Beresford v Royal Insurance Company Ltd

Lorp ATKIN. My Lords, this is an appeal
from an order of the Court of Appeal, who reversed a decision
of the late Swift J. in favour of the plaintiff and entered judg-
ment for the defendants. The action was brought by the
administratrix with the will annexed of the estate of Charles
Rowlandson to recover the sum of 50,0001. said to be due under
five policies issued to him by the defendants. The only relevant
defence pleaded was that the deceased died by his own hand,
whereby the policies became void. It is unnecessary to state in
detail the melancholy facts of the death of the assured, Major
Rowlandson. It is sufficient to say that since June, 1925, he
had been maintaining five policies on his life for 50,000/. in
respect of which the premiums payable quarterly amounted to
about 450/. In June, 1934, he was insolvent : he had borrowed
over 60,000/., over 40,0001. from personal friends, to finance an

(1) 20 Sup. Ct. (Cape of Good Hope) 538.
(2) 4 Bligh N. S. 194.

593

Veal ME {5
1938
—~

BERESFORD
v.
ROYAL

INSURANCE
Co.

594

Hmiva(E.)
1938
—_
BERESFORD
v.
RoyvAL

INSURANCE
Co.

Lord Atkin.

HOUSE OF LORDS [1988]

invention for hardening steel, which had been unsuccessful. In
addition he had borrowed from the respondents on the security
of the policies the sum of 6791/._ The policies at this date had
no surrender value above the amount advanced: and he was
unable to pay the premium. At a series of interviews with the
representative of the defendants he obtained extensions of time
for payment of the premium: the last and final extension was
to 3 P.M. on August 3. At about 2.57 p.m. on that day he
shot himself. Letters and interviews on that day made it
clear that he shot himself for the purpose of the policy moneys
being made available for the payment of his debts. The action
was tried by Swift J. and a special jury. The jury, by consent
of counsel, were only asked to decide the question whether the
assured was sane when he took his life. They answered this
question in the affirmative. A question had been raised at the
trial as to whether the test of insanity in such a case was the
well known test negativing criminal responsibility or was
something different. The jury negatived insanity in either of
the forms put to them: and the question is no longer relevant
in these proceedings. Though the defendants had not pleaded
public policy, they raised that contention in the course of
argument. It was in any case in my opinion a matter which the
judge would be bound to discuss and determine on his own
initiative. Swift J. came to the conclusion that the rules of
public policy did not prevent the plaintiff from recovering, and
entered judgment for the plaintiff. The Court of Appeal held
that it was contrary to public policy for the plaintiff to be
entitled to enforce the contract and entered judgment for the
defendants.

In discussing the important subject of the effect of suicide on
policies of life insurance it is necessary to distinguish between
two different questions that are apt to be confused : (1.) What
was the contract made by the parties? (2.) How is that
contract affected by public policy ?

(x.) On the first question, if there is no express reference to
suicide in the policy, two results follow. In the first place
intentional suicide by a man of sound mind, which I will call
sane suicide, ignoring the important question of the test of

AO? AND PRIVY COUNCIL.

sanity, will prevent the representatives of the assured from
recovering. On ordinary principles of insurance law an assured
cannot by his own deliberate act cause the event upon which
the insurance money is payable. The insurers have not agreed
to pay on that happening. The fire assured cannot recover if
he intentionally burns down his house, nor the marine assured
if he scuttles his ship, nor the life assured if he deliberately
ends his own life. This is not the result of public policy,
but of the correct construction of the contract. In the second
place this doctrine obviously does not apply to insane suicide,
if one premises that the insanity-in question prevents the act
from being in law the act of the assured.

