C. A.

turned into 7 per cent. He says that is so slight as to justify him saying that the principle of this decision does not apply to a company with a very small capital. But that can make no difference in point of principle; and also I think when it is examined it is not a fact in substance, because although that is the capital of the company, and the 7 per cent. is what the shareholders divide, still if we accept the principle of Last's case, what this company are doing is, they are carrying on an enormous business and making an enormous profit. It is true that after they have made a profit they distribute that profit to persons other than themselves, but the management of it, the whole conduct of the business earning the annual profits, is just as much done by the company here as it was done in the case of the company in Last's case. If those are profits before they are distributed, they are just as much profits in the hands of the company here as they were in the hands of the company in Last's case; and I consider that Last's case does decide it. The principle of it is that where you have this division between a company and policyholders who are not members of the company, then those sums are not part of the expenses of earning the profits but are themselves the profits earned. For these reasons I am clearly of opinion that the judgment of the court below is right.

VAUGHAN WILLIAMS, L.J.-I am of the same opinion. We have not got in this case to decide a question of abstract justice as to the incidence of taxation. We have to deal with a statute, and we have to ascertain what is the line drawn by that statute, and we have to decide on which side of that line this particular case comes; and if the case comes plainly upon one side of the line, it is no good for those who wish that the case were on the other side of the line to say, the case is not much over the line; it is only a little past the line.

Now, before saying anything else as to this case, I would like to point out that it does not matter when you are dealing with the question whether or not a particular receipt is a profit for the purpose of taxation, whether or not, for the purposes of distribution or carrying on the business, the machinery of a company is used. The decision in Styles' case is a decision which is really based upon the relations of the members of the insurance association in that case to each other: and the fact that their relationship was worked out by means of any incorporated company was not allowed to differentiate the case, or affect the case, in any degree whatsoever. And so I agree in the present case. The mere fact that the relation of the parties interested in this business was worked out in this case by the machinery of an incorporated company, does not make any difference whatsoever. But you have to look and see who are interested in the matter, and if you find as a fact that there are those interested in the matter who take a profit outside and beyond the portion of the surplus which is paid to the vendors in reduction really of the cost of insurance, in such a case the company is not merely machinery for working out the mutual relation of the members of the mutual insurance co.; it is something else. It is a company the machinery of which is used for the purpose of making a surplus beyond the expenditure and applying that surplus not merely in reduction of the costs of insurance to which the members contribute, but also in paying the profit as such to someone else. Of course when you look at Last's case there is, as a fact, a very significant difference between Lust's case and Styles' case, and between Last's case and the present case -that is to say, in Last's case the machinery of the company was not used only for the purpose of distributing the surplus of the receipts beyond the

expenditure in the reduction of the cost of insurance, but one-third of such surplus was handed over as profits to the company and dealt with for good and all as profits. In Styles' case there was no such dealing with any part of the surplus whatsoever. The whole of the surplus was appropriated to the reduction really of the cost of insurance; but in the present case it is not true to say that the whole of the surplus is used in reduction of the cost of insurance, because there is some of it paid to the shareholders of the company, who are entirely different people to the members of the mutual insurance body. They, it is true, are only shareholders in a company which in a sense came into existence for the purpose of working out the relations of the members of the mutual insurance to one another, but they are at the same time something different and they receive moneys as profits in which the members of the insurance have no interest whatever-that is to say, they receive the difference between the 4 per cent. and the 7 per cent. clearly as profits going into their pockets. That difference between 4 per cent. and 7 per cent. on the £20,000 deposit provided by the shareholders does not differ in kind one jot from the one-third profit that went to the company in Last's case, and I agree therefore, to the full, that this case is really governed by Last's case.

