The Law of Insurance

The proper subject of insurance, is lawful property engaged in a lawful trade. We have seen that the property of enemies, and a trade carried on with enemies, do not come within this definition. So, an insurance on property, intended to be imported or exported, contrary to the law of the place where the policy is made, or sought to be enforced, is void: this is a clear, settled, and universal principle. No court, consistently with its duty, can lend its aid to carry into execution a contract which involves a violation of the laws the court is hound to administer.²⁶

It has been a question, however, of great discussion, whether a trade prohibited by one country, might be made the subject of lawful insurance, to be protected and enforced in the courts of another in which the prohibition does not exist. This question involves principles in politics and morals of momentous importance, and yet the jurists of England and France have differed widely in opinion upon it. Valin²⁷ and Emerigon consider the insurance of goods employed in a foreign smuggling or contraband trade, to be valid, provided the insurer was duly informed, when he entered into the contract, of the nature of the trade.

The French admiralty at Marseilles, in 1158, sustained and enforced a contract of insurance in favor of a French merchant who attempted to export silks from Spain contrary to the law of that country, and whose vessel was, in consequence thereof, seized, and the cargo confiscated. Emerigon justified the decision in France, under the broad terms of the policy, which assumes the aversio periculi, and by the usage of the commercial nations, who permit their subjects to carry on, at their own risk, a smuggling trade, contrary to the revenue laws of other countries, Valin concurs in opinion with Emerigon²⁸ but their conclusions were met and opposed by the manly sense, and stern moral principles of Pothier, who denied that it was permitted to Frenchmen to carry on, in a foreign country, a contraband trade prohibited by the laws of the foreign country.²⁹

They who engage in foreign commerce are bound by the law of nature and nations, to act in obedience to the laws of the country in which they transact business. Every sovereign possesses a rightful and supreme jurisdiction within his own territory. He has a right to regulate the commerce of his subjects in his discretion; and so far as foreigners interfere with that commerce within his dominion, they are equally bound with natives to obey the laws which regulate it. If Frenchmen, trading in Spain, were not bound by the Spanish laws, the subjects of Spain are bound by them, and it is immoral for foreigners to seduce Spaniards into an illicit trade. In every view, according to Pothier, the commerce was illicit, and contrary to good faith, and the insurance of it was equally inadmissible, and created no valid obligation.

Emerigon, who was enlightened, as he admits, in the whole course of his work, by the luminous mind of Pothier, as the later was by Valin, bows to the irresistible energy of the principles of Pothier, and concedes, that the insurance of a foreign smuggling, or contraband trade, is rather tolerated than justified, and allowed only because other nations have indulged in the same vicious practice.³⁰ In England, the law of insurance is the same as it is in France. A policy, unlawful by the law of the land where it is made, is void everywhere; but an insurance upon a smuggling voyage, prohibited only by the law of the foreign country where the ship has traded, or intends to trade, is good and valid, on the principle, which has been adopted from a motive of policy or comity, that one country does not take notice of the revenue laws of another, nor hold itself bound to repudiate. commercial transactions which violate them. If the underwriter, therefore, with full knowledge that he was covering a foreign smuggling trade, make the insurance, it is held to be a fair contract between the parties, and he is bound by it.³¹

The decisions of Lord Mansfield on this subject must be considered as laying down an exceedingly lax morality, particularly in the case of Planche v. Fletcher, where an insurance upon a voyage in which it was intended to defraud the revenue of a foreign state, was held not to be illegal. though fictitious papers were fabricated for the purpose of facilitating the fraud. Lord Hardwicke had advanced similar doctrine in Boucher v. Lawson,³² when he declared, that the unlawfulness, by the Portuguese laws, of exporting gold from Portugal, made no difference in the action at London, for in England it was a lawful trade. The statute of 19 Geo. II. c. 37. was made even with a view to favor the smuggling of bullion from the Spanish and Portuguese colonies. Lord Kenyon, in the case of Weymell v. Reed,³³ seemed to have felt the pressure of the unsound and immoral principle involved in the doctrine of the English courts, for he purposely waived the inquiry whether or not it be immoral for a native of one country, to enter into a contract with the subject of another, to assist the latter in defrauding the revenue laws of his country. The English writers on insurance have not concurred entirely in opinion on the question; for while Miller, in his essay on The Elements of Insurance, approves of the English rule, and Mr. Justice Park admits it without any complaint, there are other writers equally intelligent, who most pointedly condemn the doctrine.³⁴

In this country, we have followed the English rule, as declared by Lord Mansfield, to the full extent; and the underwriter is liable for losses in consequence of violations of the trade laws of foreign states, provided he was apprised of the intention on the part of the insured, to violate such laws, either by the terms of the policy, or the standing regulations of the place to which the vessel is insured, or the known usages of the trade. It is well understood, and settled, that the underwriter is not liable for any loss arising from foreign illicit trade, unless he underwrote with full knowledge that such a trade was the object of the voyage. All the authorities, foreign and domestic, recognize this doctrine. But if the trade be known to be illicit, and the underwriter makes no exception of the risk of illicit trade, it will be presumed he intended to assume it. The implication would be very fair and just, and would supply the place of more direct proof.³⁵ It is certainly matter of surprise and regret, that in such countries as France, England, and the United States, distinguished for a correct and enlightened administration of justice, smuggling voyages, made on purpose to elude the laws, and seduce the subjects of foreign states, should be countenanced, and even encouraged, by the courts of justice. The principle does no credit to the commercial jurisprudence of the age.³⁶

The insurance hy a neutral, of goods usually denominated contraband of war, is a valid contract, for it is not deemed unlawful for a neutral to he engaged in a contraband trade. It is a commercial adventure, which no neutral nation is bound to prohibit, and which only exposes the persons engaged in it to the penalty of confiscation. But, on the other hand, all articles contraband of war are subject to seizure in transitu, by the. belligerent cruisers, and so far it is a case of imperfect right.³⁷ Mr. Phillips, in his Treatise of the Law of Insurance, intimates, that the trading in articles contraband of war is illegal by the law of nations, which forms part of the municipal law of every state; and that the property cannot, therefore, be the lawful subject of insurance, even in a neutral state.³⁸ But though it may be difficult to answer this reasoning, it is certain, that the established doctrine is not so rigorous. Vattel³⁹ admits, that it is not an act in itself unlawful or hostile, for a neutral to carry on a contraband trade; and if the neutral right to carry, and the belligerent right to seize and confiscate, clash with, and reciprocally injure each other, it is a collision of rights which happens every day in war, and flows from the effect of an inevitable necessity.

The Chief Justice of Massachusetts, in Richardson v. Maine Insurance Company,⁴⁰ examined this subject with very accurate discrimination, and he considered, that illicit voyages might be ranked in several classes: (1.) When the sovereign of the country to which the ship belonged, interdicted trade with a foreign country or port; and in that case, the voyage, for the purpose of trade, would be illicit, and all insurances thereon void. (2.) Where the trade in question is prohibited by the trade laws of a foreign state; and in that case, the voyage, in such a trade, may be the subject of insurance in any state in which the trade is not prohibited, for the municipal laws of one jurisdiction have no force in another. (3.) When neutrals transport to belligerents goods contraband of war.

But the law of nations does not go to the extent of rendering the neutral shipper of goods contraband of war, an offender against his own sovereign. While the neutral is engaged in such a trade, he is withdrawn from the protection of his sovereign, and his goods are liable to seizure and condemnation by the powers at war. To this penalty the neutral must submit, for the capture was lawful. The neutral may lawfully transport contraband goods, subject to the qualification of being rightfully liable to seizure by a belligerent power; but he is never punished by his own sovereign for his contraband shipments. In like manner, the neutral may lawfully carry enemy’s property, and the belligerent may lawfully interrupt him and seize it. An insurance, then, by neutrals, in a neutral country, is valid, whether it relates to an interloping trade in a foreign port, illicit lege loci, or to a trade in transporting contraband goods, which is illicit, jure belli. But to render the insurance in either case valid, the nature of the trade, and of the goods, should be disclosed to him, or there should he just ground, from the circumstances of the trade, or otherwise, to presume that he was duly informed of the facts.⁴¹

The commercial ordinances have generally prohibited the insurance of seamen’s wages, and the expediency of the prohibition arises from the consideration, that if the title to wages did not depend upon the earning of freight hy the performance of the voyage, seamen would want one great stimulus to exertion in times of difficulty and disaster. Though there be no statute ordinance on the subject in the English law, yet it is every where assumed as a settled principle in the marine law of England, that seamen’s wages are not insurable.⁴² But the goods that seamen purchase abroad with their wages, do not fall within the reason, nor do wages already earned and due; and yet if a seaman, at an intermediate port, by a refusal to proceed, coerces the master to have his wages already earned insured, such a policy has been held void in the French courts.⁴³

In France and Spain, freight not earned cannot be insured, and for the same reason, that seamen’s wages are not insurable. Several of the commercial tribunals wished, however, to adopt the practice of the English, and give a greater extension to the liberty of insurance. To this it was answered, that risk was of the essence of the contract, and that there could be no real loss of that which is a nonentity, and had no certain existence, as future contingent freight and profits.⁴⁴ By leaving the freight to be earned uncovered, the master has stronger inducements to be vigilant in the preservation of the ship and cargo. This is the reason assigned by Cleirac; but Emerigon says, the true ground of the prohibition is, the uncertainty of the existence of any future freight.⁴⁵ In England, and in the United States, future, or expected and contingent, and even dead freight, is held to be an insurable interest. It is sufficient that the insured has an interest in the subject matter from which the freight is to arise.

It is necessary, however, that the ship should have actually begun to earn freight, in order to entitle the insurer to recover, for, until then, the risk on the freight does not commence. An inchoate right to freight is an insurable interest. The risk generally begins from the time the goods, or a part of them, are put on board, or from the tune the ship has commenced the voyage for the purpose of a cargo. If the ship has been let to freight under a charter party of affreightment, the right to freight commences, and is at risk, so soon as the ship breaks ground; and if the charterer omits to put on board the expected cargo, and the ship performs the voyage in ballast, the right to freight is perfect. But when the freight arises from the transportation of the goods, it commences when the goods are put on board, and the policy attaches to the extent of the goods on board, or ready to be shipped.⁴⁶

Profits are, equally with freight, a proper subject of insurance. The right to insure expected or contingent profits, is settled in England, and has received repeated and elaborate confirmation.⁴⁷ They are likewise, in this country, held to bean insurance interest.⁴⁸ Insurances on freight, profits, and commissions, are required, by the course and interests of trade, and have been found to be greatly conducive to its prosperity. But the doctrine that pervades the cases is, that the insured must have a real interest in the subject matter from which the profits are expected. There must be a substantial basis for the hope or expectation of profits, in order to prevent the policy from being considered a wager. Commissions are a species of profit expected to arise upon the sale of property consigned to an agent or supercargo, and they are an insurable interest in England, and other countries, where insurances on profits are legal.⁴⁹

In France, assurances on profits are unlawful, and contrary to the code, as they were also to the ordinances of the marine, and for the same reason that insurances on freight are not allowed. The subject insured must have a physical existence, and be a substance capable of being exposed to the hazards of the sea. And yet there seems to be no more objection to the insurance of a thing having only a potential existence, than to the sale of it, and it is admitted that the sale of the proceeds of a future vintage, or of the next cast of the net by a fisherman, is a good and valid sale. The hope or expectation of profit, in these cases, is, says Pothier,⁵⁰ a moral entity, susceptible of value, and of being sold. But in Italy, Portugal, and the Hanse Towns, they are held lawful; and Santerna, and after him, Straccha and then Roccus, all show, that the profit of goods may lawfully be estimated in an insurance on goods.⁵¹ The English cases have required the insured to show, in an insurance on profits, that some profit would have been produced upon the adventure, if the peril to the property from which the profits were to arise, had not intervened.⁵² I should apprehend that. was the proper course, trough the cases in this country have not explicitly declared, that the party must show affirmatively that the goods, if they had arrived safe, would have come to a profitable market, or that the state of the foreign market was such as to have afforded, as in Grunt v. Parkinson, a very strong expectation of profits. Such an expectation seems to have been assumed in the American cases.

An open policy is one in which the amount of interest is not fixed by the policy, but is left to he ascertained by the insured, in case a loss should happen. A valued policy is where a value has been set in the ship or goods insured, and inserted in the policy ill the nature of liquidated damages..

