy is renewable yearly, and premium payable in the general case then. In fire insurances, it is

not uncommon to make the premium payable halfyearly, and in some cases even quarterly.

Both in life and fire insurances, there is generally inserted in the policy a clause declaring that, if the premium is not paid within a certain number of days after the period for payment of the premium, the policy shall be held as expired. These days are called the days of grace; and nice questions often occur in the event of a loss during the running of that time, but before the premium is paid. Thus, in Tarleton and others v. Staniforth and others, 5 Ter. Rep. 695, which was an insurance against fire, the insured had agreed to pay the premium half-yearly, or "within fifteen days after the expiration of the former half-year;" and it was expressly stipulated that no insurance should take effect until the premium was paid. On a loss happening within the fifteen days after the expiry of the half-year, and before the premium was paid, it was held that the underwriters were not liable, although the insured tendered the premium before the expiry of these days; Lord Kenyon stating, "that the allowance of the fif teen days was merely given for the purpose of saving the expense of a new policy and a new stamp ; and Justice Ashurst stating, "that the assured are at their own risk during this interval; for, if any accident happen before the premium is actually paid, they stand uninsured."

Of course, in such cases, it is easy for insurance offices, by special stipulations in the policy, to hold themselves liable in the event of a loss occurring during the running of the days of grace; and it

would appear that in some offices, by the express terms of the policy, they do hold themselves liable. This seems to be the case with the Phoenix Fire Insurance Company, as appears from the case of Pitt v. Shewin, 3 Camp., p. 134; but, as in that case, where the premium was not paid within the fifteen days of grace, but fifteen days after these had expired, it was held, though no loss had occurred during the running of those days, that the contract of insurance was put an end to.

At same time, it would appear to be common for the annual premium not to be paid until after the expiry of the fifteen days, and to be received by insurance offices as a continuation of the former policy, although, in the event of a loss happening during the running of the days of grace, according to the above case, the underwriters would seem not to be liable. This would not appear to be a safe course, therefore; and, where some interval of time elapses between the expiry of those days and the payment of the premium, any loss occurring during that interval, in this form of the policy, will not subject the underwriters in liability, unless there be some special provision of revival after that period.

By the constitution of many offices in Scotland, the law on this subject has been much modified by special regulation. In some offices, if the party whose life is insured die within the running of the days of grace, the policy is still in force, notwithstanding the premium has not been paid; but if the insured die beyond the days of grace without the premium being paid, the policy is forfeited. In other

offices, the policy is not forfeited, but may be revived, even after the days of grace have expired, by paying the premium, if no change has occurred in the life insured. Other offices, again, allow the policy to be revived on payment of the premium, together with an additional sum as a fine. The latest advance in the same direction is that by which, in some offices, the policy is held in force for a year after the day on which the premium falls due; so that, if the party die within that period without payment, the policy is good. But these are all the subject of express private regulation, and are gradually developed by the competition of rival institutions. It is the law, however, apart from these special regulations, that we have to deal with here; and, therefore, supposing such regulations no part of the contract, the strict rule of law must obtain.

Where a life insurance was effected with an agent of the insurance company, the annual premium being made payable on 15th March yearly, when the year's premium payable on the 15th March 1833 fell due, it was not paid. The company's receipt bore-" If this receipt be not taken up within fifteen days from the day the premium becomes due, it must be returned to the (head) office; as, after that period, the insurance being cancelled, the receipts will be of no avail." The premium in this case was not paid to the agent of the company until the 12th April. The agent, without communicating with the company, received payment of the premium on that day, and the insured died two days thereafter, on 14th April. It was held that the insurance company