ÆäÀÌÁö À̹ÌÁö
PDF
ePub

vitiates the policy. Nay, even though the suppression should happen through mistake, without any fraudulent intention, still the underwriter is deceived, and the policy may be avoided, the reason being that the risk in such case run is really different from the risk understood and intended to be run at the time of the agreement. And the policy would equally be void as against the underwriter if he concealed, as if he insured a ship on her voyage which he privately knew to have arrived, in which case an action would lie against him to recover back the premium (b).

No proposition, it has been judicially remarked, is better established than this, viz., that the party proposing the insurance is bound to communicate to the insurer all matters which will enable him to determine the extent of the risk against which he is to guarantee the assured; (550) if, indeed, matters are common to the knowledge of both parties, such matters need not be communicated; and when a fact is one of public notoriety, as of war, or where it is one which is matter of inference, and the materials for informing the judgment of the underwriter are common to both, the party proposing the insurance is not bound to communicate that which he is fully warranted in assuming the underwriter already knows. Short of this, however, the party proposing the insurance is bound to make known to the insurer whatever is necessary and essential to enable him to determine what is the extent of the risk against which he undertakes to insure. Though, if the insurer choose to neglect the information which he receives, it is his own fault, provided sufficient information, so far as the assured is concerned, has been placed at his disposal (c). *The inducements to fraud on the part of the assured were to some [* 220] extent diminished by the stat. 19 Geo. 2, c. 37, before the passing of which a practice had obtained of insuring large sums without having any property on board, which were called insurances, "interest or no interest;" this was a species of gaming, without any advantage to commerce, such policies being denominated wagering policies: it was therefore enacted by sec. 1 of the above statute that all insurances, interest or no interest, or without further proof of interest than the policy itself, or by way of gaming or wagering, or without benefit of salvage to the insurer, shall (with certain exceptions) be totally null and void; but this provision does not extend to foreign ships. Reinsurances which were prohibited by a repealed (d) section of the above statute are now legal (e).

Fire insurance.

A policy of insurance against loss by fire is a contract of indemnity within the statute 14 Geo. 3, c. 48 (ƒ), by which the company insuring undertakes to make good the loss by a money payment not exceeding the amount insured, or (in general) to reinstate the premises which have sustained damage. Upon the construction of this instrument, the form of which varies, difficult questions may arise (g); the principles which govern

(b) Carter v. Boehm, 3 Burr. 1905; Russell v. Thornton, 6 H. & N. 104; Holland v. Russell, 4 B. & S. 14.

(c) Bates v. Hewitt, L. R. 2 Q. B. 595, 604-5. (d) See 30 & 31 Vict. c. 59.

(e) 27 & 28 Vict. c. 56, s. 1.
(f) Post, p. 221.

(g) See, for instance, Elliott v. Royal Exch. A88. Co., L. R. 2 Ex. 237.

(550) See Ely v. Hallett, 2 Caines, 57; Hoyt v. Gilmun, 8 Mass. 336; Kohne v. Ins. Co. of N. America, 6 Binn. (Penn.) 219; Clement v. Phenix Ins. Co., 6 Blatchf. 481; Walden v. New York Firemen Ins. Co., 12 Johns. 128; S. C., id. 513; Folsom v. Mercantile, etc., Ins. Co., 8 Blatchf. 170.

[merged small][ocr errors]

it, however, are very simple: any material misdescription of the premises insured, or fraud on the part of the assured, avoids the policy, any condition contained therein, performance of which by the assured is precedent to his right to claim under the policy, must be performed (h), and damage proximate to the peril insured against is alone recoverable (i).

Life insurance.

[*221] * Life insurance is made available for effecting any of various useful objects, such as making a settlement upon marriage or afterwards insuring a provision for wife and children. So, too, in the case of a loan, if the chance of re-payment depends upon the borrower's life, it is usual (besides the ordinary rate of interest) for the borrower to have his life insured till the time of re-payment; for which he is loaded with an additional premium, suited to his age and constitution. Thus, if Sempronius has only an annuity for his life, and would borrow 1007. of Titius for a year; the inconvenience and general hazard of this loan, we have seen (k), are equivalent to 57., which might, therefore, be the rate of interest: but there is also a special hazard in this case; for if Sempronius dies within the year, Titius may lose the whole of his 1007. Suppose this chance to be as one to ten: it will follow that the extraordinary hazard is worth 107. more, and therefore that the reasonable rate of interest in this case would be fifteen per cent. Sempronius, therefore, gives Titius, the lender, 5l. by way of interest, and applies to an insurance company to indemnify Titius against the extraordinary hazard incurred, paying them the other 10l. per annum for so doing. And in this manner may any particular hazard be provided against. But, in order to prevent these insurances from being turned into a mischievous kind of gaming, it was enacted by the statute 14 Geo. 3, c. 48 (7), that no insurance shall be made on any life wherein the party insured has no interest; that in all policies the name of such interested party shall be inserted; and that nothing more shall be recovered thereon than the amount of the interest of the insured (m). (551)

(h) Mason v. Harvey, 8 Exch. 819.

