139. What is meant by the term "constructive total loss" in reference to the law of marine assurance? and is there any, and, if any, what, act necessary to be done by the assured before he can maintain an action in respect of such loss against his underwriters?

Constructive total loss is a term used in the law of marine insurance to denote a loss which entitles the assured to claim the whole amount of his insurance on giving to the assurers notice of abandonment. Generally there is a constructive total loss when the subject matter insured has not actually perished or lost its form or species, but has, by one of the perils insured against, been reduced to such a state or placed in such a position as to make its total destruction, though not inevitable, yet highly imminent, or its ultimate arrival under the terms of the policy, though not utterly hopeless, yet exceedingly doubtful. In such a case the assured, by giving notice within a reasonable time to the assurers of abandonment, i.e., the relinquishment of all his right to whatever may be saved, is entitled to recover against his underwriters as for a total loss. (See Arnould on Marine Insurance; Wharton's Law Lexicon, 6th ed., 217.)

MISREPRESENTATION.

140. Can an executed contract be rescinded on the ground that it was obtained by means of a misrepresentation if it appear that such misrepresentation was made innocently and without any fraudulent intent? A.'s solicitor tells B. that he has forfeited his lease, and in consequence obtains from him a surrender of it on certain terms. Can B. avoid the surrender, the statement being in fact incorrect, but made bonâ fide?

To rescind such a contract on such a ground, the plaintiff, to succeed in an action brought to rescind it, must prove:

(1.) That he was induced to enter into the contract with the defendant (ie., the misrepresenting party) by means of representations which were material to, and did induce the plaintiff to enter into, the contract; and

(2.) That such representations were false in fact; and

(3.) Either that such representations were false to the knowledge of the defendant, or as to which at all events he made representations knowing he knew nothing about the facts—that is, representations made so recklessly as that in a court of law he would be in the same position as if the representations were false to his knowledge.

Although the representations were material to induce the plaintiff to enter into such a contract, and were false in fact, the Court will not rescind the contract on the ground of misrepresentation where the representations were not proved to be false to the knowledge of the defendant, and were not proved to have been made by the defendant recklessly, but with reasonable grounds for believing they were true and bonâ fide. In the question it is not stated that there were such reasonable grounds.

A defendant to such an action cannot escape liability merely because he had good intentions, and did not intend to defraud, or, in other words, if the three conditions are complied with such contract will be rescinded on the ground of misrepresentation, although it does appear that such misrepresentation was made innocently and without any fraudulent intent. (See judgment of the late Master of the Rolls in Smith v. Chadwick, 51 L. J. Ch. 600; see also Arkright v. Newbold, 50 L. J. Ch. 372; L. R. 17 Ch. D. 301; Redgrave v. Hurd, 51 L. J. Ch. 113; L. R. 20 Ch. D. 1, and the authorities cited in each case; and also Jennings v. Broughten, 5 De Gex, M. & G. 126, 140; 23 L. J. Ch. 999.)

Now, in the case of the surrender of the lease, we must premise that a solicitor, like a barrister, is presumed above all men to know the law, and cannot be heard to say that he acted under a misapprehension of what the law was in this particular case, that is, in other words, his ignorance in that respect cannot be used to show his bond fides, though it might be otherwise if he were a layman.

If, therefore, B. can show that the statement by the solicitor was material to and did induce him to execute the surrender, and that it was a false statement, and, presuming that the solicitor knew his law on the particular point involved, and that the statement was false to the solicitor's actual or presumed knowledge, he can apply to the Court to have the surrender declared void, if the other third

parties (if any) whose interests are prejudicially affected thereby can be restored in statu quo. (Urquhart v. Macpherson (P. C.), L. R. 3 App. Cases, 831.)

Firstly.-Will it

141. Action for deceit or false representation. be sufficient if the plaintiff proves simply that the representation was false in fact, and that he suffered damage in consequence so as to entitle him to a verdict? Secondly.-Supposing the defendant made the representation, being ignorant whether or not it was true, and it turned out to be untrue, will he be liable? Thirdly.-Is it necessary that the defendant should be benefited by the deceit, or that he should collude with the person who is? Give reasons for your answer to the above points, and refer, if you can, to any leading

case.

Firstly. It will not be sufficient unless the plaintiff, besides proving that the representation was false in fact, and that he suffered damage in consequence, prove also either that the defendant did know that it was false, or made it without reasonable and probable grounds on which to suppose it to be true, and in either. case made it with the intention of misleading the plaintiff.

