Castellain v Preston

8/10/2019 Castellain v Preston

1/28

3 80 QUEEN'S BENCH DIVISION. VOL. X I .

1883 [IN TH E COURT OF APP EA L.]

March 12 .

CASTELLAIN v. PRESTON AND OTHERS.

Insurance (Fire) Contract of Indemnity Vendor and Purchaser Insurance

by Vendor Fire after Contract for Sale, out before Com pletion Bight to

Insurance M oneys

Subrogation.

According to the doctrine of subrogation, as between the insurer and the

assured, the insurer is entitled to the advantage of every right of th e assured,

wh ether such right consists in contract, fulfilled or unfulfilled, or in remedy

for tort capable of being insisted on or already insisted on, or in any other right,

whether by way of condition or otherwise, legal or equitable, which can be, or

has been, exercised, or has accrued, and whether such right could or could not be

enforced by the insurer in the name of the assured, by the exercise or acquiring

of which right or condition the loss against which the assured is insured, can be

or has been dim inished.

A vendor contracted w ith a pu rchaser for th e sale, at a specified sum , of

a house, which had been insured by th e vendor w ith an insurance comp any

against fire. Th e contract contained no reference to the insurance. After

the date of the contract, bu t before th e date fixed for completion, th e house

was damaged by fire, and the vendor received the insurance-money from the

company. Th e purchase was afterwards completed, and the purchase-money

agreed u pon, witho ut any abatem ent on account of the damage by fire, was

paid to the vendor :

Held in an action by the company against the vendor, that the company

were entitled to recover a sum equal to the insurance-money from the vendor

for their own benefit.

Judgment of Chitty, J. (8 Q. B. D. 613), reversod.

APPEAL of the plaintiff from the judgment of Chitty, J., in

favour of the defendants. The facts are fully stated in the

report of the proceedings before Chitty, J. (1), and it is neces-

sary here only to briefly recapitulate them.

The plaintiff sued on behalf of the London, Liverpool, and

Globe Insurance Company to recover a sum of 3301. with in-

terest since the 25th of Septem ber, 1878. On the 25th of March,

1878,

the defendants, as owners of certain lands and buildings

in Liverpool, effected an insurance on the build ings against

loss by fire, and they kept the policy on foot by payment of the

(1) 8 Q. B. D. 613.


2/28

VOL. X I. QUEEN'S BENCH DIVISION.

381

premiums until after the fire hereinafter m entioned occurred. 1883

The policy was in the usual form, giving the insurers the option

of reinstating the property. On the 31st of Ju ly, 1878, the de-

fendants contracted to sell the land and the buildings to their

tenants, Messrs. Eayner, for the sum of 3100/ ., and they received

a deposit. The contract provided th at th e time of the comple-

tion should be such day within two years from the date as the

vendors should nam e. On the 15th of August in the same year

a fire occurred damaging part of the buildings. A claim was

made on behalf of the defendants, and after negotiation as to

the sum to be paid, the amount of the claim was ultimately

fixed at 330?., and that sum was in fact paid on the 25th of Sep-

tember, 1878, by the insurers, who were at that time ignorant of

the existence of the contract for sale. On the 25th of March,

1879,

the defendants named the 5th of May as the day of com-

pletion, and on the following 12th of December the conveyance

was executed and the balance of the purchase-money paid.

The present action was commenced on the 31st of October,

1881.

March 6, 10, 12. Charles Russell, Q.C.,a n d A. Aspinall Tobin,

for the

plaintiff.

A policy of fire-insurance is a contract of

indemnity, and the assured cannot derive a profit because the

thin g insured has been damaged by the peril insured agains t:

Darrellv. TiUbitts. (1) The insurer, who pays the sum insured, is

entitled to every benefit whereby the loss is diminished:

Randal

v.

