(For what is meant by the property being in him, see the chapter
If one has taken on himself certain risks, or agreed to indemnify
another for them, he may insure himself against the same risks.
The policy may express and define the interest in such a way that
any change in the nature of it will discharge the insurance. If it is
not so defined and declared, a change, as from the interest of an
owner to that of a mortgagor, or of a mortgagee, will not defeat the
A mere indebtedness to a party on account of property gives the
creditor no insurable interest ; thus, one who repaired a house or a
ship cannot insure the house or ship merely because the owner owes
him ; but if the creditor has a lien on the property, this is an insur-
able interest. And, generally, every bailee or party in possession of
goods, with a lien on them, may insure them. And a lender on
bottomry or respondentia may insure the ship or goods. And any
persons who have possession of property, or a right to possession,
308 MARINE INSURANCE.
and may legally make a profit out of it, as factors on commission,
consignees, or carriers, may insure their interest.
If a mortgagee be insured, and recovers from the insurers, he,
generally at least, transfers to them the security for his debt, or ac-
counts with them for its value ; because, to the extent of that secur-
ity, he has met with no loss, and, if he did not transfer it, would
recover his money twice. It should, however, be added that where
a mortgagee, or one having a lien, insures his own interest in prop-
erty, a payment of a loss to him by the insurers does not discharge
the debt for which the mortgage or the lien is the security. Where,
however, the mortgagee is trustee for the mortgagor, as where the
mortgagor causes insurance to be made on the premises, payable to
the mortgagee in case of loss, or where the mortgagee effects insur-
ance at the expense of the mortgagor, with his consent, payment by
the insurers would go in discharge of the debt.
A policy usually adds to the description of the property, " lost or
not lost." This phrase makes the policy retrospective ; and attaches
it to the property if that existed when, by the terms of the policy,
the insurance began, whether this were for a voyage or for a certain
time, although it had ceased to exist when the policy was made.
An interest which was originally valid and sufficient cannot be
defeated by that which threatens, but does not complete an actual
divestment of the interest in property ; therefore, not by attachment,
or an execution for debt ; nor by liability to seizure by government
for forfeiture ; nor a right in the seller to stop the goods in tramitu;
nor capture ; because after all these the property may remain in or
return to the insured. But sale on execution, actual seizure by gov-
ernment and forfeiture, stoppage in transitu, or condemnation by
court as lawful prize, divest the property, and therefore discharge
The insurance never attaches if the interest is illegal originally ;
and it is discharged if the interest becomes illegal subsequent to
the insurance, or if an illegal use of the subject-matter of the in
surance is intended. And any act is illegal which is prohibited by
law, or made subject to a penalty. The effect would be the same if
the policy opposes distinctly the principles and the purposes of law,
as wagering policies do.
THE INTEREST WHICH MAY BE INSURED. 369
Mariners, or mates, are not permitted by the law-merchant to in-
bure their wages, but may insure goods on board, bought with their
wages ; and one legally interested in the wages of a mariner may
insure them ; as one to whom they are assigned by order or other-
wise. A master may insure his wages, commissions, or any profit
he may make out of his privilege.
An unexecuted intention of illegality, if not distinctly acted upon,
will not defeat a policy ; nor a remote and incidental illegality ; as
smuggling stores on board, or not having on board the provisions
required by law ; nor a change from legality to illegality, which can-
not be proved or supposed to be known to the insured. And upon
these questions, the court, if the case be balanced, will incline to
the side of legality. A cargo may be insured which is itself lawful,
but was purchased with the proceeds of an illegal voyage.
If a severable part of a cargo or a voyage is legal, it may be in-
sured, by itself, although other parts are illegal. But if a part of
the whole property insured together is illegal, this avoids ,the whole
A compliance with foreign registry laws is not necessary, and
with our own probably is not, to sustain the insurance of an actual
owner in good faith.
Freight is a common subject of insurance. In common conversa-
tion, this word means sometimes the cargo carried, and sometimes
the earnings of the ship by carrying the cargo. The latter is the
meaning in mercantile law, and especially in the law of insurance.
