Sale or mortg,rage.—An assured derives his power to make a legal assignment of his policy of life assurance through the Policies of Assurance Act, 1867, and the Judicature Act. The features of an assignment under the Judicature Act are noticed in the article entitled CHOSE IN ACTION; here it will be convenient to notice the provisions of the Act of 1867. The Act, in the first place, confers upon an assignee the right to receive and to give an effectual discharge to the assurance company for the money assured by the policy, and to sue therefor. And in an action on a policy of assurance, a defence on equitable grounds may be pleaded and relied upon in the same manner and to the same extent as in any other personal action. It is absolutely essential to the effective validity of a legal assignment that notice thereof should be given the company. As to this section 3 provides that no assignment "of a policy of life assurance shall confer on the assignee therein named, his executors, administrators, or assigns, any right to sue for the amount of such policy, or the monies assured or secured thereby, until a written notice of the date and purport of such assignment shall have been given to the assurance company liable under such policy at their principal place of business for the time being; or in case they have two or more principal places of business, then at sonic one of such principal places of business, either in England or Scotland or Ireland, and the date on which such notice shall be received shall regulate the priority of all claims under any assignment ; and a pa) ment bona tide made in respect of any policy by any assurance company before the date on which such notice shall have been received shall be as valid against the assignee giving such notice as if this Act had not been passed." For the purpose of this notice of assignment the principal place of business of an assurance company must be specified on every policy it issues. An assignment may be made either by indorsement on the policy or by a separate instrument, and must be duly stamped. The following is a short form of assignment set forth in the schedule to the Act.
I, A. B. of, &c., in consideration of, &c., do hereby assign unto C. D. of, &c., his executors, administrators and assigns, the [within] policy of assurance granted, &c. [here describe the policy]. In witness, &c.
An assurance company is bound to acknowledge the receipt of a notice of assignment upon the conditions specified in the Act. Section 6 provides that "every assurance company to whom notice shall have been duly given of the assignment of any policy under which they are liable shall, upon the request in writing of any person by whom any such notice was given or signed, or by his executors or administrators, and upon payment in each case of a fee not exceeding Five Shillings, deliver an acknowledgment in writing under the hand of the manager, secretary, treasurer, or other principal officer of the assurance company of their receipt of such notice." Every such written acknowledgment, if signed by a person de ,jure or de facto the manager or other principal officer, as the case may be, will be conclusive evidence against the assurance company of its having duly received. the notice to which the acknowledgment relates. A policy of life assurance can also be the subject of an equitable assignment. According to the decision in Chowne v. Baylis, if an assured writes a letter to the company in words such as the following Please to take notice that I wish to transfer my interest in the policies [specifying,- them] to B.," and the letter is duly delivered and noted in the books of the company, it will coostitute a good equitable assignment, even as against a subsequent assignee of the policies who niay, in addition, have obtained possession of them. And such an assignment can be effected by merely a deposit of a policy. Thus, in Maugham, v. Ridley, A., who was indebted to B., deposited with the latter a policy of assurance upon his own (A.'s) life, and though no written document accompanied the deposit, yet, because there was a mutual understanding between the parties that the deposit was intended as a security for a debt, already due from A. to B., and for any further advances that the latter might make, it was decided that B. could prove the nature of the deposit by au affidavit and claim it as an equitable assignment. No notice of such a deposit need be given to the company ; but the depositee runs the risk of losing the benefit of his security in case the depositor should assign the policy to a bona fide third party and due notice of that assignment be given to the company. Where, as in
Crossley v. City of Glasgow Life Assurance Co., a policy on the life of a debtor is deposited by the latter with his creditor as a security for a debt, and the debtor dies before notice of the assignment has been given to the assurance company, that deposit does not operate as an equitable assignment which will justify the company in paying the assurance money to the creditor without the assent of the assured's personal representatives. In such circum stances, however, upon application by the creditor, the court has power to dispense with the assured's legal personal representatives, and can order payment by the company to the creditor. A written agreement to execute on request an effectual niortgage of a policy of assurance deposited at the time of the agreement as security for a loan, is not, according to Spencer v. Clarke, an assignment of the policy within the meaning of the Act of 1867. An equitable assignment of a policy of assurance is, strictly speaking, merely the creation of a lien on the policy. The case of Leslie v. French summed up the law in this connection as follm‘s :—" A lien may be created upon the monies secured by a policy by payment of premiums in the following cases • (1) 13y contact with the beneficial owner of the policy ; (2) by reason of the right of the trustees to an indemnity out of the trust property for money expended by them for its preservation ; (3) subrogation ts, the rights of the trustees of some person who may have advanced money at their request for the preserva tion of the property ; (4) by reason of the right vested in mortgagees, or other persons having a charge upon the policy to add to that charge any monies which have been paid by them to preserve the policy." The notice of assignment.—This is necessary to complete the assignment, and the date upon which it is received by the company regulates the priority of all claims under that assignment and any former and subsequent assign ments. But though by statute a company is bound to regard this rule of priority of notice in order to determine the direction of its oilm liabilities, yet it has no concern whatever with the rights, amongst themselves, of persons claiming to be interested in the monies payable under the policy. A person, however, who has a lien on a policy, as in the case of a solicitor for costs, is not bound to give notice of it to the assurance company in order to preserve his lien against subsequent mortgagees of the policy who give such notice (West of England Bank v. Batchelor), and—Newntan v. Newman--where a first mortgagee has failed to give the prescribed notice, and a second mort gagee, having a knowledge of the prior mortgage, has given his own notice, the second mortgagee will not thereby obtain a priority. So long as specific particulars are given as to the policy assigned and the assignee, there is no need to follow any particular form of notice. Rights qf mortgag,ror and mortgagve.—As in other cases of mortgage, a mortgagee of a life policy is entitled to sell it if the mortgagor makes default in payment of principal and interest in accordance with the terms of the security. And so also can he sell it if the mortgagor fails to keep up the premiums; or if there is no fund out of which the premiums can be paid (l'ord v. Tynte). And m here he can sell, be can surrender the policy to the company. And after the assured's death, the mortgagee is, of course, entitled to receive the assurance money. I3ut, like mortgagees generally, a niortgagee of a life policy, after sale or surrender, is a trustee for the mortgagor in respect of any monies which rentain in his hands after he has satisfied his oun claim for principal, interest and costs. And though, as against the mortgagor, he may retain thereout sufficient to repay any unsecured monies there may yet remain due to him, he cannot exercise this right of retainer as against the creditors of the mort gagor when, for exaolple, the latter is insolvent (Talbot v. Frere ; Christison v. Bohm). The bonuses and profits always belong to the assignee or mort gagee of the policy of assurance, unless there is an express agreement to the contrary (Roberts v. Edwards); and be is under no obligation to allow them to be applied in payment or reduction of premiums (Gilley v. Burky ; .ilIa,cdonald v. Irvine). And see the article (in Appendix) on INSURANCE COMPANIES.