Coohran

(2). The defendants hav ing received the agreed

amount of the purchase-money without any abatement, must be

considered to stand in the same position as a ship-owner, who,

although he has received the amount due upon a policy of insur-

ance after the happening of a loss, refuses to give up the salvage

to the underwriters; but it is clear law that the assured cannot

withhold the salvage from the insurer : 2 Arnould on Marine In-

surance, part 3, ch. 6, pp. 935, 936 (5th ed.) The decision of the

House of Lords inBurnand v.Rodocanachi(3 ), is not at variance

with the authorities above cite d; in t ha t case what the ship-

(1) 5 Q. B. D. 560. (3) 5 C. 1\ . 424 ; 6 Q. B. D. 63 3;

(2) 1

Vos. Sen.

98. 7

A pp, Cas. 333.


3/28

382 QUEEN'S BENCH DIVISION. VOL. XI.

1883 owners had received pursuant to the Act of Congress of th e

OASTBLLAIN

United States was a pure gift ; it did not accrue to them by way

PRESTON ^

sa

l

Y a

g

e

>

a u ^

e

damage caused by the fire being estimated by

the pa rties at 330?. Ultim ately, the pro perty having been already

agreed to be sold at a fixed price, the assured received the whole

amount of that price. Now they d id that in respect of a con tract

relating to the subject in sured, the house, and, to m y mind , if

they received the whole amount of the price which they pre-

viously had fixed as the value of the house, th at mu st of necessity

be brought into account when it was received, for the purpose of

ascertaining what was the ultimate loss against which they had

concluded a contract of indemnity with the insurance office.

Here the purchasers have paid the money in full, and as the

property was valued between the vendors and the purchasers at

3100?., the vendors got that sum in respect of that which had

been burned, but which had not been burned at the time when

the contract was entered into. They had fixed tha t to be th e

value,

and then any money which they get from the purchasers,

and which together with 330Z., the sum paid by the office,

exceeds the value. of the property as fixed by them under th e

contract to sell, must diminish, and in fact entirely extinguishes-

the loss occasioned to the vendors of the property by the fire.

Therefore, though it cannot, to my mind, be said that the insurers

are entitled, because the purchase is completed, to get back the

money which they have paid, yet they are entitled to take into

account the money subsequently received under a contract for the

sale of the property existing at the time of the loss, in order to

see what the ultimate loss was against which they gave their

contract of indem nity. On the principle ofD arrellv.Tibhitts(1),

when' the benefit afterwards accrued by the com pletion of the

purchase, the insurance company were entitled to demand that

the money paid by them should be brought into account. There-

fore the conclusion at which I have arrived is, that if the pu r-

chase-money has been paid in full, the insurance office will get

back that which they have paid, on the ground that the subse-

quent payment of the price which had been before agreed upon,

and the contract for payment of which was existing at the time,

(1) 5 Q. B. D. 560.


18/28

VOL.

X I.

QUEEN'S BENCH DIVISION.

39 7

must

b e

brought into account

b y t h e

assured, because

i t

diminishes

1883

the loss against which

t h e

insur ance office mer ely un der too k

t o

CASTELLAIN

indemnify them. I n m y opinion, therefore, t h e decision below

p

RE

^

T0 N

was erroneous.

I

think Chit ty,

J . ,

based

i t

upon this, that

i n

this

" '

r

'

Cotton, Ti.J.

case the re was no r ight of subrogation, no contract which the office

could have insisted upon enforcing for thei r benefit. I th ink it

immaterial to decide that question, because the vendors have

exercised their right to insist upon the completion of the

purchase.

BOWEN,

L . J. I am of the same opinion.

The answer to the question raised before us appears to me to

follow as a deduction from the two propositions, first, that a fire

insurance is a contract of ind em nity; and secondly, tha t when

4here is a contract of indemnity no more can be recovered by the

assured than the amount of his loss.

