risks for them; and the merchant or shipowner who wishes to insure, is thus enabled, by applying to the broker, to get his insurance negotiated without delay. The broker is in the situation of debtor and creditor with both parties. To the credit of the underwriter he puts down premiums, which he credits as cash, undertaking the risk of recovering them; and in periodical accounts he may balance against these, returned premiums and losses. Against the insured he debits the premium, and credits an insured loss or a return premium.2 In England the right of companies to insure was long limited to the two companies erected by royal charter -the Royal Exchange, and the London Insurance Company-but this monopoly was abolished by 5 Geo. IV. c. 114; it did not extend to Scotland. Interest. There must be an insurable interest. By the act for suppressing wager policies, no insurance "on any ship belonging to his majesty or any of his subjects, or any goods, merchandise, or effects" can be made, "interest or no interest, or without farther proof of interest than the policy, or by way of gaming or wagering, or without benefit of salvage to the assurer."3 An insurable interest does not require to be a direct right of property; it may be in expected profit or freight, or an interest in a bottomry or respondentia bond. Under the head of freight an owner may insure the benefit he derives by the conveyance of his own goods.* Seamen's wages are not insurable, on the principle that their hopes of remuneration should be solely based on the safety of the ship. The prohibition does not extend to the remuneration of the master. It is a general principle that no insurance is good where the subject-matter of the contract involves a breach of law. (See above, p. 128.)6 All parties connected with an insurance on smuggled goods forfeit £500.7 SECT. 2.-Policy and Slip. Previously to preparing the policy, a note or jotting of the contract is made out, signed by initials, and merely used for noting the extent to which the respective underwriters will undertake. This is technically termed a "slip." Although a document of considerable consequence commercially, it is questionable whether, not being stamped, it would afford 1 See B. C. i. 599. M'Culloch's Commercial Dictionary, article Broker. Marshall, 295, et seq.- 19 Geo. II. c. 37, § 1. Marshall, 101, et seq. Park, 13, 69.5 Park, 12.-6 Marshall, 52.8 & 9 Vict. c. 87, § 48. ground for an action to compel the underwriter to sign the policy, and certainly cannot stand in its stead.1 Stamp.-A policy must be stamped according to the terms of 55 Geo. III. c. 184, 3 & 4 Wm. IV. c. 23, and 7 & 8 Vict. c. 21. “Any alteration which may lawfully be made in the terms and conditions of any policy of insurance duly stamped" may be made after it is underwritten, provided the alteration be made before notice of the termination of the original risk, that the subject insured remain the property of the same person, that no additional sum be insured, and that the period insured for be not prolonged.2 Under this condition a memorandum allowing the vessel to return and unload may be introduced,3 and the time of sailing may be extended. It is liberally interpreted where mistakes are corrected, and so where a broker had by mistake effected a policy on ship," the word was allowed to be altered to goods," but where a policy was designedly underwritten "on ship and outfit," it could not be altered to "ship and goods" without a new stamp. Any party accessory to insurance transactions, in which the stamp laws are evaded, is liable to a penalty of £100.6 It was a rule clearly established that policies could not be stamped after being written. As to the doubt which the late act appears to have thrown on this law, see above, p. 143. 66 Contents. The policy must contain the name or firm of the insured, or otherwise of the consigner, or of the consignee, or of the person in Britain receiving the order to insure or effecting the insurance, or of the person who gave him directions to do so.8 It must contain the name of the ship and of the master, and a discrepancy tending to produce a misunderstanding on these points will vitiate the contract, but the insurance may be generally" on ship or ships." It must contain the subjects insured distinctly described by the usual commercial terms. The commencement and termination of the voyage must be stated, and the endurance of the risk, the places of departure and destination being specified. A blank as to either of the places vitiates the contract, but it is said that if no time is specified, the risk begins with the date of the policy. The expressions "at and from" the B. C. i. 603. Marshall, 347. See 7 & 8 Vict. c. 21, § 4.- 35 Geo. III. c. 63, § 18. 7 & 8 Vict. c. 21, § 3.-3 Weir v. Aberdeen, 2 Barn. and Ald. 320.- Kensington v. Inglis, 8 East. 273.-5 Smith's M. L. 333.- 7 & 8 Vict. c. 21, § 4.-7 34 Geo. III. c. 63, § 14. See 7 & 8 Vict. c. 21, § 5.-8 28 Geo. III. c. 56. loading port renders the underwriter liable while the vessel remains in port, and throws a corresponding obligation on the insured, that she is in port, or will soon be there in safety.1 The risks or perils insured against are stated in the policy. They are, in the first place, those casualties occasioned by the act of God and the king's enemies," for the consequence of which the shipowners are not responsible. They are enumerated as perils of the Sea, Fire, Enemies, Pirates, Jettison or the necessary throwing overboard of property,† Detainments, and Embargoes. They may extend to Barratry, or loss by the fraud of the master and crew, though these be appointed by the assured; and in a case where the master was part owner, and was charged with having scuttled the ship, this did not prevent another part owner from recovering for the loss. The specific perils are followed by a general clause, including "all other perils, losses, or misfortunes," &c. It is a general principle, in interpreting this and the other clauses, that no loss arising from the fault of the owners, or from the unseaworthiness of the vessel, whether known to them or not, comes within the risks insured against; and that no loss arising from the fault of those employed by the owners comes within the risks, unless it be specifically mentioned.4 Usual Memorandum.