I want to say one word about the surplus here. It seems to me that Lord Halsbury when he delivered his judgment in Styles' case was of opinion that if you had one insurance company which consisted simply of members of a mutual association and you had no such outside body receiving profit as you had in Last's case, yet if that insurance company made a surplus by the investment of their money in a trade or business, that would clearly be carrying on a business and making a profit thereby; and I do not understand him to say that in that case he would have excluded any part of the surplus from taxation whether it was returned to the members or whether it was not; but as I understand the decision of the majority, they do draw a distinction and they seem to say that in respect of so much of the surplus as arises from the mutual insurance business, by which I suppose is meant so much as arises from the rates of premium charged, over and above the actuarial rates in principle or by a fortunately healthy state of things, the profit being above what was necessary for the purpose by what I may call an accident, that in such a case you are to charge the income tax on so much of the surplus as is made by what I will call outside business, and not to charge it in respect of so much of the surplus as comes from the excess which has been collected for the purpose of the premiums.

Now in the present case I do not understand that the appellants in any way suggest that they are exempt from taxation in any respect excepting in respect of so much of the surplus as comes from the business done by this company in respect of participating policies. They do not deny that if the premiums had been invested, or still less if they had been invested in carrying on a subsidiary business, that so much of the surplus is taxable; but even in respect of so much of the surplus as is properly attributable to the business of issuing these policies to the participating members, it seems to me for the reasons which my brethren have given and which I also have tried to express, that it is plain that the income-tax must be paid, because the company do not in respect of that part of the surplus pay it all back to the members of the mutual association, but really pay a part of it as a profit to a body outside the mutual insurance association, or outside the aggregate of the participating policyholders in the shape of the 7 per cent. which is paid to the shareholders of this company.

unsound mind at the date of the said contract,

conversion of his personal estate into real estate was effected by two orders, dated respectively the 12th of August, 1892, and the 7th of August, 1895 (made in the matter of William Baldwyn, a person of unsound mind), so as to bind his next-ofkin.

The facts of the case were as follow:

On the 30th of June, 1890, Baldwyn attended a sale

by auction, at which certain freehold hereditaments at Badsey, near Evesham, in the county of Worcester, were put up for sale. Baldwyn bid for the property and was declared the purchaser. It was assumed, for the purpose of the argument, that he was at this time of unsound mind. Before the purchase had been completed, Baldwyn was adjudged a lunatic, and one Edward Grantham Righton was appointed his cominittee.

On the 12th of October, 1892, the Master in Lunacy made an order to the following effect:

That the contract dated the 30th day of June, 1890, entered into by the said William Baldwyn, for the purchase of certain hereditaments and premises at Badsey, near Evesham, in the county of Worcester, belonging to William Smith, of Evesham aforesaid, be carried into effect and that the purchase of certain buildings adjoining the said land retained by the said vendor at the request of the said William Baldwyn be effected at the price of £100, and that the Masters in Lunacy do settle and approve of a proper assurance thereof to the said William Baldwyn and that the said Edward Grantham Righton as such committee of the estate do pay the sum of £3,309 6s., the balance of the purchase-money, and all interest due thereon and the sum of £100 out of any money in his hands available. That the said Edward Grantham Righton, as comшittee of the estate of the said William Baldwyn, do give the necessary notice for calling in the sum of £4,000 due from William Chichester secured by mortgage dated the 12th day of July, 1869, upon premises at Dymock, in the county of Gloucester, and do in the name and on behalf of the said William Baldwyn take such proceedings and do and execute such acts, deeds, and things as the Masters in Lunacy shall approve of for making the same available.

On the 7th of August, 1895, the Master in Lunacy made a further order "that the purchase of the Badsey estate mentioned in the order dated the 12th of August, 1892, be forthwith completed," and that the said E. G. Righton do, out of the moneys received by him as directed in the schedule thereto and "any money in his hands available for that purpose, pay the sum of £3,703 14s. 10d., the purchase-money for the said estate and interest thereon." alleged that the master in making these orders expressly left open the question as to the effect of the orders to operate a conversion of Baldwyn's estate as between his co-heiresses and next-of-kin. Nothing, however, to this effect was inserted in the orders themselves.

It was

Baldwyn died on the 26th of November, 1898, intestate.

