The owner of a policy of life assurance mortgaged the policy to secure repayment of a loan. Subsequently the owner, now the owner of an equity of redemption in the policy, paid two annual premiums which became due under the policy. The policy was then sold and a question arose as to whether the proceeds of sale should be applied in repaying the owner the amount of the two premiums in priority to the claims of the mortgagee.
Held: The owner had not acquired by the payments of the premiums any interest in the policy in priority to the claims of the mortgagee.
Cotton LJ said: ‘if a stranger pays a premium on a policy that payment gives him no lien on the policy. A man by making a payment in respect of property belonging to another, if he does so without request, is not entitled to any lien or charge on that property for such payment.’
Bowen LJ said: ‘The general principle is, beyond all question, that work and labour done or money expended by one man to preserve or benefit the property of another do not according to English law create any lien upon the property saved or benefited, nor, even if standing alone, create any obligation to repay the expenditure. Liabilities are not to be forced upon people behind their backs any more than you can confer a benefit upon a man against his will.’
Judges:
Cotton LJ, Bowen LJ
Citations:
(1886) 34 ChD 234
Jurisdiction:
England and Wales
Cited by:
Cited – Foskett v McKeown and Others CA 27-Jun-1997
Various people had paid money with the promise of acquiring an interest in land in Portugal. The scheme was fraudulent. The funds had been used to purchase a life/investment policy. The policy was held in trust for the fraudster’s mother but he had . .
Cited – Foskett v McKeown and Others HL 18-May-2000
A property developer using monies which he held on trust to carry out a development instead had mixed those monies with his own in his bank account, and subsequently used those mixed monies to pay premiums on a life assurance policy on his own life, . .
Cited – Petroleo Brasileiro Sa v Ene Kos 1 Ltd (‘The MT Kos’) SC 2-May-2012
The MT Kos had been chartered by the appellants. The respondents failed to make payments, and notice was given to withdraw the vessel. The contract said that such a notice was without prejudice to any claim. At the time, the vessel was laden. The . .
Lists of cited by and citing cases may be incomplete.
Equity
Updated: 06 August 2022; Ref: scu.187410