It includes in insurance law the money to be paid to the owner of a
ship by the shipper of goods, and also the earnings of an owner by
carrying his own goods ; and the amount to be paid to the owner
by the hirer of his ship, and also the profits of such hirer, either by
carrying his own goods, or by carrying, for pay, the goods of
An interest in freight begins as soon as the voyage is determined
upon, and the ship is actually ready for sea, and goods are on board,
or are ready to be put on board, or are promised to be put on board
by a contract which binds the owner of the goods to put them on
board, for that voyage.
If a ship is insured on a voyage which is to consist of many pas-
370 MABINE INSURANCE.
sages, and sails without cargo, but a cargo is ready for her, or con-
tracted for her at the first port she is to reach and sail from, the
owner has an insurahle interest in the freight from the day on which
she sails from his home port.
If one makes advances towards the freight he is to pay, and this
is to be repaid to him by the ship-owner if the freight is not earned,
the advancer has no insurable interest in what he advances ; but if
he is to lose it, without repayment, if the ship be lost or the freight
not earned, he has an iusurable interest.
OUR marine policies generally provide for this by a clause to the
effect that the insurer shall be liable only for so much of the prop-
erty as a prior insurance shall not cover. The second covers what
the first leaves, the third what the second leaves, and so on ; and as
soon as the whole value of the property is covered, the remainder
of that policy, and the subsequent policies, have no effect. This
priority relates not merely to the date of the instrument, but to the
actual time of insurance. Sometimes the policy provides that the
insured shall recover only the same proportion of the whole loss
which the amount insured in that policy is of the whole amount
insured by all the policies on the whole property.
"Where no provision is made in the policies as to priority, all are
insurers alike, but all together only of the whole value at risk.
The insured, therefore, may recover of any one insurer at his elec-
tion, and this insurer may compel the others to contribute to him in
proportion to their respective insurances.
Insurances may be not successive, but simultaneous, and then no
clause as to prior policies has any application, for then no policy is
prior to another, and all the insurances are liable pro rata. They
are simultaneous, if said to be so in the policies, which is common ;
01 if made on the same day, and bearing the same date, and there
b no evidence as to which was, in fact, first made.
THE MEMORANDUM. 371
DOUBLE INSURANCE AND RE-INSURANCE.
IP there be double insurance, either simultaneously or by suc-
cessive policies in which priority of insurance is not provided for,
\re have seen that all are insurers, and liable each in proportion ;
thus, if all the policies cover twice the value of the property insured,
each policy is valid for one-half of its own amount.
But there is no double insurance, unless all the policies insure
the very same subject-matter, against the same risks, and, taken
together, exceed its whole value.
Many insurances of the same subject-matter, for the benefit of
different parties, do not constitute double insurance.
Re-insurance is lawful ; for whoever insures another has assumed
a risk against which he may cause himself to be insured. This is
often done by companies who wish to close their accounts, to lessen
their risks, or get rid of some especial risk.
THIS word is retained, because the English policies have attached
to them a note or memorandum providing that the insurers shall
not be liable for any loss upon certain articles therein enumerated
(and thence called memorandum articles), unless it be total, or
greater than a certain percentage. In our policies, the same thing
is provided for, but usually by a clause contained in the body or
in the margin of the policy. The general purpose is to guard
against a liability for injuries which may very probably not arise
from maritime peril, because the articles are in themselves perish-
able ; but which injuries it might not be easy to refer to the precise
causes which produced them. Thus, grain, fish, bides, fruit, <fec.,
arc very liable to be somewhat injured on the voyage, and if there
372 MARINE INSUKANCE.
has been bad weather, or a greater leak than usual, it is impossible
to say whether these goods have lost value from their own decay, or
from a peril of the sea. It is therefore provided, that the insurers
shall not pay unless there be a total loss by a sea-peril, which ends
all question, or so large a loss as ten or twenty per cent ; for this
could hardly happen without visible and certain cause. And then,
if the cause was shown to be not a peril insured against, the
insurers would not be liable.