Rowden, Q.C., and Buckmaster, for the plaintiffs. It is a rule of the court in dealing with the property of a lunatic never to alter the devolution of the property: Attorney-General v. Marquis of Ailesbury, 36 W. R. 737, 12 App. Cas. 672. Strictly speaking there cannot be a contract with a lunatic: In re Rhodes, Rhodes v. Rhodes, 38 W. R. 385, 44 Ch. D. 94; Lunacy Act, 1890, ss. 120, 123. When the court adopted the contract in this case it did not desire to abandon its general principles and to effect a conversion. If conversion was effected at all, it was effected by the committee, but this was beyond the power of a

committee. All that the orders meant to effect was a change in the lunatic's investments.

Levett, Q.C., and Napier, for the defendants.-The contract was affirmed by the master, and in this way a conversion was effected: Lawes v. Bennett, 1 Cox Ch. Cas. 167. An order in lunacy may effect a conversion : Jones v. Green, 16 W. R. 603, L. R. 5 Eq. 555; In re

Freer, Freer v. Freer, 31 W. R. 426, 22 Ch. D. 622. If an order in lunacy is not to have its natural effect there must be some words inserted in the order for the purpose: In re Barker, 29 W. R. 873, 17 Ch. D. 241.1

Rowden, Q.C., replied.

BYRNE, J.-In this case a man of unsound mind, but not so found, contracted to purchase certain real estate. He was subsequently found to be of unsound mind, and his committee was ordered to carry out the contract. I take it to be that the court exercised on behalf of the man the power of confirming the contract, which he might have exercised on his own behalf had he subsequently become sane. The court acting exactly as it would do in the case of an infant with a view to benefit the lunatic, ordered the contract to be carried out. I take it that this acted as an election on the part of the lunatic not to reject a voidable contract. Different considerations suggest themselves when the question is whether real estate shall be purchased or whether it shall be sold. I hold here that there has been a confirmation of the contract with the necessary legal consequences, and that a conversion has been effected. The estate so purchased descends to the defendants as the lunatic's co-heiresses, and the action must be dismissed with costs.

Solicitors, Crowders, Vizard, & Oldham, for Smith & Smith, Evesham; Smiles & Co., for E. S. Wood, Winchcomb.

Action.

By a policy of assurance dated the 8th of July, 1897, the defendant society, in consideration of a pay ment in advance of £48 10s., and of half-yearly payments of like sums to be made at the office of the society on or before the 16th of December and June in every year, promised to pay to the executors or administrators of one Powis, or to his assigns, £4,000 upon satisfactory proof of his death. This policy was made to replace an earlier one made temporarily, and was, on the 6th of July, 1897, assigned by Powis to the plaintiff.

Due notice was given of the assignment to the society. Two of the premiums having been paid, the plaintiff made a legal tender of a third on the 16th of June, 1898, the day on which it was payable, but the society refused to receive it.

(a.) Reported by NEVILLE TEBBUTT. Esq., Brister-at-Law.

The plaintiff thereupon brought this action, alleging that the society were still refusing to take the premium, and that the refusal was a repudiation by the society of the policy and all contracts thereunder. He claimed a declaration that the policy of assurance and the contracts thereunder were valid

and subsisting, and that he was entitled to the benefit of them, and for an injunction to restrain the society from repudiating by words or acts the policy and contracts.

The defendants, in their defence, alleged that the policy was null and void, because it was really effected by the plaintiff, who had not any insurable interest in it, and not by Powis, who was his agent only, and also on the ground that it was obtained by misrepresentations. They counterclaimed for a declaration that the policy was void and ought to be delivered up to be cancelled.

Ex parte KING'S LYNN DOCK Co. (a.) Poor law-Rating-Appeal against assessment to quarter sessions-Parish council-Notice to-Service of proper notice upon not a condition precedent to entertaining appeal--Poor Relief Act, 1743 (17 Geo. 2, c. 38)— Local Government Act, 1894 (56 & 57 Vict, c. 73).

The service of notice on the town council of a municipal borough is not a condition precedent to the hearing by the quarter sessions of appeals from a poor rate. Reg. v. Justices of Kent, 80 L. T. Rep. 622, not followed.

Rule nisi for a mandamus to the recorder of King's

Bray, Q.C., and Sheldon, for the defendants.-The person assured is still alive; the plaintiff has no present rights under the policy, and cannot come now and ask to have the question of the validity of the policy tried: Bright v. Tyndall, 25 W. R. 109, 4 Ch. D. 189; Kevan v. Crawford, 26 W. R. 49, at p. 52, 6 Ch. D. 29, at p. 42. He may have an action for damages.

