.

OF NEURALS' AND ENEMIES' GOODS.

11

It opens too wide a door to fraud, and even treachery, and the Courts of no nation upon earth will now enforce such a contract. "The policy and even the necessity of prohibiting such insurances seems apparent. The main object of a war, especially in modern times, is to cripple the power and exhaust the resources of the enemy by the destruction of his commerce; and this object the allowance of insurance upon an enemy's property by its immediate operation, counteracts, and when extensively practised, is certain to defeat. The naval hostilities of the State by which such insurances are permitted and enforced, are directed not against the enemy, but against its own subjects, and it is by them alone that its successes, which the enemy, secure of an indemnity, derides, are felt and deplored. Nor are these the only evils that such insurances tend to produce. The whole body of the insurers become in their hearts the enemies of their own government. They are under a constant and powerful temptation to save themselves from ruin by giving intelligence to the enemy; and this temptation to violate their allegiance, and betray their country, we may be sure, will not always be resisted." Singular as it may seem, it was not until after the days of Lord Mansfield, that insurance of enemies' goods from capture, was declared illegal, and void, in England. A trade contrary to the laws of nations, is not susceptible of insurance, since the laws of nations are the law of each particular nation. There cannot, then, be insurance upon goods to a blockaded port; nor could there be, we might infer, upon goods contraband by the laws of war. The United States, however, have not gone so far. The Supreme Court have decided that contraband adventures violate none of our laws, nor our neutrality, and may be insured. The reason of this exception we cannot see. The law of insurance upon these points, as it is understood in the United States, is clearly and logically summed up in the decision of Chief-Justice Parsons, of Massachusetts, referred to at length in Kent's Commentaries. He ranks into three classes all illicit voyages:

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 insurance thereon void.

2. Where the trade in question is prohibited by the trade law 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.

war.

3. When neutrals transport to belligerents goods contraband of 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 trade, he is withdrawn from the protection of his sovereign, and his goods are liable to seizure and condemnation by the powers at war; but he is never punished by his own sovereign for his contraband shipments.t Immodest insurances are not legal, viz.: as of one's sex, or that one will have issue by such a time, &c. In France a freeman's life cannot be insured, on the principle that it is beyond all value. In no * Duer, p. 418. + 3 Kent's Com., Ins. VOL. II.-30 465

country can seamen's wages be insured, since wages are not earned unless freight be earned, or, in other words, unless the vessel reach port; and an insurance upon them would indispose the sailors to action; since their wages would be safe whatever became of the ship.

The mortgagor of property, may insure; also, the mortgagee; so of the lender, or borrower, upon hypothecation; so, also, of the consignee, or factor, or agent; and these to the extent of their interest in the adventure. Commissions, and profits, and freight, may be insured.

There are certain contracts of insurance, in addition to those already named, which are deemed contrary to public policy, and void, viz. wagers of insurance, or wager policies. These have no interest to support them, and are, in general, effected upon a stranger's property, or life. The law regards them of dangerous tendency. Wager policies, says Kent, without any real interest to support them, are condemned, by positive ordinances, in France, and in most of the commercial nations in Europe. Upon general principles such transactions are exceptionable, because they hold out the prospect to one individual, of gain, out of the accidental or casual losses of another, and induce him to contribute, if possible, to bring about such losses.

The assured need not be particularly named in the policy; but he must have been within its contemplation. Thus, a policy in the name of any particular person, with a clause, for whom it may concern, or other equivalent words, will be enforced, it is said, to protect the interest of any person in whose behalf it was intended, and by whose authority it was effected. Unless the clause, for whom it may concern, be inserted, the policy will only cover the loss incurred by the party whose name appears upon it.

An insurance may be effected generally, without saying for how much-this may not be known-or upon what articles. The clause, "goods, wares, and merchandise," will protect all specie at risk, but not bank notes.

In New Orleans, the custom among merchants, receiving cotton on commission by steamers on the Mississippi, is to insure generally, without specifying the amount, and then make up a monthly statement of the quantities they have received, and upon which they are to pay the premium. Merchandise upon deck, must be insured specially, and so of live stock.

The acknowledgment in the policy of insurance that the premium has been paid, is not conclusive in the United States; though perhaps it may be in England. A very common custom with us is to accept a note of hand, payable at a certain time, for the amount; and upon this action, of course, may be brought, as in any other case.