(i) Marsden v. City and County Ass. Co., L. R. 1 C. P. 232; Everett v. London Assur. Co., 19 C. B. N. S. 126; Stanley v. Western Insur. Co., L. R. 3 Ex. 71.

(k) Ante, p. 208. (1) Ss. 1-3.

(m) Every individual has an insurable in

terest in his own life. It has, however, been held that a father has not an insurable interest in the life of his child (Halford v. Kymer, 10 B. & Cr. 72); though it seems that a wife has such an interest in the life of her husband (Read v. Royal Exch. Ass. Co., Peake, Add. C. 70).

(551) A person has an insurable interest in his own life (Provident Life Ins. Co. & Inv. Co. v. Baum, 29 Ind. 236; Campbell v. New England M. L. Ins. Co., 98 Mass. 381); a father in the life of his minor son (Loomis v. Eagle Life & H. Ins. Co., 6 Gray [Mass.], 396. See Mitchell v. Union L. Ins. Co., 45 Me. 104); or a sister in the life of a brother on whom she depends for support. Lord v. Dall, 12 Mass. 115. So, a woman engaged to be married to a man has an insurable interest in his life (Chisholm v. National, etc., Life Ins. Co., 52 Mo. 213); and a wife has an insurable interest in the life of her husband. Baker v. Union Mut. Life Ins. Co., 43 N. Y. (4 Hand) 283; Thompson v. American Tontine L. & S. Ins. Co., 46 N. Y. (1 Sick.) 674. In regard to the interest required to support a policy, the American law is less rigid than the English law; and the more recent American decisions sustain the doctrine, that a person has an insurable interest in the life of another when there is a reasonable probability that he will gain by the latter's remaining alive or lose by his death. See Id.; Hoyt v. N. Y. L. Ins. Co., 3 Bosw. 440; Miller v. Eagle Life & H. Ins. Co., 2 E. D. Smith, 268; Bliss on Life Ins., § 21; 3 Kent's Com. (12th ed.) 369, n. 1.

Where the usual condition against suicide or death, by the party's own hand, is inserted in the policy, the prevailing doctrine is, that if the party kills himself voluntarily, knowing

[*222]

* As well policies of insurance against fire as those against sea risks are properly contracts of indemnity, the insurer engaging to make good within certain limited amounts losses sustained by the assured in their buildings, ships, and goods. The contract of life assurance differs however from the two preceding contracts in this respect, that it is a mere contract to pay a sum of money on the death of a person in consideration of a certain sum paid down, or of the due payment of a certain annuity for his life, the amount of the annuity being calculated in the first instance according to the probable duration of the life, and when once fixed being constant and invariable. This species of insurance, although formerly regarded as a contract of indemnity (0), is not really such (p).

It has recently been enacted that any person or corporation entitled by assignment or other derivative title to a policy of life assurance, and possessing at the time of action brought the right in equity to receive and the right to give an effectual discharge to the assurance company liable on such policy, may sue for

the moneys secured by *it (q), a written notice of the assignment [223] having been duly given (r).

The extent of security afforded by a life policy varies in accordance with the form adopted by the office which insures and the exceptions inserted in it (s). Such a policy being founded upon the answers given by the assured to questions concerning his health proposed to him, will be avoided by any misrepresentation on his part, or by the wilful suppression of a material fact. The distinction formerly adverted to being here again noticeable between a warranty which, whether material or immaterial, must be adhered to, and a representation which, unless material and fraudulent, cannot per se affect the right of the assured to recover upon the policy (t). As a general rule, how

(0) Godsali v. Boldero, 9 East, 72. There, an insurance for a certain term had been effected on the life of Mr. Pitt by a tradesman to whom he was indebted. Mr. Pitt died insolvent before the term of insurance had expired. A grant of money was made by parliament to defray his debts, and out of this grant the plaintiff's claim was liquidated. It was held that the insured could not recover upon the policy. "This action," said Lord Ellenborough, "is, in point of law, founded upon a supposed damnification of the plaintiff occasioned by the death of the assured existing and continuing to exist at the time of action brought; and being so founded, it follows, of course, that if before the action was brought, the damage which was at first supposed likely to result to the creditor from the death were wholly obviated and prevented by payment of the debt, the foundation of any action on the part of the assured against the insurer fails."

(p) Dalby v. India and London Life Ass. Co., 15 C. B. 365. There the action was brought upon a policy of assurance effected on the life of the late Duke of Cambridge. The interest of the assured in the policy had ceased before the death of the duke, so that there was nothing in respect of which he could claim to be indemnified; the action

nevertheless was held to be maintainable.

(q) 30 & 31 Vict. c. 144, s. 1. This act does not apply to assurances, &c., granted under the 16 & 17 Vict. c. 45, or 27 & 28 Vict. c. 43: or to any engagement for payment on death by a friendly society.