Cooper Willis, Q.C., and N. C. Home, for the plaintiff. In Bright v. Tyndall the question raised was fictitious. Here the plaintiff has done an act repudiating the policy. It is clear that the plaintiff could bring an action for damages, which implies the validity of the contract; why, then, should not the court make a declaration to that effect?

J. M. W. Holmes held a watching brief for the Star Life Assurance Co.

BUCKLEY, J.-It is a matter of common experience that the court does not take upon itself to define the rights of parties until the time comes when those rights are present rights. At present the plaintiff has no claim under the policy. Before the life assured by the policy drops the society may get further information as the facts upon which they rely by way of defence. Why should they be called upon at this date to prove their case? The plaintiff could bring an action for damages for repudiation of the policy, but he does not do that as the damages would probably be nil. It is, however, to be remembered that the condition of the policy is that the premiums should be paid on or before the days mentioned, and that the defendants have refused to accept the payments. And I understand that they intend to refuse to accept those that become payable in the future. The plaintiff must not be prejudiced by their conduct. I shall refuse to make the declaration and injunction asked for by the plaintiff upon the defendant society undertaking not to rely upon the non-payment of the premiums upon the proper days in any action the plaintiff may bring in the future in respect of the policy.

[Upon this decision the plaintiff agreed to put a certain witness in the box, and the defendant society withdrew their objection to the date of the action, and the trial of the claim and counterclaim proceeded with the result that the court declared the policy null and void.]

Solicitors, Hugh Rose-Innes; John W. Sykes.

enter and respite, two appeals between the King's Lynn Docks and Railway Co. and the Assessment Committee of the King's Lynn Poor Law Union with respect to two several rates or assessments made for the relief of the poor of the parish of St. Margaret's, in the borough of King's Lynn, dated respectively the 21st of November, 1898, and the 26th of May, 1899.

The King's Lynn Docks and Railway Co. appealed to the recorder from the two rates. The notices of the appeal were addressed to the Churchwardens and Overseers of the Poor of the Parish of St. Margaret's, in the borough of King's Lynn, in the county of Norfolk, and to the Assessment Committee of the King's Lynn Poor Law Union. The notices were served on the clerk of the peace of the borough, who also held the office of town clerk. The recorder, upon the authority of Reg. v. Justices of Kent, 80 L. T. Rep. 622, 47 W. R. Dig. 108, declined to hear or to enter and respite the appeals on the ground that notice had not been served upon the town council of the borough.

The rule nisi was obtained on the grounds (1) that the town council of King's Lynn were not entitled to notice of the appeal; (2) that if they were entitled to notice they had had it; (3) that in any case the appeals ought to have been entered and respited.

with him) showed cause.Marshall, Q.C. (Cunningham Glen and A. M. Talbot 41 Geo. 3, c. 23, s. 4, persons wishing to appeal -By 17 Geo. 3, c. 38, s. 4, and against the rate or assessment made for the relief of the poor must serve notice of appeal in writing upon the churchwardens and overseers of the parish. By the Local Government Act, 1894, ss. 5 and 6, the power of appointing overseers of the poor is vested in, and the powers, duties, and liabilities of the overseers, or of the churchwardens and overseers in respect of appeals as to poor rates are transferred to, the parish council. Section 52, sub-section 5, of the same Act, says that all enactments in any Act relating to any powers, duties, or liabilities transferred by this Act to a parish council from overseers, or churchwardens and overseers, shall be construed as if any reference therein to them referred to the parish council. In King's Lynn there is no parish council, but there is a town council, it being a municipal borough, so that it comes under section 33 of the Local Government Act, which provides that the Local Government Board may on the application of the council of any municipal borough make an order conferring on that council any powers, duties, or liabilities of overseers, and any powers, duties, or liabilities of a parish council. An order of the Local Government Board dated the 7th of April, 1897,

(a.) Reported by P. B. DURNFORD, Esq., Barristerat-Law.