If a policy on profits be an open one, there must. be proof given of the amount of the profits that would probably hove been made, if the loss had not happened there would not otherwise be any guide to the jury, in the computation of the loss. In Mumford v. Hallett,⁵³ it was supposed that every policy on profits must, of necessity, be a valued one. because without the valuation it Mold be extremely difficult to ascertain the amount to be recovered. A loss on the profits must he regulated by the loss of the property from which the profits were to arise.⁵⁴

The value in the policy is, or ought to he, the real value of the ship, or the prime cost of the goods, including the incidental expenses of them previous to the shipment, and the premium of insurance.⁵⁵ It means the amount of the insurable interest; and if the insured has sonic interest at risk, and there be no fraud, the valuation on the policy is conclusive between the parties; for they have, by agreement, settled the value, and not left it open to future inquiry and dispute as between themselves. lit he valuation should, however, be grossly enormous, as in the case put by Lord Mansfield, where cargo was valued at £2,000, and the insured had only the value of a cable on board.;here is no doubt it would raise it, strong presumption of fraud; and either the valuation or the policy would be set aside. A valuation, fraudulent in fact, as respects the insurer, entirely vacates the policy, and discharges the insurer; and the English, American, and French law, of insurance contain the same general doctrine on the subject.⁵⁶

There are cases which suggest that the valuation is applicable only to cases of total loss, and does not apply to average losses.⁵⁷ But the better opinion is, that in settling all losses, total or partial, the valuation of the property in the policy, is to be considered as correct in the adjustment of the loss, and the adjustment is to be the same as if the goods had actually cost, or the ship and freight were actually worth, the sum at which they were valued. Mr. Benecke concludes from a consideration of the cases, that the opinion, that in a case of a partial loss the valuation ought to he disregarded, is as destitute of authority, as it is void of justice and sound reason.⁵⁸

A valuation does not preclude the inquiry, whether the whole interest valued has been at risk. If the valuation of freight of a whole cargo be made, the underwriter will not be liable beyond the extent of the freight of the goods put on board.⁵⁹ This doctrine applies equally to an insurance upon cargo; and the insured, on a valued policy on cargo, will not recover beyond the interest he had at risk. There must be a total loss of the whole subject matter of insurance to which the valuation applied, whether the insurance was on goods, or upon freight. The valuation fixes the price of the whole subject at risk, but it does not admit, that the property on which the valuation was made, was on board the vessel.⁶⁰ If, therefore, certain articles be comprised in a valuation, and part are safely landed before the ship is lost, the valuation must be opened, and the claim of the insured reduced in the proportion which the articles actually lost bore to the valuation of the whole at the commencement of the risk.⁶¹

A mere hope or expectation, without some interest in the subject matter, is a wager policy, and all such policies are, by statute, in England, declared void.⁶² But the English courts have refined greatly, in considering what is an interest sufficient to sustain a policy, and to place it out of the reach of the prohibition. If a person be directly liable to loss in the happening of any particular event, as if he be an insurer, or be answerable as owner for the negligence of the master, he has an insurable interest.⁶³ In the case of Lucena v. Craufurd,⁶⁴ the distinction between a reasonable expectation of gain in the shape of freight, commissions, or profits, founded on some interest in the subject matter which was to produce them, and a mere shadowy, hope or expectation, was fully, and very ably investigated, in the Court of Common Pleas, and in the House of Lords, and great talents were displayed and exhausted upon that very litigated point. The decision in that case was, that commissions to become due to public agents, and all reasonable expectations of profits, were insurable interests. The interest need not be a property in the subject insured. It is sufficient if a loss of the subject would bring upon the insured a pecuniary loss, or intercept a profit. Interest does not necessarily imply a right to, or property in, the subject insured. It may consist in having some relation to, or concern in, the subject of the insurance, and which relation or concern may be so affected by the peril as to produce damage. Where a person is so circumstanced, he is interested in the safety of the thing, for he receives a benefit from its existence, and a prejudice from its destruction, and that interest is, in the view of the English law, a lawful subject of insurance.

It was admitted by the judges of the Court of K. B. in Craufurd v. Hunter,⁶⁵ that, at common law, prior to the statute of Geo. II wager policies were not illegal; and the courts have been very much embarrassed in their endeavors to draw the line of distinction between wagers that were and were not admissible in courts of justice. The law has been thought to descend from its dignity when it lends its aid to recover, the fruits of an idle and frivolous wager. In Good v. Elliot,⁶⁶ Mr. J. Buller made a vigorous, but unsuccessful stand, against suits upon wages in any case; and nothing could have been more impertinent than the wager in that case, which was, whether one third person had purchased a wagon of another. Many of the cases stated by Mr. J. Buller, were of n nature to draw into discussion, and unnecessarily affect the character or feelings of third persons; and to sustain suits upon such wanton wages, would be a disgrace to any administration of justice. The case of Jones v. Randall,⁶⁷ went quite far enough, when it sustained an action upon a wager whether a decree in Chancery would be reversed on appeal to the House of Lords. If wagers are to be allowed in any case, as valid ground for a suit, the betting on the return of a ship, in the shape of a policy without interest, is as harmless as any that could be devised. In Egerton v. Furzeman,⁶⁸ it was ruled lately in the English courts, that a wager on a battle between two dogs was illegal, and not the ground of action.

In this state, we have assumed it to be a clear and settled principle of the common law, that a policy in which the insured had no interest, and which was, in fact, nothing more than a wager or bet between the parties to the contract, whether such a voyage would be performed, or such a ship arrive safe, was a valid contract.⁶⁹ We only require, that the wager should concern an innocent transaction, and not be contrary to good morals or sound policy.⁷⁰ In Massachusetts, the Supreme Court has expressed a strong opinion against the validity of a wager policy, and the doctrine there is, that all gaming is unlawful according to the general policy and laws of the commonwealth. In Pennsylvania, every species of gambling policy is reprobated, and they follow the principles, while they do not acknowledge the authority of the English statute in the reign of George II.⁷¹ Wager policies, without any real interest to support them, are condemned also by positive ordinances in France, and in most of the commercial nations of Europe.⁷²

(4.) Of reassurance and double insurance.

After an insurance has been made, the insurer may have the entire sum he has insured, reassured to him by some other insurer. The object of this is indemnity against his own act; and if he gives a less premium for the re-assurance, all his gain is the difference between what he receives as a premium for the original insurance, and what he gives for the indemnity against his own policy. If he gives as much for reassurance, he gains nothing by the transaction; and if he gives a higher premium, as insurers will sometimes do to cover a dangerous risk, he becomes a loser by his original insurance. These reassurances are prohibited in England, except in special cases, by the statute of 19 Geo. II ch. 37; but they are allowed with us.⁷³ The contract of reassurance is totally distinct from, and unconnected with, the primitive insurance; and the reassured is obliged to prove the loading and. value of the goods, and the existence and extent of the loss, in the same manner as if he were the original insured.⁷⁴ He need not abandon to the reinsurer, as soon as the first insured has abandoned to him, for he has no connection with the first insurance. If he proves the original claim against him to be valid, when he resorts over to the re-insurer, he makes out a case for indemnity.⁷⁵

These reassurances are allowed by the French ordinances,⁷⁶ and the first insurer can reassure to the same amount; but the better opinion is, that he cannot inure the premium due him for the first insurance. Valin, Pothier, M. Estrangin the commentator upon Pothier, and Boulay Paty, are all opposed to Emerigon on this point, and they certainly bear down his opinion.⁷⁷

The insured may likewise cause to be insured the solvency of the first insurer; but this will not often be the case, for it lessens greatly the profits of the voyage, by multiplying the charges upon it; and Marshall says, it has never happened in England, for a double insurance answers better the end proposed.⁷⁸ The second insurer does not become strictly a surety for the first insurer. It is a totally distinct contract, without any participation in the other, and he is not bound to render any service to the first one. It is a conditional obligation of a special kind.⁷⁹ Valin and Pothier contend, that the second insurer of the solvency of the first one, becomes a surety for the first, and is entitled to oppose to the claim the exception of discussion, which is to require, that the first insurer should, at his expense, be first prosecuted to judgment and execution; but Emerigon and Boulay Paty are not of that opinion, though they admit, that the first insurer must be put legally in default after a legal demand.⁸⁰

A double insurance is where the insured makes two insurances on the same risk, and the same interest. But the law will not allow him to receive a double satisfaction in case of loss, though he may sue on both policies. The underwriters on the different policies are bound to contribute rateably towards the loss.⁸¹ They pay according to the rate of their subscriptions, without regard to the order of time in which the policies were made; and if the insured recovers his whole loss froth one set of underwriters, they will be entitled to their action against the other insurers, on t he same interest and risk, for a rateable proportion of the loss.⁸² The doctrine of contribution applies very equitably to such a case.

It was so declared by the Circuit Court of the United States at Philadelphia, in Thurston v. Koch;⁸³ and though, in most countries of Europe, the first policy in the order of time is to be exhausted before the second operates, yet the rule requiring the insurers in each policy to bear a rateable share of the loss, was declared, in that case, to be founded in equity, and in sound principles of commercial policy. The French rule is, that if there exists several contracts of insurance on the same interest and risk, and the first policy covers the whole value of the subject, it bears the whole loss, and the subsequent insurers are, discharged on returning all but half percent premium. But if it does not cover the entire value, the subsequent policies, in case of loss, are bound only to make up the part uncovered.⁸⁴ The ancient rule in England was according to the French ordinance,⁸⁵ and it has been deemed more simple and convenient. Merchants frequently prefer it, and it is perfectly consonant to a strict construction of the contract with the first underwriter.

Policies have sometimes a clause introduced into them to prevent the rule of contribution, and to make the insurers responsible according to the order of date of their respective policies. Where two policies were dated upon the same day, it was held, that prior in date was intended to be equivalent to prior in time, and that the policy first in time, in point of fact, was to bear the loss.⁸⁶

As a general rule of construction, and independent of usage, the first policy under such a clause as that to which I have referred, would have to bear the whole loss, whether partial or total, to the extent of the policy.⁸⁷ But the usage of the companies in New York is understood to be, that partial losses are to be apportioned between the policies without regard to dates, provided the cargo on board was large enough to have attached both policies to it. This is the French rule. In France, if there be goods on board to the amount of both policies, and a partial loss ensues, the insurers contribute rateably in proportion to their subscriptions.⁸⁸

(5.) Of representation and warranty.

All the writers who have treated of the contract of insurance, agree, that it is eminently a contract of good faith, which is peculiarly enjoined upon the insured, as he possesses an entire knowledge of all those circumstances which combine to form the contract, and is bound to communicate the facts and objects which are to determine the will of the insurer. It is, accordingly, an established principle, that a misrepresentation to the underwriter, or concealment of a fact material to the risk, will avoid the policy. It will avoid it though the loss arose from a cause unconnected with the misrepresentation, or even though the misrepresentation or concealment happened through mistake, neglect, or accident, without an fraudulent. intention.⁸⁹ Lord Mansfield laid down, with great strength and clearness, the general principles which governed this branch of the subject, and they have been implicitly adopted in all succeeding cases.

The special facts upon which the contingent chance was to be computed, usually lie in the knowledge of the insured only, and the underwriter trusts to his representation, and proceeds upon the confidence that he does not withhold any facts material to the estimate of the risk. The suppression of any such facts, whether by design, or mistake, or negligence, equally render the policy void, for the risk run becomes different from the one assumed in the policy. The law requires uberrima fides in the formation of the contract, and yet either party may be innocently silent, as to the grounds open to both, for the exercise of their judgment. The underwriter need not be told general topics of speculation and intelligence. He is bound to know every cause which may occasion natural, or political perils. Men argue differently from natural phenomena and political appearances, and when the means of information and judging are open to both parties, each acts from his own skill and judgment. The question in those cases always is, whether there was, under all the circumstances, a fair representation, or a concealment; if the misrepresentation or concealment was designed, whether it was fraudulent, and if not designed, whether it varied materially the object of the policy, and changed the risk understood to be run. If the misrepresentation was by fraudulent design, it avoids the policy, without staying to inquire into its materiality; and if by mistake, or oversight, it does not affect the policy, unless it was material, and not true in substance.⁹⁰

If the information be stated as mere opinion, or expectation, and, perhaps, as mere belief, it does not amount to a representation, or affect the policy, provided it was given in good faith, for the underwriter, in such a case, takes the risk upon himself.⁹¹

A representation to the first underwriter, in favor of the risk, extends to all subsequent underwriters, and on the ground that they subscribed upon their confidence in his judgment and knowledge of the risk, and are, therefore, entitled to avail themselves of all the conditions upon which he subscribed.⁹² This rule has not been favorably received by later judges, and it is strictly confined to representations made to the first underwriter, and not to intermediate ones.⁹³ Nor does it extend to a subsequent underwriter on a different policy, though on the same vessel, and against the same risks.⁹⁴

The knowledge or information material for the insurer to know, and necessary to be communicated to him, when the contract is made, is a question. not of science, or one which rests upon the opinion of mercantile men, but a question of fact for a jury, and they are to judge of the materiality of the information under a consideration of all the circumstances that belong to the case.⁹⁵ This point was fully considered, and with a review of the English and American authorities, in the case of the New York Firemen Insurance Company v. Walden;⁹⁶ and that doctrine has since received the unqualified sanction of the Supreme Court of the United States.⁹⁷ The books abound with cases relative to the very litigated question as to what are, and what are not. necessary disclosures. The largest and most accurate digest of the English and American decisions on this subject., is to be seen in Mr. Phillips’ Treatise on the Law of Insurance, ch. 7; and it will not be consistent with my purpose to do more than bring into notice the leading principles which govern this very practical branch of the law of insurance.