The perishable articles thus excepted, and the percentage of loss
necessary to charge the insurers, vary very much at different times
and in different States.
A STIPULATION or agreement in the policy, that a certain thing
shall be or shall not be, is an express warranty. And every war-
ranty must be, if not strictly, at least accurately complied with.
Nor is it an excuse that the thing is not material ; or that the breach
was not intended, or not known ; or that it was caused by an agent
of the insured. A warranty is equally effectual if written upon a
separate paper, but referred to in the policy itself as a warranty.
And the direct assertion or allegation of a fact may constitute a
If the breach of the warranty exists at the commencement of the
risk, it avoids the whole policy, although the warranty was com-
plied with afterwards and before a loss, and although all other
risks were distinct from that to which the warranty related. Thus,
if a vessel is warranted " coppered," and she is not coppered, and
is lost by the ignition of cotton in the hold. Here, the breach of
the warranty, that is, the want of the copper, has nothing to do
with the loss ; but the insurers would be discharged.
If the breach occur after the risk begins, and before a loss, and is
not caused or continued by the fault of the insured, the insurers are
held ; and so they are if a compliance with the warranty becomes
illegal after the policy attaches, and it is therefore broken.
IMPLIED WAEEANTIES. 373
The usual subjects of express warranty are, first, the ownership
of the property, which is chiefly important as it secures the neutrali-
ty, or freedom from war-risks, of the property insured. The neu-
trality of the ship and of the cargo must be proved by the ship's
having on board all the usual and regular documents. False papers
may, however, be carried for commercial purposes, either when
leave is given by the insurers, or when it is permitted by a known
and established usage.
If neutrality is warranted, it must be maintained by a strict
adherence to all the rules and usages of a neutral trade or employ-
ment. Without warranty, every neutral ship is bound to respect a
blockade which legally exists by reason of the presence of an armed
force sufficient to preserve it, and of which the neutral has knowl-
The second most common express warranty is that of the time of
the ship's sailing. She sails when she weighs anchor or casts off her
fastenings, and gets under way, if the intention be to proceed at
once to sea without further delay. She must have been actually
under way. But if she moves with the intention of prosecuting her
voyage, this is sufficient. But if not entirely ready for sea, she has
not sailed by merely moving down the harbor. If she moves, being
ready and intended for sea, but is afterwards accidentally and com
pulsorily delayed, this is a sailing. Nor is the warranty complied
with by leaving a place to return to it immediately ; or by going
from one port of the coast or island, which she is warranted to leave,
to another. If the ship is warranted " in such a harbor or port," or
" where the ship now is," this means at the time of the insurance.
And " warranted in port " means the port of insurance, unless
another port is expressed or distinctly indicated.
THE most important of these warranties which the law implies,
or makes for the parties without their saying any thing about them,
although they may, if they please, make them for themselves is
3/4 MARINE INSURANCE.
that of sea-worthiness. By this is meant, that every person who asks
to be insured upon his ship, by the mere force and operation of law,
warrants that she is, in every respect, hull, sails, rigging, officers,
crew, provisions, implements, papers, and the like, competent to
enter upon and prosecute that voyage at the time proposed, and
encounter safely the common dangers of the sea. If this warranty
be not complied with, the policy does not attach, whether the breach
be known or not, unless there is some peculiar clause in the policy
waiving this objection.
If the ship be seaworthy and the policy attaches, no subsequent
breach discharges the insurers from their liability for a loss previous
to the breach. Even if the policy does not attach at the beginning
of the voyage, if the unseaworthiness be capable of prompt and
effectual remedy, and be soon and entirely remedied, the policy
may then attach. If the insurance is " at and from " a port, there-
is no implied warranty in the nature of a condition precedent to the
attaching of the policy, that the vessel shall be then seaworthy in the
sense of being fit for sea, and it is sufficient if she is portworthy. But
the policy is avoided if she goes to sea in an unseaworthy condition.