On the other hand, the contract may and often does expressly
deal with the event of suicide : and that whether sane or insane.
It may provide that death arising at any time from suicide of
either class is not covered by the policy. It may make the same
stipulation in respect of suicide of either or both classes
happening within a limited time from the inception of the
policy. The rights given to the parties by the contract must
be ascertained according to the ordinary rules of construction :
and it is only after such ascertainment that the question of
public policy arises. In the present case the contract contained
in the policy provided that the company would pay the sum
assured to the person or persons to whom the same is payable
upon proof of the happening of the event on which the sum
assured was to become payable. It further provided that the
policy was subject to the conditions and privileges endorsed
so far as applicable. It contained the further stipulation
that unless it was otherwise provided in the schedule the
policy, subject to the endorsed conditions, was indisputable.
The schedule specified the assured as Charles Rowlandson, the
life assured as the assured, the event on the happening of which
the sum was to become payable as the death of the life assured,
and the person or persons to whom the sum was payable as
the executors, administrators or assigns of the assured. The
only relevant condition is condition 4, which reads as follows :
"Tf the life or any one of the lives assured (being also the
'"'assured or one of them) shall die by his own hand, whether

595

Eve aE)
1938

——
BERESFORD
v.
ROYAL
INSURANCE
Co.

Lord Atkin.

596

Hee. (E-)
1938
~~

BERESFORD
Vv.

ROYAL

INSURANCE
(Gyoy

Lord Atkin,

HOUSE OF LORDS [1988]

'sane or insane, within one year from the commencement of
"the assurance, the policy shall be void as against any person
"claiming the amount hereby assured or any part thereof,
"except that it shall remain in force to the extent to which a
'bona fide interest for pecuniary consideration, or as a security
"for money, possessed or acquired by a third party before the
'date of such death, shall be established to the satisfaction of
"the Directors."

My Lords, I entertain no doubt that on the true construction
of this contract the insurance company have agreed with the
assured to pay to his executors or assigns on his death the sum
assured if he dies by his own hand whether sane or insane
after the expiration of one year from the commencement of the
assurance. The express protection limited to one year, and the
clause as to the policy being indisputable subject to that
limited exception seem to make this conclusion inevitable.
The respondents' counsel appeared shocked that it should be
considered that a reputable company could have intended to
make such a contract : but the meaning is clear : and one may
assume from what one knows of tariff conditions that it is a
usual clause. There is no doubt therefore that on the proper
construction of this contract the insurance company promised
Major Rowlandson that if he in full possession of his senses
intentionally killed himself they would pay his executors or
assigns the sum assured.

(2.) The contract between the parties has thus been ascer-
tained. There now arises the question whether such a contract
is enforceable in a court of law. In my opinion it is not en-
forceable. The principle is stated in the judgment of Fry L.J.
in Cleaver v. Mutual Reserve Fund Life Association (1): ''It
"appears to me that no system of jurisprudence can with
"reason include amongst the rights which it enforces rights
"directly resulting to the person asserting them from the crime
"of that person." The cases establishing this doctrine have
been fully discussed by Lord Wright M.R. in his judgment in
the present case. I mention some of them in order to call
attention to the fact that, while in the earlier cases different

(1) [1892] 1 Q. B. 147, 156.

A. CG. AND PRIVY COUNCIL.

reasons have been given for the rule, the principle can now be
expressed in very general terms. In Fauntleroy's case, Amicable
Insurance Society v. Bolland (x), the Lord Chancellor refused to
allow the assignees of a bankrupt who had committed forgery
to recover the proceeds of a life insurance taken out by the
forger who had been convicted and executed. 'Is it not void
"upon the plainest principles of public policy ? Would not
"such a contract (if available) take away one of those restraints
"operating on the minds of men against the commission of
"crimes, namely, the interest we have in the welfare and
"prosperity of our connexions?"' It may be of interest to
note with regard to this famous case that Lord Lyndhurst
had as Attorney-General been leader for the prosecution at the
trial of Fauntleroy. In this case the ground given is the
removal of a restraint against the commission of crime. In
Moore v. Woolsey (2) the Court of Queen's Bench refused to
hold void a condition that a policy on the life of a person who
should die by his own hands would remain in force to the
extent of any bona fide interest acquired as security for money.
The assured had died by his own hand, but whether sane or
insane did not appear. Lord Campbell, in deciding for the
plaintiff, said that a stipulation that if a man committed suicide
within a year the policy should give a right of action would be
void. He appears to put it on the ground that it would offer
an encouragement to suicide. In Cleaver's case (3) the executors
of James Maybrick were suing on a life policy which he had
effected in favour of his wife, who had been convicted of his
murder. The objection that the executors were suing to enforce
a trust in favour of the wife was got over by holding that the
wife could get no benefit from her crime, but that, her interest
failing, the executors could recover for the benefit of the
testator's estate. It should be noticed that on the principle
stated it is not a question of refusing to enforce a contract
made by the criminal: the doctrine avoids a testamentary
gift: and it would appear to be immaterial whether the
criminal knows or not of the intended gift. If he does not