It is the duty of the insured to communicate every species of intelligence which he possesses, which may affect the mind of the insurer either as to the point whether he will insure at all, or as to the rate of premium. The decisions, in some of the old cases, contain strict doctrines on the subject of concealment, which have never been shaken;⁹⁸ and the modern cases are equally sound and exact in their requisitions.⁹⁹ But the insured is not bound to communicate loose rumors, nor any facts which the underwriter may be presumed to know equally with himself.

The insured is not bound to disclose all by-gone calamities, or produce his portfolio of letters; and he need only disclose the material facts known to him at the date of the last intelligence.¹⁰⁰ The underwriter is bound to know the nature and general course of the trade and of the voyage, and he assumes that kind of knowledge at his peril.¹⁰¹ The general rule is, that all facts material to the risk, and known to the one party and not to the other, must be disclosed when the policy is to be effected; and they must be fully and fairly disclosed.¹⁰² But if the subject on which disclosures would otherwise be requisite, be covered by a warranty, either express or implied, in that case it need not become a matter of representation.¹⁰³ It is likewise sufficient in the case of a representation, that it be equitably and substantially complied with;¹⁰⁴ and in furtherance of that perfect good faith which is so strongly called for in the formation of this contract, it is adjudged that if the party, after having given instructions for effecting a policy, receives intelligence material to the risk, he must forthwith, or with due and reasonable diligence, communicate it, or countermand his instructions.¹⁰⁵ If, however, the insured acts with good faith, the validity of the policy will not be affected by the fraudulent misconduct of the. master, in withholding from his owner information of the loss, until after the policy was underwritten.¹⁰⁶

The French ordinance of the marine had no positive provisions on this subject, and yet the same principles which prevail in the English law were recognized as sound rules applicable to the government of the contract.¹⁰⁷ In the new code¹⁰⁸ it is provided, that any concealment or misrepresentation on the part of the insured, which would diminish the opinion of the risk, or change the subject matter of it, annuls the insurance. It is held to be void even when the concealment or misrepresentation would have had no influence on the loss. Nor is it deemed necessary, under the French law,¹⁰⁹ to prove fraud in fact; and the concealment or misrepresentation is equally fatal; whether it proceed from design, forgetfulness, or negligence. The severe dispositions of the code are much commended by the French lawyers, as an improvement upon their ancient jurisprudence, and a great protection to the insurer against impositions of which he was often the victim.

There is, in every policy, an implied warranty that the ship is seaworthy when the policy attaches. This means, as we have already seen, that the vessel is competent to resist the ordinary attacks of wind and weather, and is competently equipped and manned for the voyage, with a sufficient crew, and with sufficient means to sustain them, and with a captain of general good character and nautical skill.¹¹⁰ This warranty of seaworthiness relates to the commencement of the risk, and the warranty is not broken if she becomes unseaworthy afterwards.¹¹¹ There are numerous cases in England, and in this country, on the question of seaworthiness, and they have generally been questions depending upon matters of fact, and lead to inquiries too minute for general elementary instruction.¹¹² A breach of the implied warranty of seaworthiness in the course of the voyage, has no retrospective operation, and does not destroy a just claim to damages for losses occurring prior to the breach of this implied condition.¹¹³

Every warranty is part of the contract, and is either express or implied. If it be an express warranty, it must appear upon the face of the policy. It differs from a representation in this respect, that it is the nature of a condition precedent, and requires a strict and literal performance. Whether the thing warranted be material or not, and whether the loss happened by reason of a breach of the warranty, or did not, is immaterial. A breach of it avoids the contract ab initio. Every condition precedent requires a strict performance to entitle a party to his right of action. But seaworthiness in port may be one thing, and seaworthiness for a whole voyage quite another, and a ship may be seaworthy in harbor when under repair, though she would not be so in that condition at sea.¹¹⁴ It was held, in the case of Wier v. Aberdeen,¹¹⁵ that though a ship be unseaworthy at the commencement of the risk, yet if the defect, be cured before a subsequent loss is recoverable under the policy. The argument of Lord Tenterden in favor of this doctrine is very weighty, but a doubt seems to have been latterly thrown over its solidity by the Supreme Court of the United States.¹¹⁶

The most usual express warranties are, that the ship was safe at such a time, or would sail by such a day, or would sail with convoy, or a warranty against illicit and contraband trade, or that the property insured is neutral. During the long maritime wars that grew out of the French revolution, and while we continued in our neutral position, the warranty of neutrality attracted great attention, and became a very fruitful topic of discussion in the courts of justice. It was understood and settled, that it was not. sufficient, under this warranty, that the ship and cargo be lit fact neutral. They must be neutral to the purpose of being protected, and, therefore, the ship must have the requisite insignia of neutrality, by being accompanied with documents that go to falsify the warranty. She must also have been conducted throughout the voyage, according to the duties which particular treaties, and the general rules of neutrality, enjoin, so as to be entitled to protection, by the law of nations, in the courts of the belligerent powers.

To construe the engagement to be less than that, would be to render it, in a great degree, idle and nugatory. On such a warranty the insurer lays out of view the risk of loss, by reason of the want of due proof of neutrality, and of a strictly neutral conduct. The insured having in his own hands the means to maintain his averment, he is bound to do it whenever and wherever the neutrality of the- property, or its privileges as such, are called in question.¹¹⁷ The warranty imposes upon the insured the exact observance of all those duties which belong to a neutral vessel; and by the violation, or by the omission, of any clear and certain neutral ditty, the vessel forfeits her neutrality, and the warranty is broken. The neutral is bound to submit to visitation and search, and resistance thereto would be a breach the warranty.¹¹⁸

Many interesting questions arise in the course of a maritime war, upon the warranty of neutrality, but which attract no attention while they remain dormant in a season of general peace. One of those questions held a prominent place some years ago in the jurisprudence of this country, and led to very vexed discussions, and contradictory results. The controversy to which I allude was concerning the legal effect, in a suit upon the policy, of a sentence of condemnation in the admiralty courts of the belligerent powers, of property warranted neutral, but captured, libeled and condemned as enemy’s property.¹¹⁹ The general result of those discussions has been already stated, and they will probably not be revived until some maritime war shall hereafter arise, to stimulate cupidity, and disturb the commerce of the ocean.

(6.) Of the nature, variety, and extent of the risks or perils within their policy.

The general rule is, that the insurer charges himself with all the maritime perils which the thing insured can meet with on the voyage: praestare tenetur quodcunque damnum obveniens in mari. It was an ancient opinion stated by Santerna, that the insurer was not responsible for very unusual and extraordinary perils not specially stated. But such a principle is now utterly exploded, and the policy sweeps within its enclosure every peril incident to the voyage, however strange or unexpected, unless there be a special exception.¹²⁰ The perils enumerated in the common policy are sufficiently comprehensive to embrace every species of risk to which ships and goods are exposed from the perils of the sea, and all other causes incident to maritime adventure. The enumerated list may be enlarged or abridged at the pleasure of the parties.

A person may protect himself by insurance against all losses except such as may be repugnant to public policy or positive prohibition, or occasioned by his own misconduct or fraud. Against the latter it is not to he presumed any insurance could be effected, nor would the courts tolerate such a vicious principle; for this would, as Pothier says, be a contract which would invite ad delinquendum.¹²¹

An insurance against loss by reason of the acts of one’s own government, as an arrest, or embargo, is valid.¹²² The same principle is incorporated into the new French commercial code, and it pervades universally the law of insurance.¹²³ A distinction has, however, been taken between that case and a claim arising between subjects of different states, and it has been held, that a foreigner could not claim against a British underwriter, founded on. the act of his own state, any more than if the claim was created by his own act, and on the principle that he was to be deemed a party to the public authoritative acts of his own government.¹²⁴

But Lord Ellenborough afterwards threw a doubt over the doctrine, and explained away the force of it, by raising refined distinctions. He said, the exclusion of risk occasioned by the act of the assured’s own government, was only an implied exclusion from the reason and fitness of the thing, and might be rebutted by circumstances.¹²⁵ The distinctions were afterwards pointedly disclaimed, and the whole doctrine exploded, on a writ of error, in the Exchequer Chamber;¹²⁶ and it was there established, that it was no objection to the right of recovery by the insured, that the loss happened by the act of the government of his country, though he and the insurer were subjects of different states. The latter rule has, likewise, after a clear and accurate review of the cases, been adopted as just and solid by the Supreme Court of this state; and it was declared, that a subject was not to be deemed a party to the legislative, and much less to the judicial acts of his own country, so as thereby to deprive him of remedy on a policy by a foreign insurance office, by reason of any acts or judgments of his own country. The contrary doctrine was founded on a fanciful and unreasonable theory.¹²⁷

An interdiction of commerce with the port of destination, or a denial of entry by the power at the port, or by a blockade, has been held not to be a loss within the policy, by decisions in England and in Massachusetts. The loss must be occasioned by a peril, acting upon the subject insured immediately, and not circuitously, and a just fear of capture is not sufficient.¹²⁸ But there are other, and later, and more numerous cases, which have established a different conclusion from the same principles, and have declared that an interdiction of commerce with the port of destination by means of a blockade, or the possession of the port by an enemy, was a peril within the policy. It is considered a loss by restraint of princes which could not be resisted, and operates as effectually as if the vessel was actually seized. It would be unreasonable to require the insured to rush into danger with the moral certainty of loss. There is no doubt about the general principle, that if the voyage be relinquished merely through fear of capture, the loss is not covered by the policy. The point on which these latter cases rest is, that if the danger be so great as to amount to almost a certainty of capture, it becomes a restraint in contemplation of the policy.

A warranty against illicit trade was introduced into some of our American policies in 1788. It was intended to apply only to seizures for breaches of the laws of trade, and the commercial regulations of ports. It does not extend to seizures for offenses against the law of nations, nor to acts of lawless violence, though committed under a pretext of some municipal regulation.¹²⁹ The apprehension of capture, or of any other peril, in transitu, is no ground of abandonment. In the cases in which a just fear of one of the perils insured against has been deemed equivalent to the presence of vis major, and sufficient to charge the loss upon the insurer, the danger was imminent, and might be said to be present and palpable, as well as apparently remediless and morally certain.¹³⁰

It was a maxim of the civil law, that the life of a freeman was above all valuation: liberum corpus aestimationem non recipit; and the nautical legislation of some parts of Europe has been founded upon that principle, and they have deemed it unfit and improper to allow insurances on human life. While they are tolerated in Naples, Florence, by the ordinance of Wisbuy, and in England, they were condemned in the Le Guidon, as contrary to good morals, and as being the source of infinite abuse; and insurances on lives were expressly prohibited by the ordinance of Louis XIV. The prohibition is made to rest on the reason given in the civil law; and the ordinances of Amsterdam, Rotterdam, and Middleburg, adopted the same rule.¹³¹ The new code has omitted any express provision on the subject, though Boulay Paty¹³² thinks that a prohibition is covertly but essentially contained in art. 334 of the code; and most of the commentators on the new code, as Delvincourt,¹³³ Locre,¹³⁴ De Laporte, and Estrangin, concur in the same opinion. Pardessus,¹³⁵ on the other hand, is in favor of the legality of such insurances, and this must have been the opinion of the French government, for a royal ordinance of February, 1820, established a company for the purpose of insurances upon lives.¹³⁶

To prevent disputes respecting partial losses, arising from the perishable quality of the goods insured, or from trivial subjects of difference, it has been a general practice to introduce into policies a stipulation, by way of memorandum, that upon certain enumerated articles, the insurer should not be liable for any partial loss whatever, and upon others for none, under a given rate percent. This clause was first introduced into the English policies about the year 1749. Before that time the insurer was liable for every injury, however small, that happened to the thing insured. In France, if there be no such express stipulation, the ordinance of the marine, and afterwards the new code, provides that the insurer shall not be liable, if the partial loss does not exceed one percent of the value of the article damaged.¹³⁷

The memorandum clause in a policy usually declares that the enumerated articles should be free from average” under a given rate, unless general, or the ship be stranded. In consequence of this exception, all small partial losses, however inconsiderable, are to be borne by a general average, provided they were incurred in a case proper for such an average; and in Cantillon v. London Assurance Company,¹³⁸ it was held that the exception amounted to a condition, and that if the ship was stranded, the insured was let in to prove his whole partial loss. But in Wilson v. Smith,¹³⁹ that decision was overruled, and it was held that those words did not make a condition, but only an exception; and that in the case of stranding, and in all cases proper for a general average, and in those cases only, the memorandum did not apply.

