grounded on the prohibition of it by the law of Moses among the Jews, and condemned the practice of taking interest, as being contrary to the divine law, both natural and revealed. The canon law (a), moreover, proscribed the tak ing any, the least, increase for the loan of money as a mortal sin.

But, in answer to this, it has been observed, that the Mosaical precept was clearly a political, not a moral ordinance. It only prohibited the Jews from taking usury from their brethren the Jews; but in express words permitted them to take it of a stranger (b); which shows that the taking of moderate usury, or a reward for the use, for so the word signifies, is not malum in se; since it was allowed where any but an Israelite was concerned.

Moreover, although, as noticed at a former page (c), money was originally used only for the purposes of exchange, yet the laws of any state may be well justified in permitting it to be turned to the purposes of profit, if the convenience of society (the great end for which money was invented) require it. And that the allowance of interest tends greatly to the benefit of the public, especially in a trading country, appears from the generally * acknowl[* 206] edged principle, that commerce cannot subsist without mutual and extensive credit. Unless money therefore can be borrowed, trade cannot be carried on: and if no premium were allowed for the hire of money, few persons would care to lend it; or at least the ease of borrowing at a short warning (which is the life of commerce) would be entirely at an end. Thus, in the dark ages of monkish superstition and civil tyranny, when interest was laid under a total interdict, commerce was also at its lowest ebb, and fell entirely into the hands of the Jews and Lombards: but when men's minds began to be more enlarged, when true religion and real liberty revived, commerce grew again into credit; and introduced with itself its inseparable companion, the doctrine of loans upon interest. And, as to any scruples of conscience, since all other conveniences of life may either be bought or hired, but money can only be hired, there seems to be no greater oppression in taking a recompense or price for the hire of this, than of any other convenience. To demand an exorbitant price is equally contrary to conscience, for the loan of a horse, or the loan of a sum of money: but a reasonable equivalent for the temporary inconvenience, which the owner may feel by the want of it, and for the hazard of his losing it entirely, is not more immoral in one case than it is in the other. Indeed the absolute prohibition of lending upon any, even moderate interest, would introduce the very inconvenience which it might seem meant to remedy. The necessity of individuals will make borrowing unavoidable. Unless profit for the loan of money were allowed by law, there would be but few lenders; and those principally bad men, who would break through the law, and take a profit; and then would endeavour to indemnify themselves from the danger of the penalty, by making that profit exorbitant.

Therefore, as well in other countries as in our own, where laws against usury have existed, a capital distinction has been made between a moderate and an exorbitant* profit for the use of money. The Romans at one time [* 207] allowed centesima, one per cent. monthly, or twelve per cent. per annum, to be taken for common loans; and Justinian (7) reduced it to four per cent.; but allowed higher interest to be taken of merchants, because there

(a) Decretal. 1. 5, tit. 19.

(b) Deut. xxiii. 20.

(c) Ante, p. 160.

(d) Cod. 4. 32. 26. Nov. 33, 34, 35.

the hazard was greater. Grotius informs us (e), that, in Holland, the rate of interest was eight per cent. on common loans, but twelve to merchants. And Lord Bacon was desirous of introducing a similar policy in England (f): but our law established one standard for all alike, where the pledge of security itself was not put in jeopardy. With us the rate of legal interest, during the existence of usury laws, varied and decreased according as the quantity of specie in the kingdom increased by accessions of trade, the introduction of paper credit, and other circumstances (g). Until, in the year 1854, all the then existing laws against usury were, by the 17 & 18 Vict. c. 90, entirely repealed (h). (539)

The exorbitance or moderation of interest for money lent depends, in truth, upon two circumstances: the inconvenience of parting with it for the present, and the hazard of losing it entirely. The inconvenience to individual lenders can never be estimated by laws; the current rate, therefore, of interest must depend upon the usual or general inconvenience. This results entirely from quantity of specie or current money in the kingdom: for, the more specie there is circulating in any nation, the greater superfluity there will be, beyond what is necessary to carry * on the business of exchange and the common [*208] concerns of life. In every nation or public community, there is a certain quantity of money thus necessary; which a person well skilled in political arithmetic might calculate almost as exactly, as a private banker could estimate the demand for running cash in his own till: all above this necessary quantity may be spared, or lent without much inconvenience to the respective lenders; and the greater this national superfluity is, the more numerous will be the lenders, and the lower will the current rate of interest ordinarily be: but, where there is not enough circulating cash, or barely enough, to answer the daily uses of the public, interest will be proportionably high; for lenders will be but few, as few can submit to the inconvenience of lending.