(1) 4 Bligh N. S. 194, 211. (3) [1892] 1 Q. B. 147.
(2) 4 E. & B. 243.

A. C. 1938. 3 2S

597
Hak. (5)
1938
~—
BERESFORD
v.
RovAL

INSURANCE
Co.

Lord Atkin.

598

leks Ie (Aee))
1938
"~——
BERESFORD
v.
ROYAL

INSURANCE
Co.

Lord Atkin.

HOUSE OF LORDS [1938]

know, the inducement to commit the crime and the removal of
the restraint against committing the crime both tend to
disappear as supports for the doctrine. In Crippen's case (1), the
question arose as to whether administration of the estate of a
deceased wife who had been murdered by her husband should
be granted to the next of kin of the wife passing over the legal
personal representative of the husband. The President, Sir
Samuel Evans, decided in favour of the wife's next of kin and
said (2): 'It is clear that the law is, that no person can
"obtain, or enforce, any rights resulting to him from his own
"crime ; neither can his representative, claiming under him,
'obtain or enforce any such rights. The human mind revolts
"at the very idea that any other doctrine could be possible in
"our system of jurisprudence."' Finally, in Hall v. Knight and
Baxter (3), the Court decided that a woman who had killed a
testator in circumstances that amounted to manslaughter,
but not, it would appear, manslaughter by negligence, could
not be allowed to claim probate as a legatee under the will of
the testator. Swinfen Eady L.J. said (4): '"'The estate of the
"testator must go in the same way as if there were no benefit
"given to Jean Baxter by the will and that she cannot in any
"way benefit from the crime which she has committed. I
"see no reason for restricting the rule to cases of murder."
Lord Sumner, then Hamilton L.J., said (5): '' The principle
"can only be expressed in that wide form. It is that a man
"shall not slay his benefactor and thereby take his bounty."
It may be remarked that this pithy statement, while applicable
to the case under discussion, is not as wide as the principle
permits. It would not be apt to decide a claim under a
contract where the criminal may have given full consideration,
and could hardly be said to be "taking bounty from a
"benefactor." I think that the principle is that a man is
not to be allowed to have recourse to a Court of Justice to
claim a benefit from his crime whether under a contract
or a gift. No doubt the rule pays regard to the fact that to

(1) [1911] P. 108. (4) [1914] P. 8.
(2) Ibid. rr2. (5) Ibid. 7.
(3) [t914] P. 1.

A. C. AND PRIVY COUNCIL.

hold otherwise would in some cases offer an inducement to
crime or remove a restraint to crime, and that its effect is to
act as a deterrent to crime. But apart from these considera-
tions the absolute rule is that the Courts will not recognize
a benefit accruing to a criminal from his crime.