Afterwards, in Mason v. Skurray,¹⁴⁰ Lord Mansfield held the same doctrine; and in Cocking v. Fraser,¹⁴¹ the principle was carried still further, and received its due expansion, and was clearly and precisely defined. It was settled by a strong determination of the court of K. B., that though a total loss may exist in certain cases when the voyage is defeated, yet in case of perishable articles within the memorandum, the insurer is secure against all damage to them, whether great or small, whether it defeats the voyage, or only diminishes the price of the goods, unless the article be completely and actually destroyed, so as no longer physically to exist. Considering the difficulty of ascertaining how much of the loss arose by the perils of the sea, and how much by the perishable nature of the commodity, and the impositions to which insurers would be liable in consequence of that difficulty, the rule of construction, as settled in that ease, is very salutary, by reason of its simplicity and certainty.

But this decision was shaken, and the original doctrine of Lord Ch. J. Rider in Cantillon v. London Assurance Company revived, by the decision of the K. B. in Burnet v. Kensington,¹⁴² which declared, that if the ship be stranded, it destroyed the exception, and let in the general words of the policy. It was also shaken by the observations of Lord Alvanley, in Dyson v. Rowcroft,¹⁴³ and of Lord Ellenborough, in Cologan v. London Assurance Company.¹⁴⁴ But in our American courts, the doctrine of the case of Cocking v. Fraser, is the received law. It was explicitly and pointedly recognized as a sound decision by the Supreme Court of New York, in Maggrath v. Church,¹⁴⁵ and it has received a similar sanction in subsequent cases, in that and in other courts;¹⁴⁶ and the weight of authority is in favor of the doctrine, that in order to charge the insurer, the memorandum articles must be specifically and physically destroyed, and must not exist in specie.

It has been frequently a vexed point in the discussions, whether the insurer was holden, if the memorandum articles physically existed, though they were absolutely of no value. The dicta of some of the judges in the cases referred to, are in favor of the doctrine, that an extinguishment of the memorandum articles in value, was equivalent to an extinguishment in specie; and there is much plausible reasoning in favor of that explanation of the rule. Lord Ellenborough, in Cologan v. London Assurance Company, expressed himself strongly on the point, and declared, that it could not be less a total loss because the commodity subsisted in specie, if it subsisted only in the form of a nuisance. There was a total loss of the thing; if, by any of the perils insured against, it was rendered of no use whatever, although it might not be entirely annihilated.¹⁴⁷

If there be a total loss of the voyage by reason of shipwreck, or any other casualty, and there be no other means to forward the cargo, there is no distinction between the memorandum articles and the rest of the cargo. The total loss applies equally to the whole.¹⁴⁸ When part of the articles in the memorandum are totally destroyed by the perils insured against, and the residue remains partially damaged. it has been a very unsettled question, whether the insured was entitled to recover for the part so totally lost.

The case of Davy v. Milford,¹⁴⁹ is a strong determination in favor of the recovery. It was said, that there was no case, nor no reason to maintain, that where the least particle of the thing insured subsisted in specie, though the greater part was actually destroyed, the insured should be precluded from recovering the value of that which was totally lost. The language of some of the judges, afterwards, in Cologan v. London Assurance Company,¹⁵⁰ was to the same effect. But, in opposition to that doctrine, we have the case of Hedburgh v. Pearson,¹⁵¹ in which the hogsheads of sugar covered by the memorandum were saved, but the greater part of the loaves in each hogshead were washed out and destroyed by a peril of the sea, and yet it was held to he only an average loss, and the insurer wholly discharged. So, in Guerlain v. Col. Ins. Co.,¹⁵² part of the memorandum articles (and which were distinct kinds of provisions, and specifically enumerated in the policy) were lost by shipwreck, and the insured was not allowed to recover, on the ground that the insurance was upon so much cargo as an integral subject, and the insurer was not liable for any particular item, though it was totally lost.

The court referred to several decisions in the French tribunals, as reported by Emerigon,¹⁵³ and to the doctrine of that writer, by which it appears, that in France, under the clause free of average, the insurer is not holden, though part of the subject insured be totally destroyed. The principle is, that the parties have a right to make their own contracts, and if the contract be lawful, it becomes a law to the court, and it would introduce uncertainty and confusion to undertake to modify the contract (as they do in Italy, under this very clause)¹⁵⁴ upon assumed principles of equity. The cases of Biays v. The Chesapeake Insurance Company, and of Morcan v. The United States Insurance Company,¹⁵⁵ have established the same rule, that the underwriter pays nothing if the loss of the memorandum articles be partial, and not total, and it is partial only when part of the cargo arrives in safety, however deteriorated in value, though another part of the cargo had been wholly destroyed by disasters on the voyage. This may now be considered as the settled law of this country on the subject.

The French law positively requires, that goods, subject by their nature to particular detriment or diminution, be specified in the policy, otherwise the insurer is not liable for the losses which may happen to those articles, unless the insured was ignorant of the nature of the cargo at the time the contract was made.¹⁵⁶ This is a valuable rule, calculated to guard against dispute and imposition.

It will not be necessary, nor will the present course of instruction admit me to do more, than take notice of a few of the prominent perils which accompany the voyage, and surround it with danger.

The ignorance or inattention of the master or mariners, is not one of the perils of the sea.¹⁵⁷ These words apply to all those natural perils and operations of the elements which occur without the intervention of human agency, and which the prudence of man could not foresee, nor his strength resist. Quod fato contingit, et cuivis patrifamilias, quamvis diligentisimmo possit contingere. The imprudence, or want of skill in the master, may have been unforeseen, but it is not a fortuitous event.¹⁵⁸ The insurer undertakes only to indemnity against extraordinary perils of the sea, and not against those ordinary ones to which every ship must inevitably be exposed; but it is often difficult to discriminate between damage occasioned by the ordinary service of the voyage, and which falls upon the owner, and by a peril of the sea for which the insurer is responsible.

Damages resulting from the ordinary employment of the ship, or the inherent infirmity of the article, as the loss of an anchor by the friction of the rocks, or the wear and tear of the equipment of the ship, or her destruction by worms, or the diminution of liquids by the ordinary leakage to which they are naturally subject, or hemp taking fire in a state of effervescence, may be mentioned as instances of losses which are not within the policy, because they are not losses attributable to a cas fortuit.¹⁵⁹ It has even been a vexed question, whether damage done to a ship hy rats, was among the casualties comprehended under perils of the sea, and the authorities are much divided on the question.¹⁶⁰ The better opinion would, however, seem to be, that the insurer is not liable for this sort of damage, because it may be prevented by due care, and it is within the control of human prudence and sagacity.

When a missing vessel shall be presumed to have perished by a peril of the sea, depends upon circumstances, and there is no precise time fixed by the English law.¹⁶¹ In the French law, a vessel not heard from is presumed to be lost after the expiration of one year in ordinary voyages, and of two years in long ones.¹⁶² The ordinances of foreign states have been very arbitrary on this point. Thus, by the ordinance of Hamburgh, a ship was presumed to be lost, if bound to any place in Europe, and not heard from in three months, and by the Recopilacion des Loyes de Indias, in Spain, it is not heard from within a year and an half.¹⁶³ In the case of missing vessels, the loss is presumed to have happened immediately after the date of the last news; so that if an insurance be for three months, and the vessel not being heard from, a further insurance is made for a year, and the vessel is never heard from, in that case the first insurer pays the loss.¹⁶⁴

What degree of peril changes it from an ordinary to an extraordinary character, so as to bring it within the stipulation of indemnity, is frequently a perplexing question, to be determined by the circumstances of the particular case. And to prevent uncertainty and dispute, it is a settled rule, that the peril, whatever it may be, upon which the policy attaches, must be the proximate, and not the remote cause, of the loss. Causa proxima non remota spectatur.¹⁶⁵ If a ship be driven ashore by the wind, and in that situation be captured by an enemy, the loss is to he imputed to the capture, and not to the stranding.¹⁶⁶ When partial loss is followed by a total loss, the former may be considered as merged in the latter. The courts are not to be seeking about for odds and ends of previous partial losses, when there is an overwhelming cause of loss which swallows up the whole subject matter.¹⁶⁷ So, on the other hand, if the first loss be distinct and total, and he followed by abandonment, the rights of the parties are fixed, and the courts are not to cast their eyes forward to see what further perils awaited the property.¹⁶⁸

By the rule and practice in these United States, the wages and provisions of the crew during the necessary detention of the vessel for repairs requisite in the course of the voyage, by reason of perils insured against. are considered as included in the perils of the sea, and made chargeable upon the insurer¹⁶⁹ and we have already seen¹⁷⁰ hour far wages and provisions constitute an item of general average in the cases of capture, embargo, or detention. But I cannot undertake to specify more particularly the various kinds of losses which are deemed to be covered by the general stipulation to indemnify against perils of the sea. Many subtle distinctions have been raised and discussed in the books on this point, and several of them have been stated or referred to by Mr. Phillips.¹⁷¹

The enumerated perils of the sea, pirates, rovers, thieves, include the wrongful and violent acts of individuals, whether in the open character of felons, or in the character of a mob, or as a mutinous crew, or as plunderers of shipwrecked goods on shore.¹⁷² The theft that is insured against by name, means that which is accompanied with violence, (latrocinium,) and not simple theft: furtum non est casus fortuitus.¹⁷³ But the stipulation of indemnity against takings at sea, arrests, restraints and detainments of all kings, princes and people, refers only to the acts of government for government purposes, whether right or wrong. An arrest in the domestic port, after the voyage commenced, justifies an abandonment; but if made before the risk commenced, the contract is discharged.¹⁷⁴ An arrest by the admiralty process, at the instance of an individual, on a private claim, is not a case within the policy, and it is to be presumed the Court of Admiralty would indemnify the owner or insured in the award of costs and charges against the unjust prosecutor.¹⁷⁵ Under the insurance against fire, it is held, that if the ship be burnt under justifiable circumstances, to prevent capture, or from an apprehension of a contagious disease, the insurer is liable.¹⁷⁶

It has likewise been held, after a very learned discussion, that the insurer is answerable for a loss by fire occasioned by the negligence of the master and mariners.¹⁷⁷ This decision is subsequent to that of Grim v. The Phoenix Insurance Company,¹⁷⁸ in which it was held, after a discussion equally searching and elaborate, that a loss by fire arising from carelessness was not covered by the insurance. The French law coincides with the English decision.¹⁷⁹ Every species of capture, whether lawful or unlawful, and whether by friends or enemies, is also a loss within the policy. Barratry is a peril specially insured against, and Lord Mansfield thought it very strange, that the underwriter should undertake to indemnify against the misconduct of the master, who is the agent of the insured, and subject to his control.¹⁸⁰ It means fraudulent conduct on the part of the master, in his character of master, or of the mariners, to the injury of the owner, and without his consent, and it includes every breach of trust committed with dishonest views. Barratry is used by the French writers in its larger sense, as comprehending negligence, as well as wilful misconduct; therefore, no illustration can be safely drawn from the French authorities, when the term is used as in the English and American law, in a more limited sense, and applicable only to the wilful misconduct of the master or mariners. To trade with an enemy without leave of the owner, though it be intended for his benefit; or for a neutral to resist search, though his motive be to serve the owner, or for a letter of marque to cruise and take a prize, though done for the benefit of the owner, if the ship be lost by reason of the acts, are all of them acts of barratry.

