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.

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 1000l. To secure some part of this in the event of his demise, they assured his life for seven years with the Pelican Company, for 500l. at the rate of 3l. 3s. 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 500l. 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 500l. 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 100,000l. 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 21,000l. 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 5000l. 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.”