The application of this principle to the present case is not
difficult. Deliberate suicide, felo de se, is and always has been
regarded in English law as a crime, though by the very nature
of it the offender escapes personal punishment. Indeed,
Sir John Jervis, in his first edition of his book on the office
and duties of coroners, said: "Self murder is wisely and
"religiously considered by the English law as the most
"heinous description of felonious homicide.'' The coroner's
inquisition, as Lord Wright pointed out, formerly recorded
"felonice se murderavit '', is now (Coroners' Rules, 1927)
"the said C.D. did feloniously kill himself.'' The suicide is a
felon: on the inquisition his goods were forfeited (though
apparently not his lands). By English law a survivor who had
agreed with him to commit suicide with him is guilty of murder :
and the attempt to commit suicide is an attempt to commit
a felony and punishable accordingly: Rex v. Mann. (t)
The remaining question is whether the principle applies
where the criminal is dead and his personal representative is
seeking to recover a benefit which only takes shape after his
death. It must be remembered that the money becomes due,
if at all, under an agreement made by the deceased during his
life for the express purpose of benefiting his estate after his
death. During his life he had power of complete testamentary
disposition over it. I cannot think the principle of public
policy to be so narrow as not to include the increase of the
criminal's estate amongst the benefits which he is deprived of
by his crime. His executor or administrator claims as his
representative, and, as his representative, falls under the
same ban.

Anxiety is naturally aroused by the thought that this
principle may be invoked so as to destroy the security given to
lenders and others by policies of life insurance which are in

(1) (1914) 10 Cr. App. R. 31.
3 24S) 7)

599

Hal Ibe (2h)
1938
—
BERESFORD
v.
ROYAL

INSURANCE
Co.

Lord Atkin.

600

lal, ibe (08,))
1938
—
BERESFORD
v.
ROYAL

INSURANCE
Co.

Lord Atkin.

HOUSE OF LORDS [19388]

daily use for that purpose. The question does not directly
arise, and I do not think that anything said in this case can be
authoritative. But I consider myself free to say that I cannot
see that there is any objection to an assignee for value before
the suicide enforcing a policy which contains an express
promise to pay upon sane suicide, at any rate so far as the |
payment is to extend to the actual interest of the assignee.
It is plain that a lender may himself insure the life of the
borrower against sane suicide ; and the assignee of the policy
is in a similar position so far as public policy is concerned.
I have little doubt that after this decision the life companies
will frame a clause which is unobjectionable: and they will
have the support of the decision of the Court of Queen's Bench
in Moore v. Woolsey (1), where a clause protecting bona fide
interests was upheld. It was suggested to us that so far as the
doctrine was applied to contracts it would have the effect of
making the whole contract illegal. I think that the simple
answer is that this is a contract to pay on an event which
may happen from many causes, one only of which involves a
crime by the assured. The cause is severable and the contract,
apart from the criminal cause, is perfectly valid.

I do not deal with the United States cases which have been
discussed sufficiently by Lord Wright. I attach much
importance to uniformity of result in the Courts of the two
countries in matters of such strong mutual interest as the law
of insurance. But questions of public policy must develop
nationally : and it would be unreasonable to expect identity
of outlook in the Courts of all countries. I cannot forbear,
however, to mention the case of Northwestern Mutual Life
Insurance Co. v. Johnson (2), for the reason that the judgment
was given by Holmes J., a name always to be received with
veneration by an English lawyer. The decision seems to me
contrary to the general trend of United States decisions up
to its date: and seems only to be applicable where a rule of
public policy of the State whose law is the proper law
governing the insurance policy cannot be ascertained. It
contains no discussion of the rule of public policy that could

(1) 4 E. & B. 243. (2) 254 U.S. 96.

A.C: : AND PRIVY COUNCIL.

be applied except that the promise to pay may evoke a possible
motive for self slaughter. In reference to such a ground the
judgment points out that the motive is no stronger than the
motive for murder where an insurance is taken out on the life
of a third party. From that point of view I think that the
criticism is just: and I am glad to find support in it for the
view I recently expressed in Fender v. St. John-Mildmay (1),
where I suggested that for tendency to play a part in public
policy it must be in a case where the parties generally or in a
considerable number of cases will be exposed to a real
temptation and it is likely that they will yield to it. But,
as has already been pointed out in this opinion, the principle
of public policy applied in these Courts goes far beyond the
supposed motive for self slaughter. For the reason I have
given I think that this contract is in the circumstances
unenforceable. I agree with the judgment of the Court of
Appeal, and am of opinion that this appeal should be
be dismissed with costs.