-At the termination it is the practice to insert a memorandum, termed the Usual Memorandum, by which certain destructible commodities (generally corn, fish, salt, fruit, flour, and seed) are excepted from partial loss, and others (generally sugar, tobacco, hemp, flax, hides, and skins) are excepted from partial loss above five per cent. The object of this clause is to avoid disputes regarding petty losses; but to preserve the underwriter's responsibility for a general loss, there are the words "unless general," followed in some policies by "or the ship be stranded." It having been decided, however, that in consequence of the latter alternative, if the ship were stranded, the underwriters became responsible for partial loss, though not occasioned by the stranding, the London and Royal Exchange Insurance Companies ceased to insert this reservation.5 There are two specific sorts of policy, Valued Policy and Open Policy. In the former, the value insured is inserted. Marshall, 319, et seq. Park, 32, et seq.-* See below, p. 277.See p. 280.- Marshall, 207, et seq. Smith's M. L. 323, 324.Strong v. Martin, 11th July 1839. Marshall, 234, et seq.-5 Ibid. 224. Smith's M. L. 298. in the policy as admitted by the underwriter, in the latter it will have to be proved in the event of a loss. In the case of total loss or abandonment, the amount in a valued policy is considered the adjustment of the value as between the parties, but it cannot be made a shield for fraud, or for infringing the 19th Geo. II. c. 37, which prohibits insurances by persons who have no interest in the thing insured. Where the loss is partial, the distinction is not available, the amount of the damage necessarily becoming a subject of proof, as much as in the case of an open policy. The loss to be made good by the underwriter is divided into two sorts, total, and partial or average, and which of these it is to be, depends sometimes on those having the management of the ship. (See p. 203.) SECT. 3.-Premium. The Premium is the consideration for which the underwriter undertakes the risk. It is in this peculiar position, that the receipt is acknowledged in the policy, while the money remains unpaid, and the assured is legally responsible for it. It is, however, to the broker that he is responsible, not to the underwriter, whose acknowledgment is conclusive evidence of payment as between the assured and himself.1 In the account between the broker and the assured the unpaid premium is debited, while in his account with the underwriter it is credited.2 Return. The risk is the consideration of the premium. If it have not been incurred, an unpaid premium is not due, and a premium paid must be returned. If without any intention of fraud, or of transacting a wager-policy, an insurance has been obtained in favour of one who has no interest, or to an extent far beyond the real interest, there will be a partial or total return.3 If the same interest is in a similar manner insured in more than one office, there will be a proportional return from each. It would appear, that even in a wager-policy the premium may be recovered before the risk is run, though not afterwards. If, however, there be a loss which the underwriter refuses to make good on the ground of want of interest, and it appear that the assured was not acting fraudulently, there must be a return. If real risk has been incurred, that is, if the subject insured have been 1 Dalzell v. Mair, 1808, 1 Camp. 532.-2 B. C. i. 599.-3 Marshall, 648. 4 Ibid.-5 Ibid. 650-652. for one moment so situated, that if a loss had occurred, the whole would have fallen on the underwriter, there can be no return; and so if the ship deviate from her course, and the underwriter be discharged, he retains the premium.1 SECT. 4.-Obligations on the Assured. Those departures from the obligations of the assured, which will ground a defence against a claim on the underwriters, come under the three heads of breach of warranty, deviation, and concealment or misrepresentation. Warranty. It is an invariable rule, derived from the principles which have regulated the contract of insurance in England, that breach of warranty on the part of the assured releases the underwriter, whether it have been knowingly and wilfully incurred or not, and whether it affect the nature of the risk or not.2 "It is perfectly immaterial for what view the warranty was introduced; or whether the party had any view at all; but being once inserted it becomes a binding condition on the insured."3 Warranties are express or implied; of the former class are generally these:-That the ship is safe on a particular day; that she is to sail on a particular day; that she is to sail with convoy; and that she is to commit no breach of neutrality. A distinction is taken between a warranty to sail and a warranty to depart. In the former, the ship has only to break ground, and it is of no consequence that she may have put back from stress of weather. In the latter, the ship must clear out of port, and fairly commence her voyage.5 The principal implied warranty is Seaworthiness, as to the general rules of which see the liabilities of ship-owners (Part X. Chap. II. Sect. 6); observing that with them it is of the nature of an obligation, here of an absolute warranty, as above explained. Where there is no express evidence against it, seaworthiness is presumed; but this may be met by a counter presumption arising from circumstances, such as that of inability to perform the voyage being evinced soon after the ship has sailed.7 Warranty that the ship shall be possessed of the requisite papers, and that she shall be navigated according to law and the rules of good seaman Park, 575.- Smith's M. L. 334.- Park, 660.-4 Marshall, 353.5 Moir v. Royal Exchange Company, 3 M. & S. 460.- M'Closkie v. Glasgow, &c. Insurance Company, 4th August 1843.-7 Chief Commissioner Adam in Cairns v. Kippen, 17th March 1820, 2 Mur. 256. |