So also the hazard of loss has its weight in the regulation of interest: the better the security, the lower will the interest be; the rate of interest being generally in a compound ratio, formed out of the inconvenience, and the hazard. And as, if there were no inconvenience, there should be no interest but what is equivalent to the hazard, so, if there were no hazard, there ought to be no interest, save only what arises from the mere inconvenience of lending. Thus, if the quantity of specie in a nation be such, that the general inconvenience of lending for a year is computed to amount to three per cent.: a man having money by him will perhaps lend it upon good personal security at five per cent., allowing two for the hazard run; he will lend it upon landed security or

(e) De Jur. Bell. et Pa. 2. 12. 22. (f) Essays, c. 41.

(g) Thus the statute 37 Hen. 8, c. 9, confined interest to 10 per cent., and so did the statute 13 Eliz. c. 8. But as, through the encouragements given in her reign to commerce, the nation grew more wealthy, so, under her

successor, the statute 21 Jac. 1, c. 17, reduced it to eight per cent.; as did the statute 12 Car. 2, c. 13, to six; and the statute 12 Ann. st. 2, c. 16, to five per cent. yearly.

(h) Sect. 1. The above statute does. not affect the law as to pawnbrokers, s. 4.

(539) For a full discussion of the subject of interest on money and usury, see 1 Wait's Law & Pr. 548 to 579. The English statutes against usury and gaming have been adopted generally throughout the United States (see Unger v. Boas, 13 Penn. St. 601; Mordecai v. Dawkins, 9 Rich. [S. C.] 262); but the tendency of the present day is toward the repeal of the laws relating to usury. See 3 Kent's Com, 80, note a.

*

respondentia.

mortgage at four per cent., the hazard being proportionably less; but he will lend it to the state, on the maintenance of which all his property depends, at three per cent., the hazard being none at all. But formerly the hazard might sometimes have been greater than the rate of interest allowed under a restrictive law would compensate. And this gave rise to various species of contracts by way of insurance or otherwise, which will here be briefly adverted to. Bottomry (which originated from permitting the master of a ship, [* 209] in a foreign country, to hypothecate the ship in order to raise money Bottomry and to refit (i) is in the nature of a mortgage of a ship; when the master takes up money to enable him to carry on his voyage, and pledges the keel or bottom of the ship (partem pro toto) as a security for its re-payment. In which case, it is understood, that, if the ship be lost, the lender loses also his whole money; but, if it returns in safety, then he shall receive back his principal, and also the premium or interest agreed upon. And this is allowed to be a valid contract in all trading nations, for the benefit of commerce, and by reason of the extraordinary hazard run by the lender (k). In this case the ship and tackle, if brought home, are answerable (as well as the person of the borrower) for the money lent, and nothing short of an actual total loss will discharge the borrower (7). (540)

If the loan is not upon the vessel, but upon the goods and merchandize, which must necessarily be sold or exchanged in the course of the voyage, then

(i) The circumstances under which the master is authorized to raise money on the credit of the owner or on bottomry, are set forth in The Karnak, L. R. 2 Adm. 289; The Great Eastern, id. 88; The Gratitudine, 3 Rob. 240; Benson v. Chapman, 2 H. L. Cas. 696. See also 19 & 20 Vict. c. 97, s. 8.

(k) Instruments of bottomry are in use in all countries wherein maritime commerce is carried on. The lender of the money is entitled to receive a recompense, called, in the

civil law, "periculi pretium," to which no person can be entitled who does not take upon himself the peril of the voyage. Simonds v. Hodgson, 3 B. & Ad. 57.

See also Moll, de Jur. Mar. 361; Malyne, Lex Mercat. b. 1, c. 31; Bacon's Essays, c. 41; Cro. Jac. 208; Bynkersh. Quæst Jur. Privat. 1. 3, c. 16.

(1) Thomson v. Royal Exch. Ass. Co., 1 M. & S. 30.

(540) The questions which arise from the bottomry of a vessel are, in the United States, frequently settled in admiralty. 1 Pars. on Ship. & Adm. 132. A bottomry bond made by the master vests no absolute inde feasible interest in the ship on which it is founded, but gives a claim upon her which may be enforced with all the expedition and efficiency of the admiralty process. Blaine v. The Charles Carter, 4 Cranch, 328. See United States v. Delaware Ins. Co., 4 Wash. C. C. 418. Such bonds are not within the purview of a State statute requiring record of mortgages of personal property. Fontaine v. Beers, 19 Ala. 722; The Brig Draco, 2 Sumn. 157, 189.