So, sailing out of port in violation of an embargo, or without paying the port duties, or to go out of the regular course upon a smuggling expedition, or to be engaged in smuggling, are all of thorn acts of barratry, equally with more palpable and direct acts of violence and fraud, for they are breaches of duty by the master, in his character of master, to the injury of the owner.¹⁸¹ It makes no difference in the reason of the thing, whether the injury the owner suffers be owing to an act of the master, induced by motives of advantage to himself, or of malice to the owner, or a disregard to those laws which it was the master’s duty to obey, and which the owner relied upon him to observe. It is, in either case. equally barratry. If the ship be barratrously taken out of her course, that act takes the whole property from the possession of the insured, and produces a total loss.¹⁸² But it is requisite, that the loss resulting from the barratry must actually happen during the continuance of the voyage; and if the ship be not seized for a smuggling act until she has been moored twenty hours in safety at the port of destination, the insurer is discharged.¹⁸³

We have seen, that it is a vexed question, rendered the more perplexing by well balanced decisions, and in direct opposition to each other, whether a loss by fire proceeding from negligence, be covered by a policy insuring against fire. It is equally doubtful, whether a loss by any other peril in the policy, operating immediately and proximately upon the property, be chargeable upon the insurer, when the remote cause of that loss was the negligence or misconduct of the master and mariners, not amounting to barratry. Among a number of cases that bear upon the question, the case of Cleveland v. Union Insurance Company,¹⁸⁴ may be selected as a strong decision in favor of the insurer; and the more recent case of Walker v. Maitland,¹⁸⁵ as one equally strong against him, on that very point. It may be expedient to suspend one’s own judgment, under such a sad uncertainty of the law, and leave the question for further judicial consideration, since an eminent judge of the Supreme Court of the United States has thought proper to take this course.¹⁸⁶

II. Of the voyage in relation to the policy.

(1.) When the policy attaches, and terminates.

The commencement and end of the risk depend upon the words of the policy, The insurer may take, and modify, what risks he pleases. The policy may be on a voyage out, or on a voyage in, or on the whole complex voyage out and in; or it may be for part of the route, or for a limited time, or from port or port, in an intermediate stage of the voyage. If insurance on a ship be from such a place, the risk does not commence until the vessel breaks ground. If at and from, it then includes all the time the ship is in port after the policy is subscribed, if the ship be at home; and if abroad, it commences, according to a decision in Pennsylvania, only from the time she has been safely moored twenty-four hours after her arrival.¹⁸⁷ But if a ship be expected to arrive at a foreign port, and be insured at and from that place, or from her arrival there, other cases say, the risk attaches from her first arrival.¹⁸⁸ The risk is usually made to continue until the vessel has been anchored for twenty-four hours in safety, and no longer; and the rule has been applied, though the loss proceeded from a cause, or death wound, existing before the ship’s arrival.¹⁸⁹ But the risk continues during quarantine, though after the twenty-four hours.¹⁹⁰

If the policy be to a country generally, as to Jamaica, the risk ends at the first port made for the purpose of unloading, after the vessel has been moored there in safety for twenty-four hours.¹⁹¹ But in France, where insurances are generally to the French West India Islands, the risk on the ship continues until the cargo is discharged at the last place of destination.¹⁹² If the policy contains a liberty to touch, stay and trade, or to touch and stay, or if there be a known usage of trade, the risk will be prolonged according to that usage, or the terms of the policy, and intermediate voyages may be covered by the insurance.¹⁹³

The risk upon the cargo is subject to much modification by the agreement of the parties, but it usually commences from the loading thereof aboard the ship. By the French law, the policy covers the goods while on the passage in lighters from the wharf to the ship, in the harbor where she is anchored, though not if the goods are to ascend or descend a river to the ship.¹⁹⁴ The risk continues while the cargo is actually on hoard the ship, and no longer; though if the cargo be temporarily landed from necessity, during the voyage, they are still protected by the policy.¹⁹⁵ If the policy, as is usual, covers the risk upon the goods until safely landed, then the risk continues during their passage to the shore, and until all the goods are landed.¹⁹⁶ Policies of insurance are construed according, to the usages of trade; and if it be the ordinary course of the trade for the owner to employ a common public lighter to remove the goods from the ship to the shore, the policy covers them; though if he was to employ his own lighter, or take the goods under his own charge, the insurer would be discharged.¹⁹⁷

There are usually distinct policies on the outward and on the homeward voyage, and if the ship perishes in the harbor abroad, after having discharged part of her outward, and received part of her homeward cargo, there may arise questions as between the different policies on the cargo. It is stated in the French law, that the policy on the outward cargo does not end but by the total or almost total discharge of the outward cargo; and I should presume the risk on the homeward cargo attaches as fast as it is received on board, and that the case may happen in which there was aliment sufficient to sustain both policies concurrently in point of time. If the policy be on the voyage out and home, on cargo to such a value, the policy will attach on every successive cargo taken on board in the course of the voyage, and the amount of property on board to the sum mentioned, remains covered, if on board, without regard to the fact that part of the original cargo was landed at an intermediate port, and the cargo on board at the time of the loss was the proceeds of the outward cargo.¹⁹⁸

In insurances on freight, the risk usually begins from the time the goods are sent on board, and not before.¹⁹⁹ But if the ship, sailing tinder a contract, be lost on her way to the port of lading, or at the port of lading to which she had arrived in ballast, before any goods are put on board, or when part of the cargo is on board, and preparations making to receive passengers, the insurer on freight and passage money is liable; because an inchoate right to freight, which is an insurable interest, had commenced, and there was an inception of the risk, which attaches on the whole freight for the voyage.²⁰⁰

If the policy be an open one, the recovery is limited to the actual amount of freight which would have been earned; and it is necessary to prove that goods were on board from which freight was to arise, or that there was some contract, under which the ship owner would have been entitled to freight, if the peril had not occurred. In a valued policy, if the insured has done something towards earning the freight, and there was nothing to prevent earning it but the occurrence of the peril, his interest in the whole freight has commenced and been put at risk, and the weight of authority is, that he is entitled to recover the amount of the valuation, though only part of the cargo be on board.²⁰¹ In the case of De Longuemere v. Fire Insurance Company,²⁰² the court did not question the decision in Forbes v. Aspinall,²⁰³ where a valued policy on freight was opened, and a recovery allowed only as to the portion of the cargo on board when the peril occurred; and they rather concurred in it, on the ground that the residue of the cargo, which was to be the aliment for the freight, was not in that case ready to be shipped, and the vessel was, in fact, a mere seeking ship, and for aught that appeared, the residue of the cargo might never have been obtained.

(2.) Of deviation.

The policy relates only to the voyage described in it, and to the route proper for the voyage insured; and if the vessel departs voluntarily, and without necessity, from the usual course of the voyage, the insurer is discharged, for it is a variation of the risk, and the substitution of a new voyage. The meaning of the contract of insurance for the voyage is, that the voyage shall be performed with all safe; convenient, and practicable expedition, and in the most regular and customary track. In the case of an unjustifiable deviation, the insurer is discharged; not indeed from loss occurring previous to the deviation, beat from all subsequent losses. These are elementary principles in the law of insurance, and pervade the institutions of every country on the subject.²⁰⁴

The shortness of the time, or of the distance of a deviation, makes no difference as to its effect on the contract; if voluntary and without necessity, it is the substitution of another risk, and determines the contract.²⁰⁵ So strictly has this doctrine been maintained, that where a vessel having liberty in sailing down the Frith of Forth to touch at Leith, she touched at another port in its stead equally in her way, it was held to be a fatal deviation, though neither risk nor premium would have been increased, if it had been permitted.²⁰⁶

The great cause of litigation in the courts, on this subject of deviation, is as to the facts and circumstances which will be sufficient to justify it, on the ground of usage or necessity, or of the true construction of the policy; and these are mostly questions of law for the determination of the court.

Stopping, or going out of the way to relieve a vessel in distress, or to save lives, or goods, may perhaps, under certain circumstances, not be considered as a deviation which discharges the insurer. Mr. Justice Lawrence intimates in one case,²⁰⁷ that it might be justifiable; but Judge Peters observed, that such deviations were justified to the heart on principles of humanity, but not to the law. If, however, the object of the deviation was to save life, Judge Washington afterwards observed, that he would not be the first judge to exclude such a case from the exceptions to the general rule, though he could not extend the exception to the case of saving property.²⁰⁸ The Chief Justice observed, in the case of Mason v. Ship Blaireau,²¹⁰ that the Supreme Court of the United States had great doubts whether stopping to relieve a vessel in distress, was an unjustifiable deviation in regard to the policy.

The courts are exceedingly strict in requiring a prompt and steady adherence to the performance of the precise voyage insured; and considering the particular state of facts upon which calculations of the value of risks are made, and the uncertainty and danger of abuse that relaxations of the doctrine would introduce, the severity of the rule is founded in sound policy.

If there be liberty granted by the policy to touch, or to touch and stay, at an intermediate port on the passage, the better opinion now is, that the insured may trade there, when consistent with the object, and the furtherance of the adventure, by breaking bulk, or by discharging and taking in cargo, provided it produces no unnecessary delay, nor enhances nor varies the risk.²¹⁰ And if there be several ports of discharge mentioned in the policy, and the insured goes to more than one, he must go to them in the order in which they are named in the policy, or if they be not specifically named, he must generally go to them in the geographical order in which they occur, though there may be cases in which he need not follow the geographical order.²¹¹ This liberty to touch, stay, and trade, is always construed to be subordinate to the voyage insured, and to the usual course of that voyage, and for purposes connected with it. It does not extend to ports and places opposite to, or wide of, the usual course, or wholly unconnected with the voyage insured. This principle is as old as the law of insurance, and has accompanied it in every stage of its progress.²¹²

The law requires the voyage, so far as concerns the underwriter, to be performed with reasonable diligence, and every unnecessary delay in or out of port, will amount to a deviation.²¹³ Deviation is always understood to be an after thought, arising, subsequent to the commencement of the voyage, and produced by the perception of some new interest, or the influence of some strong temptation. A premeditated intention to deviate, amounts to nothing, unless it be actually carried into execution; and this rule is adopted in England and in the courts of the United States.²¹⁴ If the ship quits, from necessity, the course described in the policy, she must pursue such new voyage of necessity, in the direct course, and in the shortest time, or it will amount to a deviation. This was the doctrine as declared by Lord Mansfield in the case of Lavabie v. Wilson,²¹⁵ and that case is reported at large in Emerigon,²¹⁶ with a liberal and exalted eulogy (pronounced in the midst of war between the two countries) on the wisdom and probity of the English administration of justice: tanta vis probitatis est, ut eam in hoste etiam diligamus. All permissions given by the policy out of the ordinary course and incidents of the voyage, are to be construed strictly. If the vessel have liberty to carry letters of marque, she may deviate for the purpose of defense, but not for the purpose of capture.²¹⁷ In Haven v. Hollead²¹⁸ a pretty enlarged discretion, and one carried to the very verge of the law, was confided to the captain as to the best mode of defense, and it was held, that the letter of marque might chase and capture hostile vessels in sight, in the course of the voyage, without its being a deviation; and. if he captures the vessel, the master may make the victory effectual, and man out the prize, and the delay for those purposes is not a deviation. If liberty be given her to chase and capture, that will not enable her to convoy her prize into port,²¹⁹
though she may do it if she he not thereby led out of the way;²²⁰ and to cruise for six weeks, means six consecutive weeks, and not at different times.²²¹

The object of the deviation must be considered, in order to determine its effect upon the policy. It must be commensurate only with the necessity that produces it, and that necessity will justify a deviation on account of a peril not insured against.²²² And when the deviation is governed by that necessity, as a deviation from stress of weather, or to procure necessary repairs, or to join convoy, or to avoid capture or detention, it works no injury to the policy.²²³

There has been considerable discussion in the books relative to the identity of the voyage described in the policy, and the voyage actually begun. If the vessel sails on a different voyage, the policy never attaches; but if she be lost before she comes to the dividing point, between the course of the voyage in the policy, and the course of the new voyage, the change of the voyage often becomes a contested question as to the intention of the party. If the ship really sailed on another voyage, the policy never attached, though the vessel be lost before she came to the dividing point; but if the termini of the voyage described in the policy be the same as those upon which the vessel sailed, it is the same voyage, and a mere intention, afterwards formed, to deviate, is of no consequence, if the vessel be lost before she came to the dividing point.

