FERNANDO AJT.—Almeida v. Amit.
1936Present; Moseley J. and Fernando A.3.
81—D. C. (Inty.) Colombo, 4,038.
ALMEIDA v. AMIT.
Insolvency—Failure to disclose insurance policy—No right to claim benefit ofpolicy—Ordinance No. 7 of 1853, s. 70.
Where an insolvent failed to disclose in his balance sheet an insurancepolicy taken by him, he is not entitled to claim the benefit of the policyon maturity or to be reimbursed the amount of a mortgage on thepolicy redeemed by him.
^^PPEAL from an order of the District Judge of Colombo.
Thiagarajah, for insolvent, appellant.
Marikar (with him Neville Perera), for assignee, respondent.
Cur. adv. vult.
November 27,1936. Fernando A.J.—
The appellant in this case was adjudicated insolvent and was awardeda certificate of conformity on February 4, 1930. Before the adjudicationhe had taken out a policy of insurance on his life, but did not disclose this
FERNANDO A.J.—Almeida v. Amit.
fact in the balance sheet which he filed. It would appear, however, thathe was examined by the opposing creditors, and he then stated that hehad a policy which had lapsed by his failure to pay the premiums. Thisstatement was apparently accepted by the creditors, and the assignees,as correct, and no further inquiries appear to have been made with regardto this policy of insurance.
In 1934, by letter X 2, the Insurance Company informed the appellantthat the policy had matured and that there was sum of Rs. 729.82 dueto him on the policy subject to a mortgage in favour of V. E. A. A.Muttiah Chetty, one of the opposing creditors. On receiving thisinformation, the insolvent appears to have obtained a discharge of the.mortgage from Muttiah Chetty, but the Insurance Company refused topay the sum to the insolvent, unless he obtained an order of Court em-powering the Company to pay that sum to him. When this applicationwas made, the Court ordered notice to issue on the assignee, and theAssignee thereupon objected to the money being paid to the insolvent,And claimed the money on behalf of the creditors.
At the argument, Counsel for the insolvent claimed that even if he wasnot entitled to the money due from the Insurance Company, he was atleast entitled to be reimbursed the amount which he had paid to themortgagee.
The learned District Judge held that under section 70 of the Ordinance,the entire property of the insolvent both present and future vested inthe assignee, with the result that the money utilized by the appellantin paying off the mortgage was money that vested in the assignee,and that therefore the appellant was not entitled to be repaid that sum.On the facts as stated, however, it would appear that this money was paidby the appellant about four years after the issue of the certificate. I donot think the District Judge was right in holding that money belongingto the appellant at that date was money that vested in the assigneeunder section 70. That section has been taken verbatim from section 141of 12 & 13 Viet. c. 106 quoted at length at page 243 of Archbold’sBankruptcy (11th ed.) at page 471. The index prepared by Archboldstates that future property of the bankrupt up to the certificatepassess to the assignees, and he refers to page 320 where section 141 isconstrued in these words, “ as to personal property not only all such ashe is possessed of at the time of his bankruptcy, but also all propertywhich he may purchase, or which may revert, descend, be devised orbequeathed, or come to him before he shall have obtained his certificate ”.He also states at page 415 “ that the certificate of conformity allowedunder this action subject to the provisions wherein contained, shalldischarge the bankrupt from all debts due by him, when he becamebankrupt ”, and continues in the next paragraph in these words, “ theformer of these clauses was held to extend to .discharge the goods as wellas the person of the bankrupt and he cites the case of Davis v. Shapley1as authority for the proposition that “ where the goods of a certificatedbankrupt acquired after the bankruptcy were seized under a fierifacias upon a judgment in respect of a debt due before the bankruptcy
1 1 B. and Adol. 54.
FERNANDO A.J.—Almeida v. Amit.
the Court set aside the fieri facias on motion In view of this statementof the law in England, I would hold that “ future property ” referredto in section 70 means nothing more than any property acquired by theinsolvent before the issue of the certificate, and does not include propertyacquired by him after the certificate has been issued. I would accordinglyhold that the learned District Judge was wrong in the interpretationplaced by him on that section.
Counsel for the respondent, however, argued that the policy of insurancehad not been disclosed by the insolvent, and that when the policy becamedue, the money due under that policy did vest in the assignee in spiteof the fact that the insolvent had himself kept it alive by paying thepremiums, and he referred to the case of Tapster v. Ward1 The factsin that case were that Tapster had a policy of assurance on his own life.He had paid one premium only when he commenced proceedings for theliquidation of his affairs under the Bankruptcy Act. He did not includethe policy in the statement of his affairs, and no notice of it was given,to the official receiver who became entitled to all the property of thebankrupt after the liquidation. Having concealed the existence of thepolicy, or having said nothing about it, the bankrupt went on paying the’premium on that policy, and the policy was available against theAssurance Company at the date of the bankrupt’s death. Cozens-Hardy M.R. after referring to earlier English cases cites from the judg-ment of Farwell L.J., commenting on a case where he had allowed moneypaid by the wife of a bankrupt by way of premium on a policy to berepaid to her. The quotation is in these words, “My judgment pro-ceeded on the knowledge of the trustee of the existence of the policies,of the necessity of paying the premiums and the fact that the wife waspaying them. There was something in that case very like an impliedrequest that the wife should pay, but in a case like the present where thetrustee is absolutely ignorant of the existence of the policy, and wherethe trustee is absolutely ignorant of any payment made for premiumsin respect of it, I am unable to see that we should be in the least justifiedin making such an extension of the doctrine of ex parte James (lawReports 9 Ch. App. 609) as we are asked to do”. It seems to me thatthe position here is exactly the same. The insolvent did not disclose thepolicy in his balance sheet. When questioned about the policy, he saidthat the policy had lapsed, and the assignee must have assumed that thisstatement was true in fact, and took no action on the policy. He was notaware that any premiums had to be paid, and the insolvent did notdisclose the fact that he was paying those premiums. As Cozens-Hardysaid in that case, “ the appellant has no right at law or in equity to thepolicy, and neither at law nor at equity has he any lien upon the policymoney for the premiums which have been paid”. It may be true thathe has paid off a mortgage on that policy, but I cannot see any differencein principle between paying off the mortgage, and paying the premiumsdue on that policy. The insolvent having failed to disclose the policy,and having paid off the mortgage or settled with the mortgagee on someterms which are not clear, cannot take advantage of his own fraud toclaim any benefit under the policy. The learned District Judge thought
1 101 Law Timee 503.
Alice Nona v. Wickremesinghe.
that he had acted foolishly in paying the mortgage, but on the fact, itseems clear to me that his conduct savours of fraud rather than of folly.I would therefore, hold that the appellant is not entitled in law or equityto claim to be reimbursed for money if any paid by him to the mortgagee.
I would accordingly dismiss the appeal with costs.
Moseley J.—I agree.
ALMEIDA v. AMIT