My Lords, I am asked to say that my noble and learned
friend Lord Thankerton agrees with the opinion which I have
just expressed.

LorD RUSSELL OF KILLOWEN. My Lords, I also agree.

Lorp MacmiILLan. My Lords, the respondent insurance
company issued to the late Major Rowlandson a series of life
policies whereby, in consideration of the payment by him
of the stipulated premiums, they undertook to pay certain
sums of money to his executors, administrators or assigns
in the event of his death. Each policy was declared, subject
to the endorsed conditions, to be indisputable. The fourth
endorsed condition is the only one material for the present
purpose. I need not set it out as it has just been read by my
noble and learned friend on the Woolsack.

The stipulated premiums were paid for a number of years
by the assured till, on August 3, 1934, the event, on the
occurrence of which the respondents had undertaken to

(1) [1938] A. C. 1, 13.

601

lets By, (2)
1938
—
BERESFORD
v.
Roya

INSURANCE
Co.

Lord Atkin,

602 HOUSE OF LORDS [1988]

H.L. (E.) make payment—namely, the death of the assured—took place.
1938 | Inasmuch as his death did not occur within one year from the
ees commencement of the assurance, the fourth condition of the
. policy is inapplicable, and it is not suggested that any other

RoyAL

InsuRANCE condition avoiding or affecting the respondents' liability
Co. % :
—— applies. The respondents are accordingly by the terms of
Lord Macmillan.

_ their contracts incontestably under obligation to pay the
policy moneys to the appellant, as the assured's administratrix,
under deduction of certain sums advanced by the respondents
to the assured.

The respondents, however, maintain that it would be
contrary to public policy that a court of law should order
them to fulfil their contracts, on the ground that the assured,
as is the fact, died by his own hand while sane.

My Lords, on the question of the construction of the
contracts, I have no difficulty. If the policies had contained
no reference at all to suicide, I should have been of opinion
that they did not cover the contingency of the assured
committing suicide while sane, or in other words that the
event of the assured's death did not mean or include the event
of his self-caused death while sane. But the policies do contain
an express reference to the contingency of suicide in the fourth
condition, which avoids the policies in the event of the assured
dying by his own hand, whether sane or insane, within one
year from the commencement of the assurance. This
condition, as I read it, is a pregnant condition. Coupled
with the declaration of indisputability, I think that it
necessarily implies a positive undertaking to pay if the assured
dies by his own hand, sane or insane, after the expiry of a year
from the commencement of the assurance.

The question therefore is whether it is contrary to public
policy for a court of law to enforce a contractual undertaking
by an assurance company to pay a sum of money to an
assured's representatives in the event of his dying by his own
hand while sane after the expiry of a year from the commence-
ment of the assurance.

My Lords, I confess that I have found this question a
difficult one. I need not rehearse the emphatic reminders

A. C. AND PRIVY COUNCIL.

contained in the speeches of the noble and learned Lords who
were in the majority in the recent case of Fender v. St. John-
Mildmay (1), on the subject of the dangers which attend the
application of considerations of public policy to contracts
deliberately undertaken by persons of full age. The first
question must always be—what is the principle of public
policy which would be infringed by the enforcement of the
contract ? In the present instance, the principle which, it
is said, would be infringed is the principle that no Court
ought to assist a criminal to derive benefit from his crime ;
it has also been put in this form—that no Court ought to
enforce stipulations tending to induce the commission of a
crime. That there are such principles of public policy to
which the Courts ought to give effect, I do not doubt. But
in the present case would the enforcement of the respondents'
obligation enable a criminal to take benefit from his crime ?
Or can it be said that the obligation now sought to be enforced
was one which held out an inducement to commit a crime, to
wit, the crime of felo de se ?