The distinction between an alteration of the voyage, and a mere deviation in the course of it, is very reasonable and solid. The one is adopted previous to the commencement of the risk, and shows that the party had receded from his agreement, but the other takes place after the risk has commenced, and relates only to the execution of the original plan.²²⁴ It has, however, been held, in one case, after much discussion,²²⁵ and suggested in another, in opposition to the established rule, that the identity of the voyage does not always consist in the identity of the termini;²²⁶ and that though the terminus ad quem be dropped, and another substituted in the course of the voyage, it may be still the same voyage; and if the vessel be lost before she comes to the dividing point between the course to the original, and to the substituted port of destination, it is an intention to deviate, and nothing more.²²⁷

III. Of the rights and duties of the insured in cases of loss.

(1.) Of abandonment.

A total loss, within the meaning of the policy, may arise either by the total destruction of the thing insured, or, if it specifically remains, by such damage to it as renders it of little or no value. A loss is said to be total if the voyage be entirety lost or defeated, or not worth pursuing, and the projected adventure frustrated. In such cases, the insured may abandon all his interest in the subject insured, and all his hopes of recovery, to the insurer, and call upon him to pay as for a total loss. The object of the provision is to enable the insured to be promptly reinstated in his capital, and be thereby enabled to engage in some new mercantile adventure. Long interruption to a voyage, and uncertain hopes of recovery, would often be ruinous to the business of the merchant; and, therefore, if the object of the voyage be lost, or not worth pursuing, by reason of a petit insured against, or if the cargo be so damaged as to be of little or no value, or where the salvage is very high, and further expense be necessary, and the insurer will not engage to bear it, or if what is saved be of less value than the freight, or where the damage exceeds one half the value of the goods insured, or where the property is captured, or arrested, or even detained by an indefinite embargo; in these and other cases of a like nature, the insured may disentangle himself, and abandon the subject to the underwriter, and call upon him to pay a total loss. In such cases. the insurer stands in the place of the insured, and takes the subject to himself with all the chances of recovery and indemnity. A valid abandonment has a retrospective effect, and does of itself, and without any deed of cession, transfer the right of property to the insurer to the extent of the insurance; and if after an abandonment, duly made and accepted, the ship should be recovered, and proceed and make it prosperous voyage, the insurer, as owner, would reap the profits.²²⁸

These considerations have introduced the right of abandonment into the insurance law of every country, and yet the text writers have generally condemned the privilege as inconsistent with just notions concerning the nature of the contract of insurance, which is a contract of indemnity. But it has now become an ingredient so interwoven with the whole system of insurance that it cannot be abolished, though the late English cases, says Mr. Benecke, show a stronger inclination in the courts to restrict than to enlarge the right. The laws of Hamburgh distinguish themselves from all others, by restricting the right of abandonment to the only case of a missing ship.²²⁹

As soon as the insured is informed of the loss, he ought (after being al lowed a reasonable tinge to inspect the cargo, and for no other purpose) to determine promptly whether he will or will not abandon, and he cannot lie by and speculate on events. If he elects to abandon, he must do it in a reasonable time, and give notice promptly to the insurer of his determination; otherwise he will be deemed to have waived his right to abandon, and will be entitled to recover only for a partial loss, unless the loss be, in fact, absolutely total. If the thing insured exists in specie, and the insured wishes to go for a total loss, an abandonment is indispensable.²³⁰ The same principle which requires the insured who abandons, to do it in a reasonable time, also requires the insurer who rejects an abandonment, to act promptly.²³¹ The object of the abandonment is to turn that into a total loss, which otherwise would not be one; and it is unnecessary, and would be idle, to abandon in the case of an entire destruction of the subject.²³² It is only necessary when the loss is constructively total.

The right of abandonment does not depend upon the certainty, but upon the high probability of a total loss, either of the property, or voyage, or both. The insured is to act, not upon certainties, but upon probabilities; and if the facts present a case of extreme hazard, and of probable expense, exceeding half the value of the ship, the insured may abandon, though it should happen that she afterwards recovered at a less expertise.²³³ Though the subject may physically exist, yet there may be a technical total loss to the owner, if the thing be taken from his free use and possession. Such are the common cases of total losses by embargoes, by captures, and by restraints, and detainments of princes. The right to abandon exists when the ship, for all the usual purposes of the voyage, is gone from the control of the owner; as the cases of submersion, or shipwreck, or capture, and it is uncertain, or the time unreasonably distant, when it will be restored in a state to resume the voyage; or when the risk and expense of restoring the vessel, are disproportioned to the expected benefit and objects of the voyage. All these general doctrines concerning abandonment have been entirely incorporated into our American law, and they exist to all essential purposes in the French jurisprudence.²³⁴

The case of Peele v. The Merchant’s Insurance Company,²³⁵ contains a very elaborate review of the whole law of abandonment, and the conclusion is, that the right of abandonment is to be judged of by all the circumstances of each particular case, and that there was no general rule that the injure to the ship by the perils insured against, must in all cases exceed one half her value, to justify an abandonment. The law, as declared in the great cases before Lord Mansfield, of Goss v. Withers, Hamilton v. Mendes, and Mills v. Fletcher, has been acted upon for half a century, and their doctrine has never been shaken; and the late case of McIver v. Henderson²³⁶ left the law on the subject of abandonment exactly where those cases had placed it.

The French ordinance of the marine confined abandonment to the five cases of capture, shipwreck, stranding, arrest of princes, and an entire loss of the subject insured.²³⁷ But the new commercial code has modified and enlarged the privilege of abandonment. It applies to the cases of capture, shipwreck, stranding with partial wreck, disability of the vessel occasioned by perils of the sea, arrest of a foreign power, or arrest on the part of the government of the insured after the commencement of the voyage, and a loss or damage of the property insured, if amounting to at least three fourths of its value.²³⁸ The English and American law of abandonment applies not only to those cases, but to every case where the perils covered by the policy have occasioned a loss, either of the subject, or of the voyage.

It is understood, that mere stranding of the ship is not, of itself, to be deemed a total loss; yet it may be attended with circumstances that will justify an abandonment, even though the hull of the ship should not be materially damaged; as if she be stranded where there are no means of adequate relief, and the expense of the removal would exceed the value of the ship. The foreign writers distinguish innavigability from shipwreck, and there has been sortie difficulty as to the true definition of shipwreck.²³⁹ But the right to abandon does not turn upon any definition, and the cases on the subject have been governed by their own peculiar circumstances, connected with the property at the time, and with reference to the general principles and analogies of law.²⁴⁰

The English rule is, that an abandonment, though rightfully made, is not absolute, but is liable to be controlled by subsequent events; and that if the loss has ceased to be total before action, the abandonment becomes inoperative. The rule was suggested, but left undecided, in Hamilton v. Mendes, but it was explicitly declared and settled in subsequent cases.²⁴¹ The English rule does not rest, however, without some distrust as to its solidity. It was much doubted in the House of Lords, by Lord Eldon, in Smith v. Robertson,²⁴² and every question as to the principle expressly waived. But in these United States a different rule prevails, and it is well settled in American jurisprudence, that an abandonment once rightfully made, is binding and conclusive between the parties, and the rights flowing from it become vested rights, and are not to be divested by subsequent events. The right to abandon is to be tested by the actual facts at the time of the abandonment, and not upon the state of the information received.²⁴³ The opinion of Lord Mansfield, in Hamilton v. Mendes, was very destitute of precision and decision on this point, and the American rule is founded on principles of equity, and public convenience. The opposite doctrine, said a great authority,²⁴⁴ appeared to trench very much upon the true principles of abandonment, and not to be supported by very exact or cogent analogies. The Court of Session in Scotland even went so far as to consider the right to abandon to depend merely upon the information at the time, and that if the right be exercised bona fide upon the state of facts received, the transaction was closed and definitive, and was not to be opened or disturbed by any subsequent event, or any event of which the intelligence subsequently arrived.²⁴⁵

There is a material difference between an insurance on ship, and on cargo, and some confusion is introduced by blending the cases, but the essential principles of abandonment, with some variation, apply equally to each. A total loss of cargo may be effected not merely by its destruction, but, in very special cases, by a permanent incapacity of the; ship to perform the voyage, as when it produces a destruction of the contemplated adventure. A loss of the voyage for the season, or a case of retardation only, unless the cargo be of a perishable nature, does not amount to a total loss of the cargo.²⁴⁶ It is only in particular cases that the loss of the voyage will be a ground of abandonment of the cargo. The goods are not so necessarily connected with the ship, that if the ship be lost, there must, of course, be a loss of voyage with respect to the goods.

In Gernon v. The Royal Exchange Assurance,²⁴⁷ the ship was forced back by stress of weather, and the cargo found to be so damaged as not to he in a state to send on, and an abandonment was held good. There must be an actual total loss, or one in the highest degree probable, to justify an abandonment of the cargo.²⁴⁸ In Hudson v. Harrison,²⁴⁹ it was admitted to be extremely difficult to deduce any general rule from the circumstances under which the insured has a right to abandon the cargo. It is a very entangled branch of the law of insurance. If the ship has been lost, and the cargo materially damaged, the cases and text writers vary as to the right of the insured to abandon, or whether he must send on the goods when half is saved, or a third, or a quarter. The doctrine of the old cases, that the insured may abandon when the voyage is lost, is narrowed. Every such loss will not justify it. A retardation is not sufficient. If the profits be reduced one half, it was said the owner was not bound to prosecute the voyage, but every case seems to rest on its own circumstances.

When a case proper for abandonment exists, and it be duly made, the underwriter cannot intercept the exercise of the right, and destroy its effect, by an offer to pay the amount of the repairs. In a case proper for abandonment, the insured may stand upon his rights uncontrolled by the underwriter, for the option to abandon rests with him, and not with the other party. He may elect to repair the damage at the expense of the insurer, even if it amounts to the whole value of the ship; and on the other hand, he is not obliged, against his consent, to take the remnants and surplusses of a lost voyage, and claim under the policy only the average or expenses incurred by the calamity. This is the more recent, and, I think, the more solid doctrine on the subject, and it is enforced with great strength in the case of Peele v. The Merchants’ Insurance Company, which has so fully investigated and explained all the prominent points under this interesting title in the law of insurance.

In Pole v. Fitzgerald,²⁵⁰ decided in the Exchequer Chamber in the middle of the last century, on error From the K. B., it was held, after great discussion and consideration, that on an insurance of a ship for a voyage, it was not sufficient that the voyage be lost, if the ship was safe. It was declared, that the insurance was of the ship, and not of the voyage, and the decision was affirmed in the House of Lords, notwithstanding Lord Mansfield made a very strong argument against it in his character of counsel.²⁵¹ After Lord Mansfield came into the Court of K. B., he introduced and established the doctrine which he had maintained as counsel, that on the insurance of a ship for a specified voyage, a loss of either the ship, or the voyage, was the same thing, and justified an abandonment. This, according to Lord Eldon,²⁵² was an act of the King’s Bench, reversing a judgment of the Exchequer Chamber, and the House of Lords.

The case of Fitzgerald v. Pole, after having slept unnoticed and disregarded for half a century, was mentioned with respect, first in the Supreme Court of New York,²⁵³ and then in Hadkinson v. Robinson²⁵⁴ and more recently by Lord Ellenborough,²⁵⁵ who intimated, that the loss of the voyage had nothing to do with the loss of the ship, and that it was well to resort to the good sense of the judgment in Pole v. Fitzgerald, to purify the mind from those generalities. It is settled, that a loss of the voyage as to the cargo is not a loss of the voyage as to the ship, for a policy on a ship is an insurance of the ship for the voyage, and not an insurance on the ship and the voyage.²⁵⁶ And, under this qualification, I apprehend, the doctrine of the case of Manning v. Newnham to be the established doctrine, that if the ship be prevented by a peril within the policy from proceeding on her voyage, and the voyage be thereby lost, it is a total loss of ship, freight and cargo, provided no other ship can be procured to carry on the cargo.²⁵⁷ It must be admitted, however, that the extreme variety, and apparent conflict of many of the cases on this subject of abandonment, are enough to justify the complaint of Lord Eldon, that there is as much uncertainty on this, as on any other branch of the law.