F irs t of all, is a fire insurance a contract of indem nity ? I t

appears to me it is quite as much a contract of indemnity as a

marine insurance is: the differences between the two are caused

by the diversity of the subject-matters. On a m arine policy a ship

jnay be insured which is a t a distance and moveable, or goods

may be insured on board of vessels which are a t a distance , and on

a fire policy a house is insured which is fixed to the la nd; bu t both

ar e contracts of indem nity. Only those can recover who have an

insurable interest, and the y can recover only to the ex tent to which

th at insurable in terest is damaged by the loss. In the course of

th e argum ent it has been sought to establish a distinction between

a fire policy and a marine policy. I t has been urged tha t a fire

policy is not qu ite a contract of indem nity, and that the assured

can get something more than what he has lost. I t seems to me

th a t there is no justification in autho rity, and I can see no founda-

tion in reason, for any suggestion of tha t kind . W ha t is it that

is insured in a fire policy ? Not the bricks and the materials

used in building the house, but the interest of the assured in

th e subject-matter of insurance, not the legal interest only, but

.the beneficial in te re st; and I do not know any reason why there

should be a different definition of what is an insurable interest in

fire po licies from that which is well known as the established


19/28

398 QUEEN'S BENCH DIVISION. .VOL.XI.

1883 definition

in

marine

policies,

allowance being made

for the

differ-

CASTELLAIN

ences

of the

subject-matter.

I t

seems

to me

that

it is an

ocular

PBESTON

illusion

to

suppose that under

any

circumstances more

may be

obtained by the assured tha n the amount of the

loss.

I th ink

Buwen, L .J . "

this illusion can be detected if it is recollected what are the

ordinary business rules according to which insurances are made.

It is well known in marine and in fire insurances that a person

who has a limited interest may insure nevertheless on the total

value of the subject-matter of the insurance, and he may recover

the whole value, subject to these two provisions; first of all,

the form of his policy must be such as to enable him.to recover

the total value, because the assured may so limit himself by the

way in which he insures as not really to insure the whole value

of the subject-m atter; and secondly, he must intend to insure the

whole value at the tim e. W hen the insurance is effected he

cannot recover the entire value unless he has intended to insure

the entire value. A person with a limited intere st may insure

either for himself and to cover his own inte rest on ly, or he m ay

insure so as to cover not merely his own limited interest, but the

interest of all others who are interested in the prope rty. I t is a

question of fact what is his intention when he obtains the policy.

B ut he can only hold for so much as he has intende d to insure.

Let us take a few of the cases which are most commonly known

in com merce' of persons who insure. There are persons who have

a limited interest and yet who insure for more than a limited

interest, who insure for the total value of the subject-matter.

There is the case, which is I suppose the most common, of

carriers and wharfingers and commercial agents, who have an

interest in the adventure. I t is well known what their r igh ts

are.

Then, to take a case which perhaps illustrates more exactly

the argum ent, let us turn to the case of a mortgagee. If he has

the legal ownership, he is entitled to insure for the whole value,

but even supposing he is not entitled to the legal ownership

he is entitle d to insure prima facie for all. If he inten ds to

cover only his mortgage and is only insuring his own interest, he

can only in

1

the event of a loss hold the amount to which he has

been damnified. If he has intended to cover other persons beside

himself, he can hold the surplus for those whom he has intended


20/28

.VOL. X I. .QUEEN'S BENCH DIVISION. ^399

to cover. B ut one th in g he can not do, th a t is, ha vin g inte nd ed 1883

only to cover himself and be in g a person whose int ere st is only CASTELLAMJ

l imi ted , he cannot hold anything beyond the amount of the

p

BE

"'

T

loss caused to his own pa rticu lar interest. Suppose for a m om ent

*

x

x

Bowen, L . J .

the case of a ship and a mortgagee who has lent 500Z. on the sh ip.

The sh ip is worth 10,000?. If h e insures for 10,000Z., mean ing

only to cover his own interest, and not the interest of anybody

besides, can it for a moment be supposed that the mortgagee

who insures under those circumstances can ho ld the 10,0002. ?

