Taxi Driver Online

This is an interesting case which caught my eye and it immediately drew my attention to making specific narrow terms when supplying data for insuarance purposes.

[COURT OF APPEAL]

FARR v. MOTOR TRADERS MUTUAL INSURANCE SOCIETY, LIMITED. [1919. F. 576.]

1920 June 10.

BANKES, WARRINGTON, and SCRUTTON L.JJ.

Insurance (Accident) - Insurance of Motor Cab - Statement in Proposal - To be driven in one Shift per 24 Hours - Incorporated in and made Basis of Contract - Warranty or Description of Risk.

The plaintiff was the owner of two taxi-cabs which he insured with the defendants in February, 1918, for one year against damage caused to either of them by accidental external means. In the proposal for the policy the plaintiff, in answer to a question, stated that each cab was to be driven in one shift per 24 hours.

At the foot of the proposal form the plaintiff stated that the above statements was true, and the policy provided that the statements in the proposal were to be the basis of the contract and to be considered as incorporated therein. In August, 1918, while one of the cabs was undergoing repair, the other cab was driven in two shifts per 24 hours for a very short time, and from that time until the accident hereinafter mentioned happened the two cabs were driven in one shift only.

In November, 1918, the cab which had been driven in two shifts in August was injured by an accident. It was at that time being driven in one shift only. In an action on the policy to recover in respect of the damage so caused, the defendants contended that the statement in the proposal that the cab was to be driven in one shift per 24 hours was a warranty, and upon breach thereof the insurance came to an end:-

Held, that the statement was not a warranty, but was merely descriptive of the risk, indicating that the cab, whilst being driven in more than one shift per 24 hours, would cease to be covered by the policy, but would be covered whilst being driven in one shift; and that the defendants were liable.

APPEAL from the judgment of Rowlatt J. at the trial of the action with a common jury.

The action was brought to recover a sum of money under a policy of insurance on a motor taxi-cab.

The plaintiff was the proprietor of two motor taxi-cabs in Belfast. On February 15, 1918, he signed a proposal for insuring the taxi-cabs with the defendants at a premium of 36l. a year. The proposal form contained the following (among other) questions, to which the plaintiff gave the answers herein stated: "State whether vehicles are used for public or private hire." - "Public." "Is the vehicle driven solely by the proposer?" - "No." "If not, state whether driven in one or more shifts per 24 hours." - "Just one." At the foot of the proposal form there was the following declaration: "I declare that all the above statements and particulars are true and complete and that I have not withheld any material information." Upon that proposal a policy, dated February 27, 1918, was issued, insuring the two taxi-cabs for one year against (so far as material to this case) any damage occasioned by accidental external means to any of the insured's motor vehicles described in the schedule thereto whilst being driven by the insured or by his licensed and duly authorized paid male driver.

The policy contained a recital that the insured had made to the defendants "a written proposal and declaration containing certain particulars and statements which it is hereby agreed shall be the basis of this contract and be considered as incorporated herein." The policy was made subject to the conditions indorsed thereon, one of which stated that the policy was granted on the express condition "that all statements made by the insured in the said proposal are true in every respect, and that if either this policy or any renewal hereof be obtained through any misrepresentation, suppression, concealment, or untrue averment whatsoever by or on behalf of the insured all claims hereunder shall be absolutely void and all premiums paid in respect hereof forfeited to" the defendants.

Each taxi-cab had its own driver who was duly licensed, and who took it out for one shift each day. A shift lasted about 8 hours. On August 19, 1918, one of the taxi-cabs was being repaired, and when the driver of the other cab came in after having driven it for one shift, the other driver was allowed to take it out for a second shift so as to "earn a few shillings." The cab was driven for a short time in two shifts in August. From that time each cab was driven in one shift only. On November 7, 1918, an accident happened to the same taxi-cab (that is, the one which had been driven in two shifts in August) while being driven in one shift, and it was damaged to the extent of 121l. 4s. 6d.

The plaintiff brought this action to recover that sum from the defendants under the policy. (1) The defendants contended that as the statement in the proposal that the cab was only to be driven in one shift per 24 hours was made the basis of the contract, this averment having been broken the policy became void. No question was put to the jury in reference to this claim.

Rowlatt J. held that the effect of the statement in the proposal that the cab was only to be driven in one shift per 24 hours was that the defendants were only to be liable when the cab was being driven in one shift per 24 hours, and were not to be liable when the cab was being

(1) An accident happened to the cab when it was being driven in two shifts in August, and a claim was also made in this action in respect of that accident. The jury were asked whether running in two shifts increased the risk, and they answered, Yes. Rowlatt J. gave judgment for the defendants on that claim, and it is unnecessary further to refer to it. driven in more than one shift; that it was merely a limitation of the risk, and that the fact that the cab had been driven in two shifts in the previous August did not render the policy void. He accordingly gave judgment for the plaintiff for the sum claimed.