It is understood to be a fixed rule, that if the ship and cargo be so injured by perils as to require repairs to the extent of more than half her value, the insured may abandon; for if the ship or cargo he damaged so as to diminish their value above half, they are said to be lost. The rule came from the French law, and is to be found in the treatise Le Guidon,²⁵⁸ where it is applied to the case of goods; and in respect to both ship and cargo, the rule has been incorporated into the French, English, and American jurisprudence.²⁵⁹ There has been considerable discussion in the text books, as to the right to abandon, when a part only of the property insured, is damaged above a moiety, or lost, and this will depend upon the manner in which it is insured. If the insurance be upon different kinds of goods indiscriminately, or as one entire parcel, it is then an insurance upon an integral subject, and an abandonment of part only cannot be made. But if the articles be separately specified and valued, it has been considered so far in the nature of a distinct insurance on each parcel, that the insured was allowed to recover as for a total loss of the damaged parcel, when damaged above a moiety in value. Mr. Phillips has suggested a doubt whether this distinction be well founded. The rule was taken from the French treatises, and unless the different sorts of cargo be so distinctly separated and considered in the policy, as to make it analogous to distinct insurances on distinct parcels, there cannot be a separate abandonment of a part of the cargo insured.²⁶⁰

The meaning of the words in the rule, “one half of the value,” has been held to be the half of the general market value of the vessel at the time of the disaster, and not her value for any particular voyage or purpose. The expense of the repairs at the port of necessity, is the true test for determining the amount of the injury, and such sum is to be taken as will fully reinstate the vessel, and, in general, with the same kind of materials of which she mas composed at the time of the disaster. It has also been considered, that the three objects of insurance, vessel, cargo and freight, stand on the same ground as to a total loss by a deterioration to more than one half of the value.²⁶¹

In ascertaining the value of the ship, and the quantum of expense or injury, difficulties have arisen, and they were fully discussed, and very clearly explained, in Peele v. The Merchants’ Insurance Company.²⁶² The valuation in the policy is conclusive in case of a total loss, but, in some respects, it is inapplicable for the purpose of ascertaining the quantum of injury in case of a partial loss of goods. The rule in that case, is to ascertain the amount of injury by the difference between the gross proceeds of the sound and damaged goods.²⁶³ This is also the true rule as to the ship, though there is a greater difficulty in the application.

The value of the ship at the time of the accident, is the true basis of calculation. And with respect to the arbitrary and fluctuating rule as to the allowance of one third new for old, there is no doubt of its application in cases of partial loss; but such a deduction is nut allowed, and does not apply to cases of total loss. The reason of this allowance to the underwriter, of one third of the expense of ripe reparations, is on account of the better condition in which the ship is put by them, than she was when insured; and, therefore, neither the reason of the rule, nor the rule itself, applies to the case of a ship suffering a partial loss on her first voyage, when she is new, and cannot be made better by repairs. The half value which authorizes an abandonment, is half the sum which the ship, if repaired, would be worth, without any such deduction.²⁶⁴

Upon a valid abandonment, the master becomes the agent of the insurer, and the insured is not bound by his subsequent acts unless he adopts them It is the same thing with the consignee of the cargo. It is the duty of the master, resulting from his situation, to act with good faith, and care, and diligence, for the protection and recovery of the property, for the benefit of whom it may eventually concern. In cases of capture he is bound, if a neutral, to remain and assert his claim until condemnation, or the recovery be hopeless. His wages, and those of the crew are a charge on the owner, and ultimately, in case of recovery, to be borne as a general average by all parties in interest. If the master purchases in the vessel, or ransoms her, the insurer will be entitled to the benefit of the purchase or composition; and, on the other hand, if the insured affirms the purchase of the master, it will be, at the option of the insurer, a waiver of the abandonment. The insurer can accept of the repurchase of the master, as his constructive agent, and affirm the act, or he may leave it to fall upon the masters.²⁶⁵

It has been a very difficult and controverted question, whether an abandonment of the ship transferred the freight in whole or in part. It was finally settled in the jurisprudence of New York, that on an accepted abandonment of the ship, the freight earned previous to the disaster was retained by the owner, and apportioned pro rata itineris; and that the freight subsequently to be earned went to the insurer on the ship.²⁶⁶ In Pennsylvania, the language of the case of Armroyd v. The Union Insurance Company,²⁶⁷ was that the entire freight, in such a case, went on abandonment to the insurer of the ship. This litigious question has now been settled in England, substantially as it was settled in the year 1800, in this state; and in Case v. Davidson,²⁶⁸ where ship and freight were separately insured, and each subject abandoned as for a total loss, it was adjudged that the abandonment of the ship transferred the freight subsequently earned as incident to the ship.²⁶⁹

The French jurisprudence on this subject has been equally embarrassing and unsettled. The ordinance of 1681 had no textual regulation relative to freight, in cases of abandonment. It was left to the decisions of the tribunals, and they denied to the insurer on the ship any freight for the goods saved. Valin exposed the error,²⁷⁰ and maintained that freight on abandonment, whether paid in advance or not, ought to go to the insurer. In 1778 it was settled at Marseilles, under the sanction of Emerigon, that freight was an accessory to the ship; and in abandoning the ship, the freight acquired during the voyage went with it.²⁷¹ The ordinance of 1779 followed that doctrine, and declared that acquired freight already earned on the voyage, was insurable, and did not go with the ship on abandonment, but that the future freight to be earned on the goods saved, would go to the insurer, if there was no stipulation to the contrary in the policy, saving the wages of seaman and bottomry liens. The new codes²⁷² declared that the freight of goods saved, though paid in advance, went, upon abandonment, to the insurer on the ship. The construction given to the code by the Royal Court at Rennes, in 1822, in the case of Blaize v. The Company of General Assurance at Paris, was, that the future freight did not go to the insurer on the ship, but only the freight on the goods saved and already earned at the time of the loss.²⁷³

(2.) Of the adjustment of partial losses.

In an open policy the general rule is, that the actual or market value of the subject insured, is to be estimated at the time of the commencement of the risk. The object of inquiry is, the true value of the subject put at risk, and for which an indemnity was stipulated.

There are two kinds of indemnity that may lawfully be obtained under a contract of insurance. The first is, to pay what the goods would have sold for if they had reached the place of destination; and the value there consists of the prime cost and expenses of the outfit, the freight and expenses at the port of delivery, and the profit or loss arising from the state of the market. This species of indemnity puts the insured in the same situation as if no lost had happened. The other kind of indemnity is, to pay only the first cost of the goods, and the expenses incurred; and this places the insured in the situation he was before he undertook the adventure. It annuls the speculation, and excludes the consideration of any eventual profit or loss. The first kind of insurance is, in the opinion of Mr. Benecke,²⁷⁴ more conformable to the nature of mercantile transactions, and affords, in every case, an exact indemnity; but the second kind of insurance of goods is the one in practice in England, and other commercial countries.

The active or market value at. the port of departure, may frequently be different from the invoice price, or prime cost, and when that happens, or can be ascertained, it is to be preferred.²⁷⁵ In Gahn v. Broome,²⁷⁶ the invoice price was adopted as the most stable and certain evidence of the actual value; but in Le Roy v. United Insurance Company,²⁷⁷ the invoice price was understood to be equivalent to the prime cost, and that was commonly the market value of the subject at the commencement of the risk. The court, in that case, did not profess to lay down any general rule, but they, nevertheless, adopted the prime cost as being, a plain, and simple, and, generally speaking, the best rule by which to test the value of the subject. The English Court of King’s Bench, in Usher v. Noble,²⁷⁸ pursued, in effect, the same rule, by estimating a loss on goods in an open policy, at the invoice price at the loading port, and taking with that the premium of insurance, and commission, as the basis of the calculation.²⁷⁹

If goods arrive damaged at the place of destination, the way to ascertain the quantity of damage, either in open or valued policies, is to compare the market price, or gross amount of the damaged goods, with, the market price or gross amount at which the same goods would have sold if sound.²⁸⁰ But this mode of adjustment affords no perfect indemnity to the insured, for he has to pay freight for the goods as if they were sound, and which freight he cannot recover of the insurer. Various expedients have been suggested to remedy the inconvenience, and the true one is to insure the sum to be paid for the freight and charges at the port of delivery ²⁸¹

We have seen, in a former lecture, that an adjustment of a general average at a foreign port is conclusive; and it is equally so between the parties to the policy, and between the parties in interest in the adventure. It is the rule in all foreign countries for the underwriter to be bound by foreign adjustments of general average, unless there be a stipulation to the contrary in the policy, as is the case in those of the insurance companies at Paris.²⁸² There is a material difference between the adjustment of a partial loss, and of a general average, since the former is adjusted. according to the value at. the time and place of departure of the vessel, and the latter according to the value at the foreign port.²⁸³ And as in cases of partial loss, it is to be adjusted upon a comparison of the gross proceeds of the sound and damaged goods, the underwriter has nothing to do either with the state of the market, or with the loss on landing expenses, freight, and duty, accruing in consequence of the deterioration, for no premium is paid for those items, and all other modes of adjusting particular average, except that founded on the principle of the gross proceeds, are erroneous.²⁸⁴ In settling losses under the memorandum in the policy, which declares articles free of average under say five percent, if a partial loss to an article he found, on survey and sale, to have been five percent, the insurer pays the damages, and the expenses. If under five percent, he pays nothing, and the insured bears the expenses. The expenses are like costs of suit, and fall upon the losing party. The expenses are not taken to make up the five percent.²⁸⁵

If extraordinary expense, and extra freight, be incurred in carrying, on the cargo in another vessel, when the first one becomes disabled by a peril of the sea, the French rule is, to charge the same upon the insurer of the cargo.²⁸⁶ This question is left undecided in the English law, but in this country we have followed the French rule.²⁸⁷ With respect to leakage, the rule, in cases free from special stipulation is, that the insurer is not liable for waste occasioned by ordinary leakage, and only for leakage beyond the ordinary waste, and produced hy some extraordinary accident. The practice is, to ascertain, in each particular case, what amount of leakage is to be attributed to ordinary causes, or the fault of the insured, and what to the perils of the sea; and, in pursuing this inquiry, the season of the year, the nature of the articles, the description of the vessel, the length of the voyage, and the stowage, are all to be considered.²⁸⁸

An adjustment of a loss cannot be set aside or opened except on the ground of fraud, or mistake of facts not known. It is only prima facie evidence of the claim, and the party must have a full disclosure of the circumstances of the case before he will be concluded by it. In the language of Lord Ellenborough, they must all be blazoned to him as they really existed.²⁸⁹ And in making the adjustment, in the case of a partial loss, the rule is to apply the old materials towards the payment of the new, and to allow the deduction of the one third new for old upon the balance. In England, if the injury be sustained, and the repairs made when the vessel is new, no deduction of new for old is made; because the vessel being new, it is not supposed that she is put in better condition by the repairs. But in New York that distinction has not been adopted, and the deduction of one third new for old is made, whether the vessel be new or old.²⁹⁰

In consequence of the general permission in the policy for the insured to labor for the recovery of the property, the insurer may be rendered liable for the expenses incurred in the attempt to recover the lost property, in addition to the payment of a total loss.²⁹¹ It has been a question much contested in the French tribunals, whether the insurer can, in cases distinct from the above stipulation, be held chargeable at the same time, and cumulatively, with the amount of an average, and also with the amount of a subsequent total loss, in the same voyage. This is said to be contrary to all principle, and the elements of the contract; and it was decided in the Court of Cassation, in 1823, after great litigation, that the insurer was not holden beyond the amount of his subscription, and for which he received a premium, notwithstanding the prior partial and the subsequent total loss.²⁹²

(3.) Of the return of premium.