The general rule is, that, if unseaworthiness prevents the policy
from attaching at the proper commencement of the risk, the contract
becomes a nullity.
If she becomes unseaworthy in the course of the voyage, from a
peril insufficient to produce it in a sound vessel, this may be evi-
dence of inherent weakness and original unseaworthiness ; and then
the policy never attached. But if originally seaworthy, and by any
accident made otherwise, the policy continues to attach until she
can be restored to a seaworthy condition by reasonable endeavors.
And the general rule is, that she must be so restored as soon as she
can be. It is the duty of the master to repair her as soon as he
can ; by the aid of another ship if that may be, but if otherwise, not
to keep her at sea if she can readily make a port where she can
be made seaworthy ; and not to leave that port until she is sea-
worthy. It is the rule that a ship must not leave a port in an un-
seaworthy condition, if she could there be made seaworthy ; if she
does, the insurers are no longer held. But their liability may be,
not destroyed, but only suspended, if the seaworthiness be cured
at the next port, especially if that be not a distant port.
BEPKESENTATION AND CONCEALMENT. 375
There cannot possibly be a definite and universal standard for
feftaworthiness. The ship must be fit for her voyage or for her
place. But a coasting schooner needs one kind of fitness, a freight-
ing ship to Europe another, a whaling ship another, a ship insured
only while in port another. So as to the crew, or provisions, or
papers, or a pilot, or certain furniture, as a chronometer or the like ;
or the kind of rigging or sails. In all these respects, much depends
upon the existing and established usage. There is, perhaps, no
better test than this ; the ship must have all those things, and in
such quantity and of such quality as the law requires, provided there
is any positive rule of law affecting them ; and otherwise such as
would bo deemed requisite according to the common consent and
usage of persons engaged in that trade. And the reason for this
rule is, that this is exactly what the insurers have a right to expect,
and if the insured intend any thing less, or the insurers desire any
thing more, it should be the subject of special bargain.
If a policy be intended to attach when a ship is at sea, the ship
must be seaworthy in that sense and in that way in which a ship
of her declared age, size, employment, and character, after being at
sea for that time, under ordinary circumstances, ought to be in, and
may be expected to be in by all concerned. The standard of sea-
worthiness is to be found from the usage and understanding of mer-
chants, at the place where the ship belongs, and not at that where
the ship is insured.
BEPRESENTATION AND CONCEALMENT.
IP there be an affirmation or denial of any fact, or an allegation
which would lead the mind to a conclusion, whether made orally
or in writing, or by exhibition of any written or printed paper, or
by a mere inference from the words of the policy, before the making
of the policy, or at the making, and the same be false, and tend to
procure for him who makes it the bargain, or some advantage in the
bargain, it is a misrepresentation. And it is the same thing, whether
it refers to a subject concerning which some representations were
necessary, or otherwise.
876 MARINE INSURANCE.
Concealment is the suppression of a fact not known to the other
party, referring to the pending bargain, and material thereto.
A misrepresentation or a concealment discharges the insurers.
To have this effect, it must continue until the risk begins, and then
It is no defence, that it was innocent, and arose from inadvertence
or misapprehension, because the legal obligation of a full and truo
statement is absolute ; nor that the insurers were not influenced by
it, if it were wilfully made with intention to deceive.
If it be in its nature temporary, and begins after the risk begins,
and ends before a loss happens, the insurers are not discharged.
And if it relate to an entirely separate subject-matter of insurance,
as the goods only, and has no effect upon the risk as to the rest, as
the ship, for example, it discharges the insurers only as to that part.
Ignorance is never an excuse, if it be wilful and intentional. If one
says only he believes so and so, the fact of his belief in good faith is
sufficient for him. But if he says that is true of which he does not
know whether it be true or false, and it is actually false, it is the
same misrepresentation as if he knew it to be false. If a statement
relate to the future, a future compliance or fulfilment is necessary.