Tha t would be an over insurance, and to trea t it in any other

way would be to make a marine policy not a contract of indem-

ni ty , bu t a wager, a speculation for gain . Suppose, again, th ere

are several mortgagees for small sums, can they all recover and

hold (having ex hypothesi insured their separate interests only)

the en tire value of the ship ? I t seems to me they cannot. They

can recover only what they have lost. That being, as I appre-

hend , the law about m ortgages of ships, is there any real distinc-

tion between th at and the mortgagee of a house? I can see

none. I t seems to me tha t the same principle applies, and

here as. in many other problems of insurance law, the problem

will be solved by going back and resting upon the doctrine of

indemnity.

L et us take another instance which has been much pressed upon

us in the course of the argument, the case of a tenant for years or

a ten an t from year to year. W e have been asked to hold t ha t a

tenant from year to year can always recover the full value of the

house from the insurance company, although he has intended to

insure only his limited interest in it. There is some justification

for that in the language of James, L.J., in

Bayner

v.

Preston.

(1)

He says th is : " In my view of the case it is perhaps unnecessary

to refer to the Act of Parliam ent as to fire insurance. But th at

Act seems to me to shew that a policy of insurance on a house

was considered by the legislature, as I believe it to be considered

by the universal consensus of mankind, to be a policy for the

benefit of all persons interested in the property, and it appears to

me that a purchaser having an equitable interest under a contract

of sale is a person having an interest in the house within the

. 1) 18 Ch. D. 1, at p. 15. .


21/28

40 0 QUEEN'S BENCH DIVISION. VOL. X I.

1883 m ea nin g of the Ac t. I believe th at the re is no case to be found

CASTELLAIN

i

11

which th e liab ility of th e insura nce office has been limite d to

P E*'

ox

* ^

e v a

^

u e

f *

n e

interest of the insured in the house destroyed.

If a ten an t for life hav ing insure d his house has th e house d estroye d

Bowen, L.J .

J

or damaged by fire, I have never heard it suggested that the

insurance office could cut down his claim by shewing that he was

of extreme old age or suffering from a mortal disease." Now,

with the greatest possible respect and reverence for all that is left

to lis.of the judgm ents of a g reat judge like Jam es, L.J ., I confess

I do no t follow that . I have no doubt the insurance offices seldom

take the trouble to look to the exact interest of the tenant who

insures, or perhaps of the landlord who insures, and for the best

of all reasons because it is generally intended that the insurance

shall be made, not m erely to cover the limited interest of th e

tenan t, bu t also to cover the interest of all concerned. In most

cases the covenants as to repair throw liability on one side or the

other, and in a large class of leases the liability to repair is by

the provisions of the lease thrown upon the tenant. Therefore, in

these cases no question ever can arise between the insurance office

and the tena nt from year to year, or the tenan t for years, as to the

amount which the insurance office ough t to pay. But if a tenan t for

a year, or a tenan t for six mon ths, or a tena nt from week to week,

insures, meaning only to cover his interest, does anybody really

suppose that he could ge t the whole value of the house ? I t is tru e

that in most cases the claim of the tenant from year to year, or for

years, cannot be answered by handing over to him what may be

the marketable value of his property; and the reason is that he

insures more than the marketable value of his property, and he

loses more than the marketable value of his prop erty ; he loses

the house in which he is living and the beneficial enjoyment of

the house as well as its pecuniary value. Th at I th ink is all that

was meant by the Vice-Chancellor in

Simpson

v.

Scottish Union

Insurance C o.(1) I will pass on to the case of a life tenan t. I

will tak e the case of a life tenan t who is a very old m an, and

whose house is burnt down, but who has intended only to insure

his own interest. I am far from saying t ha t he could not under

any conceivable circumstances be entitled to have the house

(1) 1H .& M . 618, at p. 628.