Previous to every insurance there must be a representation made by the parties, of the particular facts within their knowledge, in relation to the subject. A representation, says Phillips, is a material fact stated, before completing the contract, by either party to the other, and a misrepresentation is the statement of such a fact, which turns out not to be true. By a material fact is meant one that shows the nature and extent of the risk, and may induce the other party to enter into the contract. A concealment, on the other hand, is the suppression of a material fact within the knowledge of either party, which

OPEN AND VALUED POLICIES.

13

the other has not the means of knowing, or is not presumed to know. It is the suppression of a fact, the disclosure of which would have been an inducement to the other party not to enter into the contract. If either party, whether by design, or through negligence, mistake, or oversight, conceals or misrepresents a fact material to the risk, the contract will be void with respect to the other party. Chief-Justice Lewis says, a false representation cannot avoid the policy, unless it be on a point material to the risk.

An insurance having been ordered, the party must countermand his orders, if news of loss should reach him before he has heard of the insurance being effected. A party knowing, says Judge Story, his agent to be about to procure insurance, and withholds the information of a loss for the purpose of misleading the underwriters, is guilty of a fraud. Under such circumstances the maxim applies, qui facit per alium facit per se. The insurer need not represent things generally known or understood. It has been decided that underwriters need not be told that other underwriters have refused to risk. Questions put must be fairly answered by the parties, at their peril. The underwriter is presumed to be acquainted with all the usages of the trade insured, and these usages need not be disclosed to him. If the trade be prohibited by the temporary regulations of a foreign country, the fact must be disclosed; otherwise, if the regulations be of a fixed and permanent nature. Where the insured did not disclose a letter from the Cape of Good Hope, stating that there were two or three privateers in those seas, the concealment was held to vacate the policy. If a material fact be misrepresented or suppressed, the contract will not bind the underwriters, although such fact related to only a part of the subject insured, and though no loss arise from the circumstance concealed or misrepresented. 1 Phil. 302.

Policies receive the name of valued, or open, according to their tenor. Whatever the value in the policy, the insurer is never bound for an amount greater than the value of the goods actually at risk. The insurer may be liable for a less, but never for a greater sum than is stated in the policy. When the value of the subject is fixed in the policy, as of a ship for $10,000, the policy is said to be a valved one, and it is open where the value is left for after determination, as of such merchandise, on board of such a ship, &c. A valuation in good faith, but a mistaken one, is open afterward for correction by the parties; but a valuation in bad faith, or a fraudulent valuation, will vitiate and annul the contract altogether, even although there has been some property at-stake, and an actual loss upon it. This, however, is a tender point in the law, and the proof of fraud is, in consequence, most stringently to be made; for, as Mr. Phillips justly remarks, a high valuation affords of itself but slight ground of presumption against the assured. The valued policy is based upon prime cost, added to the premium paid to the insurer. The value in the policy, however, will be held conclusive, unless open to strong suspicions; but then the whole interest valued must be put at risk. In an open policy the value of the interest is its value at the commencement of the risk, and not the value at any subsequent time. The following case is to be found in the

Louisiana Law Reports. Millaudon was insured against fire on five brick tenements, to the amount of $3,000 on each, $15,000 on the whole, in an open policy, containing a stipulation that notice should be given of any insurance made by the insured elsewhere on the same property, and the same indorsed on the policy; "in which case each office shall be liable to the payment only of a rateable proportion of any loss." The assured afterward effected insurance to the amount of $15,000 more, on the same tenements, valued in the subsequent policies at $30,000, of which notice was given, and indorsed upon the first policy; and the tenements were totally destroyed by fire. The first underwriters contended that the buildings were not worth $30,000, and that they were liable, not for the whole sum of $15,000, underwritten by them; but only for their rateable proportion of the actual value of the tenements, with the subsequent underwriters, precisely as if the subsequent policies had been open ones. Bullard, in giving the opinion of the court, said; "If the defendants will not adopt the second insurance as to valuation, we cannot well see how they can take advantage of it for the purpose of exonerating themselves from part of the loss, for which they are clearly liable under their own policy. We are of the opinion that they are liable to pay the full amount underwritten by them."

