The deed of settlement of an insurance company founded in 1854 provided that its profits were to be divided as directed by its bye-laws, and that its bye-laws could be altered by other byelaws.
In 1886 the bye-laws provided that the whole profits made in the mutual branch were to be divided among the policy-holders in that branch. In that year the company issued to the respondent a policy entitling him to pounds 400 on death, and ‘all such other sums, if any, as the said company by their directors may have ordered to he added to such amount by way of bonus or otherwise according to their practice for the time.’ There was nothing further in the policy or the proposal which could be construed into a contract by the assurance company to pay anything beyond the pounds 400, and the respondent’s proposal for insurance was made on a form in which he expressly agreed to ‘conform to and abide by the deed of settlement and bye-laws, rules, and regulations of the company in all respects.’ The respondent, however, had taken his policy relying upon a prospectus issued by the company, which stated:-‘The entire profits made by the company in the mutual department, after deducting the expenses, are divided among the policy-holders without any deduction for a reserve fund.’ In 1902 the assurance company proposed under the Companies Act 1890 to alter its constitution by becoming registered as a company with limited liability, with a memorandum and articles of association which provided that 5 per cent. of the profits of the mutual department were to be carried to a reserve fund. The proposed change was perfectly competent, looking to the constitution of the company as set forth in the original deed of settlement.
Held that the company had not contracted with the respondent that the whole of the profits of the mutual department should be divided among the policy–holders in that department. Judgment of Court of Appeal reversed.
Judges:
Lords Macnaghten, Robertson, and Lindley
Citations:
[1905] UKHL 578
Links:
Jurisdiction:
England and Wales
Company, Insurance
Updated: 26 April 2022; Ref: scu.621196
