The South Australian Insurance Company v Randell

THIS was an action on a Fire Policy of Insurance, in which the Respondents were Plaintiffs, and the Appellants were Defendants.

The Appellants were an Insurance Company, carrying on business in the Province of South Australia, and having their principal place of business at Adelaide, in that Province. The Respondents were Millers, carrying on business at Blumberg, in the same Province.

The facts were these:—

On the 4th of July, 1866, application was made to the Appellants by the Respondents, to insure the current stock in their Mill, namely, wheat, flour, sacks, &c., to the amount of £1,250, against loss or damage by fire, and on the same day an Insurance was effected in the terms of such application, and subject to the conditions indorsed on the Policy; one of which was that “Goods held in trust or on commission must be insured as such, otherwise the Policy will not extend to cover them.”

On the 17th of February, 1867, a fire occurred, whereby the Respondents' Mill, with the stock therein, was destroyed. A claim was made by the Respondents for the loss, but the amount being disputed by the Appellants, an action was brought by them to recover the value of the stock.

The Plaintiffs declared upon the Policy, and the Defendants pleaded, that the Plaintiffs, were not interested in the stock, and also that in their proposals for the insurance they represented, that the stock was to be insured for themselves, whereas it was held by the Plaintiffs in trust for other persons. Issue was joined on the pleas, and the action was tried before the Chief Justice and a jury.

Upon the trial it was admitted by the Plaintiffs, that the stock which had been destroyed by the fire had been paid for by the Defendants, except such portion as the Defendants alleged was held by the Plaintiffs, in trust for others; and the question was, whether such portion, consisting of wheat, was held by the Plaintiffs in trust, within the meaning of the above condition, and was therefore not covered by the Policy.

The evidence, so far as it was material to this question, shewed that according to the Plaintiffs' custom and course of business wheat was received by them from Farmers to whom such course of business and dealing was known, and on receipt, shot out of Bags in the presence of the Farmers who brought it into large hutches, where it became mixed with other wheat which had been received in a similar manner, and on part of which advances had been made to the Farmers by the Plaintiffs. The wheat thus mixed lost its identity and became the current stock of the Plaintiffs, which, according to their course of dealing, known to the Farmers, was either sold as wheat by the Plaintiffs or ground in their Mill. The Plaintiffs could do what they liked with it. If ground, the flour produced from such stock was sold and otherwise dealt with by the Plaintiffs as they thought fit, and as their own property. It never was intended by the parties that the identical wheat delivered by the Farmers should be returned to them. On delivery of the wheat to the Plaintiffs they gave to the Farmer a receipt in these terms:— “Received, &c., to store,” and it was shot to be stored or taken on storage. The Farmer could at any time demand an equal quantity of wheat of like quality with that delivered by him to the Plaintiffs, or the market price of an equal quantity, fixing the price as of the day on which he made his demand. The Plaintiffs had the option of delivering wheat of like quality or paying such market price. Advances were frequently made to the Farmers by the Plaintiffs in respect of the wheat so delivered to them. No charge was made by the Plaintiffs in respect of the wheat until after the lapse of a certain time, when the charge was one farthing per bushel per month. The wheat in question had been brought by Farmers to the Plaintiffs in manner aforesaid, and in the course of business, and had been mixed with other wheat, and treated in the manner aforesaid, and a portion of it had been paid for by the Plaintiffs. No evidence was adduced on the part of the Defendants, but their Counsel applied for a nonsuit on the ground that the wheat was held in trust, and was not the property of the Plaintiffs.

The Chief Justice declined to nonsuit the Plaintiffs, and by consent the verdict was entered for them for £698, including interest, with leave to the Defendants to move to enter a verdict for them if the Court should be of opinion, that the wheat so taken on storage was held in trust within the terms of the conditions in the Policy.

A rule nisi was granted calling on the Plaintiffs to shew cause why the verdict for the Plaintiffs should not be set aside and a verdict entered for the Defendants, pursuant to leave reserved, upon the following grounds:— First, that the goods stored had not been assured by the Plaintiffs; and secondly, that the wheat taken on storage was held upon trust within the terms of the conditions of the Policy.

This rule came on to be argued before the Chief Justice and Mr. Justice Gwynne, when the Court was divided in opinion, Mr. Justice Gwynne being of opinion, that the property in the wheat when delivered was vested in the Plaintiffs beneficially, as their own property, and was not property held in trust, the Chief Justice being of the contrary opinion, and Mr. Justice Wearing being precluded from taking part in the judgment, the rule was discharged.

From this judgment the present appeal was brought.