It was certainly not the desire or intention of the
respondents in framing their policies as they did to offer any
inducement to the commission of the crime of suicide. It
was directly contrary to their interest that the assured should
commit suicide and bring their obligation prematurely into
operation. The respondents did not agree to pay the policy
moneys in consideration of the assured committing suicide,
which would plainly have been a turpis causa, but in
consideration of the assured making payment of the stipulated
premiums, and the longer he lived and paid these premiums
the better for the respondents. The event of his suicide,
although they undertook to pay on its occurrence, was
certainly not an event which the respondents desired to induce
the assured to bring about. By providing that they would
not pay if the assured committed suicide within a year of the
commencement of the assurance the respondents provided
some safeguard against the assured taking out a policy with
a view to suicide, for few suicides can be so provident as to

(1) [1938] A. C. 1.

603

Hig 2 (Bs)
1938
—
BERESFORD
v.
ROYAL

INSURANCE
Co.

Lord Macmillan.

604

ret (BA)
1938

—_——
BERESFORD
wv.
ROYAL
INSURANCE
Co.

Lord Macmillan.

HOUSE OF LORDS [1938]

plan the commission of the act more than a year ahead.

Moreover, it is plain that the benefit of the crime, in the
sense of receiving the policy moneys, could never be enjoyed
by the assured, for it is a condition of the benefit that it shall
not accrue till after his death. There is obviously much less
inducement to commit a crime in order to benefit others than
to commit it in order to benefit oneself. The instinct of self-
preservation may be said to provide a stronger motive against
suicide than the desire to benefit relatives or creditors can be
said to provide a motive to commit suicide, though it was no
doubt true in Major Rowlandson's case that the benefit to be
derived by his creditors from his death influenced him in
taking his own life. If the plea of public policy is sustained in
this case, the remarkable result will ensue that the respondents
who are said to have provided the assured with the inducement
to commit a crime will be the only persons to benefit by its
commission for they will retain the premiums paid by the
assured without any liability to fulfil the obligation in con-
sideration of which they received them.

There may truly be said to be a conflict of principles of
public policy involved, for it is undeniably a principle of public
policy that persons who enter into contractual engagements
should be required to fulfil them. It is of the first importance,
in particular, that policies of life assurance, which are among
the most useful instruments of credit, should not be subject
to any contingent invalidity, and the present form of clause
was no doubt adopted by the respondents, an eminently
reputable company, and presumably by other equally reput-
able companies, solely with a view to rendering their
policies attractive by reason of their stipulated incontesta-
bility.

Finally, there is the decision of the Supreme Court of the
United States in Northwestern Mutual Life Co. v. Johnson (x)
where payment was enforced in the case of a suicide under
a policy containing a clause practically the same as the present
clause and the view that it was contrary to public policy to
do so was negatived, a decision all the more striking in that it

(1) 254 U.S. 96.

A. ©. AND PRIVY COUNCIL. 605

was contrary to the view previously entertained by that H.L. (E,)
eminent Court. 1938

My Lords, I have accumulated these considerations in justi- Brrzsrorp
fication of the difficulty which I have experienced in con- pi,
curring with your Lordships, and it is perhaps as well that Neg
I should have done so in order that it may not be thought that
any of them have been overlooked. But, after carefully
weighing them, I do not find them, cogent as they are, suffi-
ciently convincing to deter me from agreeing with your
Lordships' conclusion. I need not repeat the considerations
leading to that conclusion which have been so fully developed
by my noble and learned friend on the woolsack and also in
the Court of Appeal. I feel the force of the view that to
increase the estate which a criminal leaves behind him is to
benefit him. To enforce payment in favour of the assured's
representative would be to give him a benefit, albeit in a sense
a post-mortem benefit, the benefit, namely, of having by his
last and criminal act provided for his relatives or creditors.
And no criminal can be allowed to benefit in any way by his
crime.

I return to the simple question—ought the Courts to
enforce a contract to pay a sum of money to a person's repre-
sentatives in the event of his committing felo de se? In my
opinion I am bound to answer this question in the negative,
both on principle and, so far as the Courts of this country are
concerned, by authority. I should add that I desire to reserve
my opinion as to the position of third parties who have bona
fide acquired rights for value under such policies.

Lord Macmillan.

Appeal dismissed.