The essential differeuce between a bottomry and a simple loan is stated to be, that in the latter the money is at the risk of the borrower, and must be paid at all events; in the former it is at the risk of the lender during the voyage, and the right to demand payment depends on the safe arrival of the vessel. Greeley v. Waterhouse, 19 Me. 9; Jennings v. Ins. Co. of Penn., 4 Binn. 244; Northwestern Ins. Co. v. Ferward, 36 N. Y. (9 Tiff.) 139; Bray v. Bates, 9 Metc. (Mass.) 237; Leland v. The Medora, 2 Woodb. & M. 92, 107. The perils of the sea being at the risk of the lender gives the right of reserving any rate of interest agreed upon without incurring the penalties of usury. The Atlantic, 1 Newb. 514; The Yuba, 4 Blatch. C. C. 352; The Mary, 1 Paine, 671.

A valid bottomry bond may be made by the owner of a vessel either in a foreign or home port. The Draco, 2 Sumn. 157; The Mary, 1 Paine, 671. But the master can give such a bond only abroad and from necessity. See The Lavinia v. Barclay, 1 Wash. C. C. 49; Hurry v. The John and Alice, id. 293; The Aurora, 1 Wheat. 96; Maitland v. The Atlantic, 1 Newb. 514; Joy v. Allen, 2 Woodb. & M. 303; The Packet, 3 Mas. C. C. 255; Murray v. Lazarus, 1 Paine, 572.

VOL II -22

only the borrower, personally, is bound to answer the contract; who therefore in this case is said to take up money at respondentia (m). (541) The general nature, accordingly, of a respondentia bond is this: the borrower binds himself [* 210] in a penal sum, upon condition that the obligation shall be * void, if he pay the lender the sum borrowed and so much per month from the date of the bond till the ship arrives at a certain port, or if the ship be lost or captured in the course of the voyage. The respondentia interest is frequently at a high rate in proportion to the risk and profit of the voyage. Further, a lender upon respondentia is entitled to receive the whole sum advanced, provided the ship and cargo arrive at the port of destination; nor will he lose the benefit of the bond, if an accident happens by the default of the borrower or the captain of the ship. Neither will a temporary capture, or any damage short of the destruction of the ship, defeat his claim (n).

The terms "bottomry" and "respondentia," above used, are also applied to contracts for the repayment of borrowed, not on the ship and goods only, but on the mere hazard of the voyage itself; ex. gr., when a man lends a merchant 1000l. to be employed in a beneficial trade, with condition to be repaid with extraordinary interest, in case such voyage be safely performed: which kind of agreement is sometimes called fanus nauticum, and sometimes usura maritima (0).

Insurance

*

A policy of insurance (p) is a contract between A. and B., that upon A.'s paying a premium equivalent to the hazard run, B. will indemnify or insure him against a particular event (q). This is founded upon one of generally. the same principles as the doctrine of interest upon loans, that of hazard; but not that of inconvenience. For, if I insure a ship to the Levant, and back again, at five per cent.; here I calculate the chance that she performs her voyage, to be twenty to one against her being lost: and, if she be lost, I lose 1007. and get 5l. Now, this is much the same as if I lend the mer[* 211] chant, whose fortunes are embarked in this vessel, 1007. at the rate of eight per cent. For, by a loan I should be immediately out of possession of my money, the inconvenience of which we have supposed equal to three per sent.: if, therefore, I had actually lent him 1007. I must have added 37. on the score of inconvenience, to the 57. allowed for the hazard, which together would have made 81. But as, upon an insurance, I am never out of possession of my money till the loss actually happens, nothing is therein allowed upon the principle of inconvenience, but all upon the principle of hazard. (542)

(m) Busk v. Fearon, 4 East, 319.

(n) See Thomson v. Royal Exch. Ass. Co., 1 M. & S. 30.

(0) Moll. de Jur. Mar. 361. Malyne, Lex Mercat. b. 1, c. 31.

(p) Police d'assurance, from polliceri, to

promise. So, a bill of lading is called in French police de chargement.

(9) The subject matter insured was peculiar in Carter v. Boehm, 5 Burr. 1905; Wilson v. Jones, L. R. 2 Ex. 139.

(541) See Maitland v. The Atlantic, 1 Newb. 514; S. C., 3 Am. Law. Reg. 477; 1 Pars. on Ship. &. Adm. 165.