Where a double insurance is effected upon the same risk, the two insurances are counted as one; and the underwriters are responsible for the value only. The second insurer can only be held for the difference between the first insurance and the real value, while the first insurer remains solvent. The American policies contain a clause to this effect: "If the assured have made any other insurance upon the subject prior in date, the underwriters shall be answerable only for so much as the amount of such prior insurance may be deficient, toward covering the loss."

In addition to these express warranties, which, in the way of representation, or otherwise, form a part. of the contract of insurance, there are certain implied ones always insisted upon, viz.: That the ship is sea-worthy: that the adventure will be conducted according to the laws and treaties of the country where the insurance is effected, and according to the laws of nations, etc. Of particular express warranties, we need not say more than that they must be complied with in every, even the most insignificant particular: differing in this from what is merely technically so called, a representation. A warranty of convoy, in time of war, is always inserted in the English policies. We have hitherto made no such provision ourselves.

A policy of insurance will be made void by what is called a deviation on the part of the ship from the accustomed route. The presumption always is, that the ship will pursue the ordinary and usual route, and not deviate, unless from absolute necessity; as, for example, on account of tempests, pirates, famine, etc., etc. For all losses previous to the deviation, the underwriters are bound; for losses afterward, unless in the excepted cases, they are discharged. A departure from the ship's course, to save human life, is not a deviation; otherwise if it be to save property. Justice Laurence said, emphatically, in 6 East., 54,"as to deviation for the purpose of succoring ships at sea in distress, it is for the common advantage of all persons, underwri

RISKS OF THE SEA AND FIRE.

16

ters, and others, to give and receive assistance to and from each other in distress." And this is but the voice of universal humanity, against which no law does or can speak

Homo sum; humani nihil, a me alienum puto.

On the subject of Letters of Marque, Mr. Phillips concludes that a vessel insured with leave to take such a letter, but without any liberty to cruise, and convoy prizes, can act on its commission only on the defensive; and also, that a vessel without any express liberty for that purpose, may take a commission of marque, to be used in the same manner. A mere intention to deviate, without actual deviation, does not vacate the policy. In Louisiana, it has been decided to be a deviation for a steamer to take a hull in tow.

It will be of importance to know what are the understood risks against which insurance is effected. In general, they embrace the perils of the sea, fire, piracy, thefts, barratry, capture, arrests, detention, etc., etc. The ignorance, or inattention of the master, or marines, are not considered perils of the sea; but the criminal acts of these, constituting what is termed barratry, are protected by the insurance. The insurer, according to Kent, undertakes only to indemnify against the extraordinary perils of the sea; and not against those ordinary ones to which every ship must be inevitably exposed: as, for instance, wear and tear of the rigging and equipment of the ship: her destruction by worms, rats, etc. Barratry is declared by Lord Ellenborough to include every species of fraud, in the relation of the master to his owners, by which the subject matter insured might be endangered. The captain's smuggling, or resisting the exercise of the right of search, without consent of owners, is barratry. The insurers are not responsible for ordinary leakage, or for losses resulting from the very nature of the thing: as the death of an animal from natural causes. Fire, occurring by the negligence of the master or crew, is not protected. The usual "perils of the sea," are the wind, waves, lightning, rocks, shoals, collisions, inevitable accidents, etc. The plunder of shipwrecked property is a " peril."

In relation to the loss by embargo, or blockade, Chief-Justice Marshall expressed himself in Olivera v. Union Insurance Co.: “An embargo is admitted to be a peril within the policy. But the sovereign imposing the embargo is virtually in possession of the vessel;' and may, therefore, be said to arrest and detain her; yet, in fact, the vessel remains in the actual possession of the master, or owner, and has the physical power to sail out, and proceed on her voyage There is as much reason for insuring against one peril as against another; and if the word restraint does not necessarily imply the possession of the thing by the restraining power, it must be construed so as to comprehend the forcible confinement of a vessel in port, and the forcible prevention of her proceeding on her voyage: if so, the blockade in such case is within the policy."

As to the time when the presumption is that a missing vessel is lost, the usage varies in different countries. In England there is no fixed period. In France, a loss is presumed in a year after the ship has been heard from, in an ordinary voyage, and two years in a