22/28

VOL.XI. QUEEN'S BENCH DIVISION. 4 01

reinstated.

A m a n

cannot

be

compensated simply

b y

paying

1883

him for the marketable value of his interest. B u t i t does n o t CASTEIXAIN

follow from that that

h e

gets

or can

keep more than

he has

p

RE

^'

T0

K

lost. I very much doubt whether, if a life tenant, having ;

T

J

. Bowen, L.J .

intend ed to insure only his life intere st, dies within a. week

after the loss by fire, the Court would award his executory the

whole value of the house. In all these difficult problems I go

back with confidence to the broad principle of indemnity. App ly,

th at and an answer to the difficulty will always be found. The

present case arises between vendors and vendees. That does not

fall within the category of the cases which I have been discussing,

where a person with a limited interest intends only to cover his

own interest. Bu t can it be any exception to the infallible rule

tha t a man can on ly be indemnified to th e ex tent of his loss ?

W ha t is really the interest of the vendors, the assured ? Their

insurable interest is thisthey had insured against fire, and

they had then contracted with the purchasers for the sale of the

house, and, after th e contract, but before the completion, the fire

occurred. Their intere st therefore is that at law they are the

lega l owners, bu t their beneficial interest is that of vendors with

a lien for the unpaid purchase-m oney; they would get ultima tely

all the purchase-money provided the matter did not go off owing

to defective title. Such persons in the first instance can obviously

recover from the insurance company the entire amount of the

purchase-money. Th at was decided in the case ofCollingridgev.

Royal

Exchange Assurance Corporation (1); but can they keep the

whole, hav ing lost only half? Surely it would be m onstrous to say

that they could keep the whole, having lost only half. Suppose

for a moment that only 501.remained to be paid of the purchase-

money, and tha t a house had been burnt down to the value of

10,000?., would it be in accordance with any principle of ind em nity

th at persons who were only interested, and could only be interested

to the extent of 501.,could recover 10,000Z. ? They would be

ge tting a .windfall by the fire, their contract of insurance would

not be a contract against loss, it would be a speculation for gain .

Then what is the p rinciple which must be applied ? I t is a corol-

lary of th e grea t law of indem nity, and is to the following effect:

(1) 3 Q. B. D. 173.


23/28

402 QUEEN'S BENCH DIVISION.

VOL. XL

1883 That

a

person

who

wishes

to

recover

for and is

paid

by the

CASTELLAIN insurers as for atotal loss, cannot take with both hands. If he

p " has a means of diminishing the

loss,

the result of the use of

those means belongs

to the

underwriters.

If he

does diminish

Bowen, L. J.

the loss, he must account for the diminution to the underwriters.

In Simpsonv. Thomson (1) it is said by Lord Cairns, L.C .: " I

know of no foundation for the right of underwriters, except the

well known principle of law, that where one person has agreed to

indemnify another, he will, on making good the indem nity, be

entitled to succeed to all the ways and means by which the person

indemnified might have protected himself against or reimbursed

himself for the loss."

Is there any real distinction here between fire policies and

marine policies ? I t seems to me that the learned ju dg e below,

and the American au thorities on which he relies, have fallen into

the mistake of supposing that the distinction which obtains as to

certain incidents of marine policies and fire policies, is derived

from a difference of princ iple, and not from the diversity of th e

subject m atter. In any case the principle of indem nity is the

same, and there is no departure from it. I w ill make plain what

I mean by reading the language of Ch itty, J. He says, 8 Q. B. D .

618 : " An obvious distinction exists between the case of marine

insurance and of insurance of buildings annexed to the soil. In

the case of marine insurance where there is a constructive total

loss,the th ing is considered as abandoned to the underwriters, and

as vesting the property directly in them. Bu t this doctrine of

abandonment cannot be applied to the insurance of buildings

annexed to the soil; although the buildings annexed are de-

stroyed, there cannot be a cession of the right to the soilitself.