(542) A contract of insurance is an agreement by which one party, for a consideration, promises to make a certain payment of money upon the destruction or injury of something in which the other party has an interest. In fire insurance and marine insurance the thing insured is property; in life or accident insurance it is the life or health of a person. In either case neither the times and amounts of payments by the assured, nor the modes of estimating or securing the payment of the sum to be paid by the insurer, affect the question whether the agreement between them is a contract of insurance. All that is

To the time of queen Elizabeth is referable the first of our statutes (r) concerning marine insurance, its object having been to establish a special tribunal for the determination of cases connected therewith; or rather to Marine insurance. confirm and extend the authority of one which the merchants of London had previously established. The special court thus erected for deciding questions on policies of insurance fell, however, on account of its defective jurisdiction, into disuse; it having been decided, that a judgment therein for the defendant did not protect him from a subsequent action for the same cause (8).

It must not, indeed, be supposed that maritime insurance originated with the statute of Elizabeth just cited, or was, even at the date of its passing, of recent existence here; on the contrary, the preamble of the act recites that it had been "time out of mind an usage amongst merchants, both of this realm, and of foreign nations; " the introduction of maritime insurance amongst us having been due to the Lombards, who settled in London in the 13th century, and for a long time conducted, almost exclusively, the foreign trade of this country (t). (543)

[*212] The written contract (u) by which a ship, its cargo, or freight (v) may be

(r) 43 Eliz. c. 12.

(8) Came v. Moye, 2 Sid. 121. A subsequent parliamentary interference with this matter, was the granting of a monopoly of insuring, as against other companies, to the Royal Exchange and the London Assurance Companies, by the stat. 6 Geo. 1, c. 18, which was repealed by the 5 Geo. 4, c. 114; and marine assurances are now largely effected with public companies.

As to the mode in which assurances are transacted, through the medium of brokers, see Stewart v. Aberdein, 4 M. & W. 211;

Jenkins v. Power, 6 M. & S. 289; Xenos v.
Wickham, L. R. 2 H. L. Cas. 296.

(t) Mr. Duer observes, in the Introduction to his Treatise on Marine Insurance, p. 33, that the influence of the Italians over the commerce and commercial regulations of our ancestors is well known, and is attested, even at this day, by the reference in sea policies to the street which was distinguished by the name and residence of their countrymen.

(u) The contract of marine insurance is expressly required to be in writing by stat. 35 Geo. 3, c. 63, s. 11.

(v) See De Vaux v. P'Anson, 7 Scott, 507.

requisite to constitute such a contract is the payment of the consideration by the one and the promise of the other to pay the amount of the insurance upon the happening of injury to the subject by a contingency contemplated in the contract. GRAY, J., in Com. v. Wetherbee, 105 Mass. 149, 160.

That a contract of insurance by parol is sufficient to bind the parties in the absence of any statute provision to the contrary, see McCullock v. Eagle Ins. Co., 1 Pick. (Mass.) 278; Sanford v. Trust Fire Ins. Co., 11 Paige, 547; Hamilton v. Lycoming Mut. Ins. Co., 5 Barr. (Penn.) 339; Union Mut. Ins. Co. v. Commercial Mut. Ins. Co., 2 Curtis' C. C. 524; S. C. affirmed, 19 How. (U. S.) 318; Rhodes v. Railway Passengers' Ins. Co., 5 Lans. 71; Fried v. Royal Ins. Co., 50 N. Y. (5 Sick.) 243; Ellis v. Albany Ins. Co., id. 402; Henning v. U. S. Ins. Co., 2 Dill. (Mo.) 26; Sanborn v. Firemen's Ins. Co., 16 Gray (Mass.), 448; Walker v. Metropolitan Ins. Co., 56 Me. 371. But see, contra, Cockerell v. Cincinnati Mut. Ins. Co., 16 Ohio, 148. A verbal agreement to extend the terms of an existing policy, so that it shall cover property not originally within the scope of the contract, would also seem to be valid. See Wood v. Rutland, etc., Mut. Ins. Co., 31 Vt. 552.

Contracts of insurance, like all other contracts, are construed so as to give effect to the intent of the parties as indicated by the language employed. And the language employed must be taken in its ordinary popular sense, unless it appears to have been used in a technical sense, or custom or usage has impressed a different meaning upon it. See Mutual Safety Ins. Co. v. Hone, 2 N. Y. (2 Comst.) 235; Whiton v. Old Colony Ins. Co., 2 Metc. (Mass.) 1; Springfield Fire & Marine Ins. Co., 43 N. Y. (4 Hand) 389; S. C., 3 Am. Rep. 711; Savage v. Howard Ins. Co., 52 N. Y. (7 Sick.) 502.

(543) See 1 Pars. on Mar. Ins. 10 et seq.