Any statement in reply to a distinct inquiry will be deemed ma-
terial ; because the question implies that the insurer deems it mate-
rial. On the other hand, the insured is not bound to communicate
any mere expectation or hope or fear ; but only all the facts material
to the risk.
WHAT THINGS SHOULD BE COMMUNICATED.
NOT only ascertained facts should be stated by the insured, but
intelligence, and mere rumors, if of importance to the risk ; and it
has been held that intelligence known to his clerks would be gener-
ally presumed to be known to him ; and it is no defence, that the
things have been found to be false. It has been held that an agent
was bound to state that his directions were sent him by express ;
because this indicated an emergency. If the voyage proposed would
violate a foreign law not generally known, this should be stated.
THE PREMIUM. 377
It is impossible. to give any other criterion to determine what
should be communicated than the rule that every thing should be
stated which might reasonably be considered in estimating the risk.
And so every thing of any kind which the insurer might reasonably
wish to take into consideration in estimating the value of the risk
which he is invited to assume.
The question, however, being one of concealment as it affects the
estimation of the risk, it is obvious that the insured need not state
to the insurer things which he already knows ; and by the same
reason, he is not bound to state things which the insurer ought to
know, and might be supposed to know.
If either party says to the other so much as should put the other
upon inquiry in reference to a matter about which inquiry is easy
and would lead to information, and the other party makes no in-
quiry, his ignorance is his own fault, and he must bear the conse-
quences of it.
An intention, which, if carried into effect, would discharge the
insurers, as, for example, an intention to deviate, need not be stated,
unless the intention itself can be shown to affect the risk. So a past
damage to the property need not be stated, unless it affects its pres-
ent probability of safety.
A false statement that other insurers have taken the risk on such
or such terms is a misrepresentation ; but a false statement by the
insured that he thinks they would take it on such terms is not one,
for of this the insurers can judge for themselves.
Every statement or representation will be construed rationally,
and so as to include all just and reasonable inferences. A substan-
tial compliance with it will be sufficient ; and a literal compliance
which is not a substantial one will not be sufficient.
THIS is undoubtedly due when the contract of insurance is com-
pleted ; but in practice in this country, the premium in marine
insurance is usually paid by a premium note on time, which is given
378 MARINE INSUKANOB.
at or soon after the delivery of the policy. If the policy acknowl
edge the receipt of the premium, and it is not paid, this receipt
would be no bar to an action for it.
The premium is not due, if the risk is not incurred ; whether this
be caused by the non-sailing of the ship ; or by one insured on goods
not having goods on board ; or not so much cargo as he is insured
for ; or by any error or falsity in the description which prevents the
policy from attaching.
If the premium be not earned, or not wholly earned, it must bo
returned in whole or in part by the insurers if it have been paid ;
and not charged in account with the insured, if it be unpaid.
The premium may be partially earned ; and then there must be
a part return only. As if the voyage consist of several passages, or
of " out and home " passages, and these are not connected by the
policy as one entire risk ; or if the insured has some goods at risk,
but not all which he intended to insure.
It is, however, an invariable rule, that if the whole risk attaches
at all, that is, if there be a time, however short, during which the
insurers might, in case of loss from a sea-peril, be called on for the
whole amount they insure, there is to be no return of premium.
In this country, insurers usually retain one-half of one per cent
of a returnable policy. And our policies contain a clause permit-
ting the insurers to set off the premium due against a loss, whether
the note be signed by the insured or by another person.
THE DESCRIPTION OF THE PROPERTY INSURED.
THE description must be such as will distinctly identify the prop-
erty insured, as by quantity, marks, and numbers, or a reference
to the fact of shipment, or the time of shipment, or the voyage, or
the consignee ; or in some similar and satisfactory way ; and no
mere mistake in a name, or otherwise, vitiates the description if it
leaves it sufficiently certain. If different shipments come within
the policy, the insured may attach it to either by his declaration,
THE PERILS COVERED BY THE POLICY. 379