It seems to me, if I may venture to say it of so experienced a

judge, that there is an ambiguity in the way in which he is deal-

ing with the doctrine of constructive tota l loss. The doctrine of

abandonment is itself based upon the principle of indemnity.

I t is well known, historically, that th at is so, and in reason i t

must be so. I t is only since marine policies have ceased to

be wager policies throughout the world and become contracts

of indemnity, that the doctrine of abandonment has become

(1) 3 App. Cas. 279, at p. 284.


24/28

VOL.

XI. QUEEN'S BENCH DIVISION. 403

universal,

and so farfrom itsconstituting a difference ofprinciple 1883

between marine insurance

law and

fire insurance

law, it is the

CASTELLAIN

same principle ofindem nity, only workedout differently, because - *

what happens at sea is the loss of aship, and what happens on

e r

_

tr

'

r l

Bowen, L. J.

land is th e loss of a house. I t is true that the doctrine of aban-

donm ent is inapplicable. Bu t if the buildings annexed to the soil

are destroyed, it is not a question of constructive total loss, it

is a question of actual total loss. The same am biguity, I th ink ,

is to be found in the language of the American case which

Chitty, J., cites at page 624. The learned judg e in that case

says, " it may be a question whether h e " (the Chancellor)

" has not relied too much on the cases of marine insurance in

which the doctrine of constructive total loss, abandonment, and

salvage are fully acknowledged, but which have slight appli-

cation to insurance aga inst loss by fire." Slight application

it is true , bu t not because the doctrine of indem nity is not

to be carried out to its extreme in case of loss by fire, but

because the subject matter in the one case is the vessel lost at

sea, and in the other the house burned, which is annexed to

the soil. Ohitty, J., goes on to discuss the case on the basis of

what he calls the principle of subrogation. I will add very

little to what Bre tt, L.J., has said about tha t. I t seems to me

that a good deal of confusion would be caused, if one were to sup-

pose th at insurers are in the position of sureties. A surety is a

person who answers for the default of another, and an insurer is a

person who guarantees aga inst loss by an even t. The default or

non-default of another, as between that other and the person who

is insured, may diminish or increase the loss; bu t what th e insurer

is guaranteeing is not the default of that person, he is gua-

ranteeing that no loss shall happen by the event. And sub-

rogation is itself only the particular application of the principle

of indemnity to a special subject matter, and there I think

is where the learned judge has gone w rong. He has tak en

the term " subrogation " and has applied it as if it were a hard

and fast line, instead of seeing that it is part of the law of

indem nity. If there are means of diminishing the loss, the

insurer may' pursue them , whether he is asking for contracts

to be carried out in th e name of the assured, or whether h e is


25/28

404 QUEEN'S BENCH DIVISION. VOL. XI.

1883 suing for tort. I t is said tha t the law only gives the under-

CASTELLAIN

writers the rig ht to stand in the assured's shoes as to rights which

PRESTON

a

"

s e o u t

o r

*

n

consequence of, the loss. I venture to th ink

- there is absolutely no autho rity for tha t proposition. The true

test is, can the right to be insisted on be deemed to be one the

enforcement of which will diminish the loss? In this case the

right whatever it be has been actually enforced, and all that we

have to consider is whether the fruit of that right after it is

enforced does not belong to the insurers. I t is insisted tha t only

those payments are to be taken into consideration which have

been made in respect of the loss. I ask why, and where is the

autho rity ? If the p aym ent dim inishes the loss, to my mind it

falls within the application of the law of inde mnity. On this

point I should like to pause one instant to consider the definition

which Brett, L.J., has given. I t does seem to me, tha t tak ing

his language in the widest sense, it substantially expresses what

I should wish to express with on ly one small appendage tha t I

desire to make. I wish to prevent the danger of his definition

being supposed to be exhaustive, by saying that if anything else

occurs outside it the general law of indemnity must be looked at.