The defendants appealed.

Sylvain Mayer K.C. and Merlin for the defendants. The statement in the proposal that the taxi-cab was to be driven in one shift per 24 hours is a warranty, and having been broken when the cab was driven in two shifts per 24 hours in August, the policy on this taxi-cab became void.

The statements in the proposal were incorporated in and made the basis of the contract in the policy, and by the condition indorsed on the policy the untrue averment made all claims thereunder absolutely void. The amount of the premium depends on the number of shifts in which the cab is run. One of the defendants' witnesses said that he would not insure a car run in two shifts.

In Thomson v. Weems (1) Lord Blackburn said: "In policies of marine insurance I think it is settled by authority that any statement of a fact bearing upon the risk introduced into the written policy is, by whatever words and in whatever place, to be construed as a warranty, and, prima facie, at least that the compliance with that warranty is a condition precedent to the attaching of the risk.

I think that on the balance of authority the general principles of insurance law apply to all insurances, whether marine, life, or fire." In Dalglish v. Jarvie (2) Rolfe B. said: "In cases of insurance a party is required not only to state all matters within his knowledge, which he believes to be material to the question of the insurance, but all which in point of fact are so. If he conceals anything that he knows to be material, it is a fraud; but besides that, if he conceals anything that may influence the rate of premium which the underwriter may require, although he does not know that it would have that effect, such concealment entirely vitiates the policy." That exactly applies to the present case. If the plaintiff's contention is correct, the cab might be driven for thirty days in two shifts and for one day in one shift, and if it was damaged by an accident on that one day the plaintiff could recover. This seems an unreasonable construction of the policy. The defendants therefore are not liable.

[Bean v. Stupart (1) was also cited.]

J. G. Hurst K.C. and Moritz for the plaintiff were not called upon.

BANKES L.J.

The question in this appeal relates to the construction of a contract of insurance into which the parties have entered. The assured answered certain questions in a proposal form, and those questions and the answers thereto were made the basis of the contract and were incorporated therein.

The only question for decision by the learned judge, and by us, is whether the answer to one of the questions constitutes a warranty by the assured. If, as a matter of construction, it can properly be held that the question and answer amount to a warranty, then, however absurd it may appear, the parties have made a bargain to that effect, and if the warranty is broken, the policy comes to an end.

The position is very clearly and accurately put in Macgillivray on Insurance Law, p. 360, to which Scrutton L.J. has called my attention. In the section dealing with representations and warranties in fire policies he says: "It is a little doubtful how much is to be inferred from the mere description in a fire or burglary policy of the premises or goods insured. It may be put in three ways: (i.) that the description is a representation of the state of the premises or goods; (ii.) that the description is a definition of risk; (iii.) that the description is a warranty that the premises or goods shall correspond thereto."

In this case the question which we have to decide is whether the particular statement in the proposal form is a definition of the risk or a warranty. Then he says: "But if the description is embodied in the policy" which is the case here - "either actually or by reference, it has at least the force of a limitation of the risk to be run. In this view the premises or goods will be covered by the policy so long, but only so long, as they comply with the description, and if the description is considered merely as a limitation of the risk and not a warranty the insurer will not be wholly discharged, but the policy will merely cease to attach until the property once more corresponds to the description." In the present case the proposal form contains the following: "Is the vehicle driven solely by the proposer?" - "No." "If not, state whether driven in one or more shifts per 24 hours." - "Just one."

That was a true statement at the time it was made, and it remained a true description of the risk down to August. In that month one of the two taxi-cabs which the assured owned required some repairs, and it was sent away for that purpose. When it was away the assured gave the driver of that cab permission to take out the other cab, as the assured said, in order to earn a few shillings. As a consequence that taxi-cab was for a day or a little longer driven in more than one shift each 24 hours; but apparently that took place for a very short time. Then the practice of driving these two cabs separately by separate drivers in one shift per day each was resumed, and continued down to and including the date when the second accident happened.

The question is whether we are to construe the question and answer, as the defendants contend, as a warranty, the effect of which would be that in August, when the cab was driven in two shifts per day, the policy came to an end; or whether we are to construe them, as Rowlatt J. has construed them, as words descriptive of the risk, indicating that whilst the cab is driven in one shift per 24 hours the risk will be covered, but that if in any one day of 24 hours the cab is driven in more than one shift, the risk will no longer be covered and will cease to attach until the owner resumes the practice of driving the cab in one shift only. In my opinion, having regard to the nature of the question, it is impossible to construe the answer thereto as a warranty.

On these short grounds I think that the view taken by Rowlatt J. upon the construction of this contract is the correct one, and that the appeal fails.

WARRINGTON and SCRUTTON L.JJ. agreed.

Appeal dismissed.

Solicitors for plaintiff: Robbins, Olivey & Lake.
Solicitors for defendants: Curtis & Co.
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