Secondly. The defendant will be liable if, being ignorant whether or not the representation is true, he made it without reasonable and probable grounds on which to suppose it to be true, as it is not necessary to show it to be untrue in order to recover a verdict, assuming, of course, that the other necessary ingredients requisite to recover a verdict just stated are proved.

Thirdly. It is not necessary that the defendant should be benefited by the deceit, or that he should collude with the person who is, assuming the plaintiff's evidence to be sufficient to entitle him to a verdict as just stated above. The leading case referred to is Pasley v. Freeman, 2 Sm. L. C. 64; Haynes's Student's L. C. 87; Underhill on Torts, 203; and see Arkright v. Newbold, 50 L. J. Ch. 372.

142. An agent of an insurance company, by fraudulently representing to B. that upon his insuring his life with the company he would be entitled to certain loans, induces B. to do so. B. pays the premiums upon the policy, say for five years, and then applies

to the company for a loan, when he is informed that it cannot be granted, and that the agent had no authority to make any such representation.

Firstly. Has B. any remedy, and, if any, to what extent, against the company?

Secondly.-What is the general rule of law affecting a company in cases of fraud committed by their agent?

B. has a remedy against the company to recover damages of such an amount as shall be equal to the sum the company has benefited by such misrepresentations in premiums paid by B. (Jer-Blake v. The Albion Life Assurance Society, 48 L. J. C. P. 169; L. R. 4 C. P. D. 94.) Of course B. has a remedy against the agent for the full amount of the damage he has sustained through his fraudulent misrepresentations, after deducting the sum, if any, recovered from the company, but the agent is probably worth nothing, and if so this remedy is of course valueless. (See Swift v. Jewsbury, 43 L. J. Q. B. 56; L. R. 9 Q. B. 301.)

The general rule of law affecting a company in cases of fraud committed by their agent is, that an action for deceit will lie against an incorporated company for such fraud if the fraud of the agent is the fraud of the company and the company is benefited thereby. (A. Mackay and Another v. The Commercial Bank of New Brunswick and Others, 43 L. J. P. C. C. 31; L. R. 5 P. C. 391.)

MORTGAGES.

143. What is an "equitable mortgage?" Give instances of the several ways in which an equitable mortgage may be made.

A pledge or mortgage of any description of real or personal property which does not vest in the mortgagee the legal estate or interest therein, but which is recognised and enforced by the Courts in the exercise of their equitable jurisdiction.

An equitable mortgage may be made in the following ways:(1.) Where the subject of a mortgage is trust property, which security is effected either by a formal deed or a written memo

randum, notice being given to the trustees in order to preserve the priority.

(2.) Where the mortgage is a mortgage of an equity of redemption.

(3.) Where there is a written agreement only to make a mortgage which creates an equitable lien on the land with or without a deposit of the title deeds.

(4.) Where a debtor deposits the title-deeds of his estate with his creditor or some person on his behalf without even a verbal communication. The deposit itself is deemed evidence of an executed agreement or contract for a mortgage for such estate. (Wharton's Law Lexicon, 6th ed., 344).

144. What are the rights of a mortgagee against a tenant of the mortgaged property, holding under lease executed previously to the mortgage, in respect of the rent and covenants reserved by and contained in the lease? In case such tenant should attorn, what is now necessary to complete such attornment?

The mortgagee, assuming the mortgage of the freehold is made in the usual form (i.e., comprises the freehold) and is not made by demise, may, after giving the tenant notice of the mortgage, and after default has been made in payment of the principal and interest on the day named in the mortgage-deed, demand of the tenant the payment of all rent then due or to accrue due, and if it is not paid then he may distrain for it and sue for it, and can sue upon the covenants contained in the lease if they run with the reversion. The mortgagee cannot eject the tenant except for breach of covenant under the terms of the power of re-entry. (See Moss v. Gallimore, 1 Sm. L. C. 629; Haynes's Student's Leading Cases, 244.)

If the tenant attorns, all that is required is the consent of the landlord or landlord's lessor or lessors, or any mortgagee after the mortgage has become forfeited under 11 Geo. II. c. 19, sect. 11.

145. A mortgagor subsequent to his mortgage grants a lease of the mortgaged premises whereby he covenants to repair. The mortgagee subsequently enters into possession and receives the rent. Can the tenant enforce the covenant to repair as against the mortgagee ? What would be the position of the tenant as respects mortgagor and