W ith regard to gifts, all that is to be considered is, has there

been a loss, and what is the loss, and has th at loss been in sub-

stance reduced by anythin g tha t has happened ? Now I adm it

that in the vast majority of cases, it is difficult to conceive a

volun tary gift which does reduce the loss. I do not th ink th a t

the question of gift was the root of the decision in

Burnand

v.

Bodocanachi

(1), although it seems to me that it was a very essen-

tia l matter in considering the case. I th ink the root of the deci-

sion in Burnand v.

Bodocanachi

(1) was that the payment which

had been made did not reduce the loss, not having been intended

to do so. The tru th was tha t the E nglish Government and the

American Government agreed that the sums which were to be

paid were to be paid not in respect of the loss, but in respect of

something else, and therefore the payment could not be a reduc-

tion of th e loss. Suppose that a man who has insured his house

has it damaged by fire, and suppose th at his b rother offers to g ive

him a sum of money to assist him . The effect on the position of

(1) 7 App. Cas. 333.


26/28

VOL. XI. QUEERS BENCH DIVISION. 405

the underwriters will depend on the real character of the transac- 1883

tion. Did the brother mean to give the money for the benefit of CASTELLAIN

the insurers as well as for the benefit of the assured ? If he did, F

R

^

TO

K

the insurers, it seems to me, are entitled to the benefit, but if he ;

'

Bowen,

L.J.

did not, but only gave it for the benefit of the assured, and not

for the benefit of the underwriters, then the gift was not given to

reduce the loss, and it falls within

Burnand

v.

Rodoeanachi.

(1)

If it was given to reduce the loss, and for the benefit of the

insurers as well as the assured, the case would fall on the other

side of the line, and be within Randalv.Cockran(2), to which

allusion has been made. In the present case the vendors have

been paid the whole of their purchase-money. Even if they had

not been paid, but had still the purchase-money outstanding,

they would have had some beneficial interest in the nature of

their vendors' lien. An unpaid vendor's lien is worth something,

I suppose. I do not say that it is necessary to decide the point,

and I only mention it to make more clear my view of this case,

not as laying down the law for future occasions. But if an

unpaid vendor's lien is worth something, on what principle could

a vendor keep the unpaid vendor's lien and be paid for it by the

insurers ? In such a case he would be taking with both hands.

Now why should not underwriters be entitled at all events to

insist on the vendor's lien ? As to specific performance I say

nothing. I am not familiar, as Cotton, L.J., is, with that branch

of the law, and there may be some special reasons why the

insurers should not be able to insist upon specific performance;

but why should not they insist upon the unpaid vendor's lien ?

The vendor, if he did not exercise it for their benefit, would be

trying to make the contract between himself and the insurers

more than a contract of indemnity. Chitty, J., seems to think

that in this instance it is necessary to recollect that the contract

of sale was not a contract, either directly or indirectly, for the

preservation of the buildings insured ; that the contract of insur-

ance was a collateral contract wholly distinct from, and unaffected

by, the contract of sale. What does it matter ? The beneficial

interest of the vendors in the house depends on the contract

being fulfilled or not, and the fulfilment of the contract lessens

(1) 7 App. Cas. 333. . (2) 1 Ves. Sen. 98.