The premium paid by the insured is in consideration of the risk which the insurer assumes; and if the contract of insurance be void ab initio, or the risk has not been commenced, the insured is entitled to a return of premium. If the insurance be made without any interest whatever in the thing insured, and this proceeds through mistake, misinformation, or any other innocent cause, the premium is to be returned. So, if the insurance be made with short interest, or for more than the real interest, there is to be a rateable return of premium. If the risk has not been run, whether it he owing to the fault, pleasure or will of the insured, or to any other cause, the premium must he returned, for the consideration for which it was given fails.²⁹³ If the vessel never sailed on the voyage insured, or the policy became void by a failure of the warranty, and without fraud, the policy never attached; but if the risk has once commenced, though the voyage be immediately thereafter abandoned, there is to be no return or apportionment of premium. And if the premium is to be returned, it is the usage in every country, where it is not otherwise expressly stipulated in the policy, for the insurer to retain one half percent by way of indemnity for his trouble and concern in the transaction.²⁹⁴

The insurer retains the premium in all cases of actual fraud on the part of the insured, or his agent.²⁹⁵ So, if the trade be in any respect illegal, the premium cannot be reclaimed.²⁹⁶ If the voyage be divisible, there way be an apportionment of the premium, and if the risk as to the one part of the voyage has not commenced, the premium may be proportionably retained. But the premium cannot be divided and apportioned, unless the risks were divisible and distinct in the policy. If the voyage and the premium be entire, there can be no apportionment. It is requisite that the voyage, by the usage of trade, or the agreement of the parties, be divisible into distinct risks; and, in that case, if no risk has been run as to one part, there may be an apportionment of premium.²⁹⁷

The French code provides for the apportionment of premium, in the case of an insurance on goods, when part of the voyage has not been performed.²⁹⁸ M. Le Baron Locre, in his commentary upon this article, vindicates it by very ingenious reasoning, which M. Boulay Paty²⁹⁹ thinks, however, does not remove the difficulty, and he contends, that such a provision is contrary to a principle of the contract, that when the risk has once commenced, the right to the entire premium is acquired.

IV. Of the writers on insurance law.

I have now finished a survey of the leading doctrines of marine insurance, which is by far the most extensive and complex title in the commercial code. There is no branch of the law that has been more thoroughly investigated, and more successfully cultivated in modern times, not only in England, but upon the European continent. Maritime law, in general, partakes more of the character of international law, than any other branch of jurisprudence; and I trust I need not apologize for the free use which has been made, for the purpose of illustration, not of English authorities only, but of the writings of other foreign lawyers, and the decisions of foreign tribunals, relative to the various heads of the law merchant. I am justified, not only by the example of the most eminent of the English lawyers and judges, but by the consideration, that the law merchant is part of the European law of nations, and grounded upon principles of universal equity. It pervades every where the institutions of that vast combination of Christian nations, which, constitutes one community for commercial purposes, and social intercourse; and the interchange of principles, and spirit, and literature, which that intercourse produces, is now working wonderful improvements in the moral and political condition of the human race.

The general principles of insurance law rest on solid foundations of justice, and are recommended by their public utility; and yet it is a remarkable fact, that none of the nations of antiquity, though some of them were very commercial, and one of them a great maritime power, appear to have used, or even to have been acquainted, with this invaluable contract.³⁰⁰ It was equally a stranger to the early maritime codes compiled on the revival of arts, learning, and commerce, at the conclusion of the middle ages. The Consolato del Mare, the laws of Oleron, and the laws of the Hanseatic association, were all silent upon the subject of the contract of insurance. The first allusion to it is said to have been made in the latter part of the fourteenth century, and where we should not, at that early age, have first expected to find it; in the laws of Wisbuy, compiled in the Teutonic language, on the bleak shores of an island in the middle of the Baltic sea.³⁰¹

It is so necessary a contract, that Valin concludes, maritime commerce cannot well be sustained without it, for no prudent shipowner would be willing to risk his own fortune, and that of others, on an unprotected adventure at sea. The business of uncovered navigation or trade, would be spiritless or presumptuous. The contract of insurance protects, enlarges, and stimulates maritime commerce; and under its patronage, and with the stable security which it affords, commerce is conducted with immense means, and unparalleled enterprise over every sea, and to the shores of every country, civilized and barbarous. Insurers are societies of capitalists, who are called by their business to study, with profound sagacity, and with exactness of calculation, the geography and navigation of the globe, the laws of the elements, the ordinances of trade, the principles of inter national law, and the customs, products, character and institutions of every country, where tide waters roll, or winds can waft the flag of their nation.³⁰²

Many of the states and great commercial cities of Europe, in the early periods of modern history, made and published ordinances relating to insurance, and most of them have been collected in Magen’s Essay on Insurance, published in 1755. The most important of these compilations, were the ordinances of Barcelona, Bilboa, Florence, Genoa, Antwerp, Rotterdam, Amsterdam, Copenhagen, Stockholm, and Koningsberg, as well as royal ordinances of the kings of France, Spain and Portugal. They are authentic memorials of the prosperity of commerce, and evidence of the early usages in respect to a contract governed by general principles of policy and justice. We may also refer to the decisions of the Rota of Genoa, (of which so much use is made by Roccus,) to show how early and extensively insurance questions became a source of litigation and topic of discussion in the courts of justice.³⁰³ But without dwelling upon these historical views, my object at the close of this lecture is, merely to direct the attention of the student to the character and value of the most distinguished works, which have elevated and adorned this branch of the law.

The earliest work extant on insurance, is the celebrated French treatise entitled Le Guidon. It was digested and prepared some centuries ago, by a person whose name is unknown, for the use of the merchants of Rouen. It was published by Cleirac in 1971, in his collection entitled, Les Us et Coutumes de la Mer; but it was a production of a much earlier date, and it contains decisive evidence, that the law of insurance had become, in the sixteenth century, a regular science. Emerigon viewed it as containing the true principles of nautical jurisprudence, and was valuable for its wisdom, and for the great number of principles and decisions which it contained; and when Cleirac gave to the world his revised and corrected edition of the Le Guidon, he regretted that he was not able to rescue from oblivion the name of an author, who had conferred signal honor on his country. by the merit and solidity of his production, though it wanted the taste and elegance of later ages.³⁰⁴

The treatise of Roccus on insurance, has been universally regarded as a text book of great authority. He was an eminent civilian and judge at Naples, and published his work in 1655; and Mr. Ingersoll, the American translator, perceives an analogy between the treatises of Roccus and Littleton’s tenures. That analogy does truly exist in the sound logic, admirable precision, and vast power of compression, which are displayed throughout his works. He made free use of the treatises of Santerna and Straccha on insurance law, and gave authority to those very creditable productions of the latter part of the sixteenth century.³⁰⁵ Bynkershoek has devoted the fourth book of his Quaestiones Juris Privati to the contract of insurance. It constitutes a large treatise, which discusses, with his usual freedom of thought and expression, almost every important branch of the law of marine insurance. His work, which occasionally refers to the Roman law, is almost entirely grounded on Dutch edicts, and judicial decisions in the courts of Holland. It is essentially a collection of reports of cases adjudged in the Dutch courts, and I do not perceive that he ever refers to the decisions of the Rota of Genoa, or to the writings of Santerna, Straccha, or Roccus, which were before his eyes. Such reserve, or proud disdain of foreign illustration and aid, detracts greatly from the scientific character, and liberal temper of the work.

But we proceed to the mention of authors, by whose learned labors the utility of all preceding treatises on insurance was superseded, and their fume and luster eclipsed.

Valin’s copious commentary upon that part of the ordinance of Louis XIV which relates to insurance, is deserving of great attention, and it has uniformly and every where received the tribute of the highest respect, for the good sense, sound learning. and weight of character which are attached to his luminous reflections. Pothier’s essay on insurance is a concise, perspicuous, accurate, and admirable elementary digest of the principles of insurance, and it contains the fundamental doctrines and universal law of the contract. But the treatise of Emerigon very far surpasses all preceding works, in the extent, value, and practical application of his principles. It is the most didactic, learned, and finished production extant on the subject. He professedly carried his researches into the antiquities of the maritime law, and illustrated the ordinances by what he terms the jurisprudence of the tribunals; and he discussed all incidental questions, so as to bring within the compass of his work a great portion of international and commercial law, connected with the doctrines of insurance.

In the language of Lord Centerden, no subject in Emerigon is discussed without being exhausted, and the eulogy is as just as it is splendid. Emerigon was a practical man, who united exact knowledge of the details of business with manly sense and consummate erudition. He was a practicing lawyer at Marseilles, for perhaps forty years, and the purity of his private life corresponded with the excellence of his public character. Valin acknowledges that he owed some of the best parts of his work to the genius and industry of that eminent civilian, who gratuitously pressed upon him, with a cordiality and disinterestedness almost without example, a rich collection of materials, consisting of decisions and authorities, suitable to illustrate and adorn the jurisprudence of the commentary. It would be difficulty to peruse the testimony which Valin has so frankly borne to the oral as well as literary and, professional accomplishments of Emerigon, without being sensibly touched with the generosity of the friendship of those illustrious men.

Since the renovation of the marine ordinance of Louis XIV, in the shape of the commercial code of France of 1897, there has arisen a host of commentators, such as the Baron Lorcé, Pardessus, Laporte, Delvincourt, Toullier, and Boulay Paty, of various and unequal merit. Toullier, though already quite voluminous, has not as yet touched on the commercial code. On the law of insurance I would select and recommend Boulay Paty, as the latest and best writer. He has explained and illustrated every part of the code, but devoted nearly half of his voluminous work to the single head of insurance, and he has treated the subject very much in the style of Emerigon. He has trodden in his footsteps, adopted his copious learning, applied his principles with just discrimination, and given us a complete treatise on every branch of insurance, according to the order, and under the correction of the new code.

The first notice of the contract of insurance that appears in the English reports, is a case cited in Coke’s Reports,³⁰⁶ and decided in the 31st of Elizabeth; and the commercial spirit of that age gave birth to the statute of 43d Elizabeth, passed to give facility to the contract. But the law of insurance received very little study and cultivation for ages afterwards; and Mr. Park informs that there were not forty cases upon matters of insurance prior to the year 1756, and even those cases were generally loose nisi pries notes, containing very little information or claim to authority. From that time forward, the decisions of the English courts on insurance assumed new spirit and vigor, and they deserve to be studied with the utmost application. When Sir William Blackstone published the second volume of his Commentaries, Lord Mansfield had presided in the Court of King’s Bench for nearly ten years, and in that short space of time the learning relating to marine insurance had been so rapidly and so extensively cultivated, that he concluded that if the principles settled were well and judiciously collected, they would form a very complete title in the code of commercial jurisprudence.

Mr. Park (now a judge, of the Court of King’s Bench) took the suggestion, and published his System of the Law of Marine Insurances in 1786, and he had the advantage of the labors of the whole period of Lord Mansfield’s judicial life; and the decisions are collected and digested with great copiousness, erudition, and accuracy. He extracted all that was valuable from the compilations of Malynes, Molloy, Magens, Beawes, and Weskett; and he had the good sense and liberality to enrich his work with the materials of those vast and venerable repositories of commercial learning, the Le Guidon, the foreign ordinances, and the writings of Roccus, Bynkershoek, Valin, Pothier, and Emerigon.

About the time that Park published his treatise, the Elements of the Law relating to Insurances, by Mr. Miller, a Scotch advocate, appeared at Edinburgh. He evidently compiled his work without any knowledge of the contemporary publication of Mr. Park; and though the English cases are not so extensively cited and examined by him, he supplied the deficiency by a digest of cases in Scotland; and he appears to have been equally familiar with the continental civilians, and to have discussed the principles of insurance with uncommon judgment and freedom of inquiry. Since the publication of Miller’s treatise, no work appeared in. Scotland on the subject of insurance, until Mr. Bell took a concise view of that, as well as of other maritime contracts, in his very valuable Commentaries; and he states that since the period of 1787 the mercantile law of Scotland has been making rapid strides towards maturity.

The treatise of Park had passed through five editions, when Mr. Marshall, published, in 1802, his Treatise on the Law of Insurance. It contains a free and liberal discussion of principles, and it is more didactic and elementary in its instruction than the work of his predecessor, but it abounds with citations of the same cases at Westminster, and a reference to the same learned authors in France and Italy. Mr. Park is entitled to the superior and lasting merit of being the artist who first reduced the English law of insurance to the beauty and order of a regular science, and shed upon it the rays of foreign genius and learning. The American edition of Marshall, by Mr. Condy, is greatly to be preferred to any other edition, and even that improved work is now in a considerable degree superseded by Mr. Phillips’ Treatise on the Law of Insurance, published at Boston, in 1823. This author has very diligently collected and ingrafted into his work the substance of all the American cases and decisions on insurance, which had been accumulating for a great number of years. In that view it is an original work of much labor, discrimination, and judgment, and of indispensable utility to the profession in this country.

The treatise of Mr. Benecke on the Principles of Indemnity in Marine Insurance, may be considered as an original work of superior merit, written by a business man, on the most useful and practical part of the law of insurance. It contains great research, clear analysis, strong reasoning, and an accurate application of principles, and was intended for the use of the merchant and ship owner, as well as of the practicing lawyer. The work was the result of many years’ study, researches and experience; and the public expectation of its value, from the well known character and ability of the author, had been highly raised, a long time before the publication.³⁰⁷