27/28

406 QUEEN'S BENCH DIVISION. YOL. XL

1&83 th e loss, its non -fulfilm ent affects it . C h itt y, J., in de ed , say s

CASTELLAIN further th at " the at te m pt now ma de is to convert th e insurance

PKESTON aga inst loss by fire int o an insu ranc e of th e solvency of th e pu r-

chaser." (1) T ha t m ay be answered in th e same way. I t is no t

Bowen, L.J. \ / J J

that the solvency of the purchaser is guaranteed, but that the

vendors are guaranteed against the loss which is diminished or

increased according as the purchaser turns out to be solvent or

not. The solvency of th e purchaser affects the loss,that is the

only way in which it touches the insurance it is not because th e

insurance is direc tly an insurance of his solvency. F ina lly (and

this is the last observation tha t I wish to make upon the judgm en t

of Ch itty, J.) , he puts the case of a landlord insuring, and the

ten an t under no obligation to repair. He takes a case, " where

under an informal agreement evidently drawn by the parties

themselves, the large ren t of 700Z. was reserved, and the tenant,

notwithstanding the fire, was bound to pay the ren t." H e says,

" Assume that the building in such a case was ruinous, and would

last the length of th e term only. Could the insurers recover a

proportionate part of each paym ent of rent as i t was made, or

could they wait until the end of the term, and then say in effect,

' You have been paid for the whole value of th e bu ilding, and

therefore we can recover against you ?' " Th at seems to m e a t

first sight to look as if it were a very difficult point, but I think

th is difficulty diminishes, if it does no t vanish, as soon as it is

considered what are the conditions of the hypothesis. Is the

learned judg e supposing that the landlord, who is a person with a

limited interest, did intend to insure all other interests besides

his own ? The landlord can do so if he so intended ; the ques-

tion is, has he done so ? If the landlord intended to insure all

other in terests besides his own, the difficulty dissipates itself into

th in air. If he did not, it would be a very odd case, and pe rhaps

one might ride safely at anchor by saying that one would wait

til l it arose. But I am no t desirous of being over cautious,

because I am satisfied to re st on th e b road p rincip le of indem-

nity, and I say, " Apply th e broad p rinciple of indem nity, and

you have the answer." The vendor cannot recover for greate r

loss than he suffers, and if he has only a limited interest in the

(1) 8 Q. B. D. 621.


28/28

VOL. XI.

QUEEN'S BENCH DIVISION.

7

subject-matter, and only intends to insure that interest, I know 1883

PRESTON.

Bowen, L.J.

of no means in law or equity by which he is entitled to obtain

OASTEHAIN

anything else out of the insurance office except what is measured

by the measure of his loss. As to the form of action, I need add

nothing to what has fallen already from the other members of

the Court. I am so much in accord with their views that I should

not have added a judgment as long as mine has been if it were

not for the very great importance, to my mind, of keeping clear

in these insurance cases what is really the basis and foundation

of all insurance law.

Judgmentreversed.

Solicitors for

plaintiff:

Gregory,

Boiveliffies,

Co,for Laces,

Bird Newton, Richardson, Liverpool.

Solicitors for defendants: Torr

Co.,

for Anthony Imlach,

Liverpool.

J. E. H.

[IN THE COUKT OF APPEAL.]

March

19

.

CHAMBERLAIN v. BOYD.

DefamationSlanderRemoteness of DamageDamage not natural and

probable

Consequence

of Words spoken.

Claim, that the plaintiff was a candidate for membership of the E. Club, but

upon a ballot of the members was not elected; that a meeting of the members

was called to consider an alteration of the rules regarding the election of

members; that the defendant falsely and maliciously spoke and. published of

the plaintiff as follows: The conduct of the plaintiff was so bad at a club

in M. that a round robin was signed urging the committee to expel him; as

however he was there only for a short time, the committee did not proceed

further; whereby the defendant induced a majority of the members of the club

to retain the regulations under which the plaintiff had been rejected, and

thereby prevented the plaintiff from again seeking to be elected to the club :

Held

upon demurrer, that the claim disclosed no cause of action; for the

words complained of, not being actionable in themselves, must be supported

by special damage in order to enable the plaintiff to sue; and the damage

alleged was not pecuniary or capable of being estimated in money, and was not

the natural and probable consequence of the defendant's words.

CLAIM. 1. The plaintiff together with his brother, was a

candidate for membership of the Reform Club. The defendant

Castellain v Preston

Documents