(r) 30 & 31 Vict. c. 144, s. 3.

(8) As to the exception in case of suicide, see Borradaile v. Hunter, 5 M. & Gr. 639; Clift v. Schwabe, 3 C. B. 437; in case of accident, see Fitton v. Accidental Death Ins. Co., 17 C. B. N. S. 122.

(t) Anderson v. Fitzgerald, 4 H. L. Cas. 484, 503-4; Broom, Leg. Max. 4th ed. 757-8, and cases there cited.

the nature and effect of the act which he does, and intending the consequence, the policy is avoided, although he is insane at the time. See Dean v. American Mut. Life Ins. Co., 4 Allen (Mass.), 96; Cooper v. Mass. Mut. Life Ins. Co., 102 Mass. 227; S. C., 3 Am. Rep. 451; Nimick v. Mut. Ben. Life Ins. Co., 3 Brewst. 502. See, also, St. Louis M. L. Ins. Co. v. Graves, 6 Bush (Ky.), 268; Easterbrook v. Union Mut. Life Ins. Co., 54 Me. 224; Life Ins. Co. v. Terry, 15 Wall. (U. S.) 180. A policy is also usually conditioned to be void in case the insured shall die by the hands of justice or in the known violation of law. See Overton v. St. Louis Mut. Life Ins. Co.,39 Mo. 122; Cluff v. Mut. Benefit L. Ins. Co., 13 Allen (Mass.), 308; Bradley v. Mut. Benefit L. Ins. Co., 45 N. Y. (6 Hand) 422; S. C., 6 Am. Rep. 115.

ever, with the statement of which this division of our subject will conclude, "In all cases of insurance, whether on ships, houses, or lives, the underwriter should be informed of every material circumstance within the knowledge of the assured" (u).

III. Contracts

be in writing

III. Contracts not falling within either of the two preceding classes are in the next place to be considered; such, I mean, as are not required to be in writing by statute, nor are so in virtue of custom and usage not required to prevalent amongst merchants. Contracts referable to this class are of course infinitely various, but a few of them only can properly here be noticed. We shall speak of the contract of bailment generally, contracts with carriers of goods and passengers, and shall incidentally mention some other kinds of contracts and agreements about which specific [* 224] knowledge should be had.

1. Bailment.

1. Bailment, from the French word bailler, to deliver, is a delivery of a thing in trust for some special object or purpose, and upon an undertaking express or implied to conform to the object or purpose of the trust; as if cloth be delivered, or (in our legal dialect) bailer, to a tailor to make a suit of clothes, he has it upon an implied contract to render it again when made, and that in a workmanlike manner. If goods be delivered to a common carrier, to convey from Oxford to London, he is under a contract in law to carry them to the person appointed. If goods be delivered by a guest to an inn-keeper, the inn-keeper is bound to keep them safely, and restore them when his guest leaves the house. If a man takes in cattle to graze and depasture on his land, which the law calls agistment, he takes them upon an implied contract to return them on demand to the owner. If a pawnbroker receives plate or jewels as a pledge, or security, for the re-payment of money lent thereon at a day certain, he has them upon an express contract or condition to restore them, if the pledgor performs his part by redeeming them. If a landlord distrains goods for rent, or a parish officer for taxes, these for a time are only a pledge in the hands of the distrainor, who is bound by an implied contract in law to restore them on payment of the debt and expenses before the time of sale; or, when sold, to render back the overplus. If a man delivers anything to his friend to keep for him, the receiver is bound to restore it on demand. If a man hires or borrows a horse for a month, he has the possession and a qualified property therein during that period; on the expiration of which his qualified property determines, and the owner becomes (in case of hiring) entitled to the possession of the horse and also to the price for which the horse was hired.

In each of these instances there is a special qualified property in the thing bailed transferred from the bailor to the bailee, together with the [* 225 ] possession. It is not an absolute property, because of the bailee's contract for restitution: the bailor having still left in him the right to a chose in action, grounded upon such contract. And, on account of this qualified property of the bailee in the thing bailed, he (as well as the bailor) may maintain an action against one who injures or takes away such a chattel. The tailor, the carrier, the inn-keeper, the agisting farmer, the pawnbroker, the distrainor, and the general bailee, may each of them vindicate, in his own

(u) Lindenau v. Desborough, 8 B. & C. 586, 592.

right, this his possessory interest, against a stranger or third person. For, being responsible to the bailor, if the goods are lost or damaged by his default, or if he do not deliver up the chattel on lawful demand, it is therefore reasonable that he (the baile:) should have a right of action against any other person who may have purloined or injured them, in order that he may always be ready to answer the call of the bailor (x).

According to Lord Holt (y) there are six sorts of bailments:-(1) A bare naked bailment of goods, delivered by one man to another, to keep for the use of the bailor; this was called by the civilians depositum (z). (2) When goods or chattels are lent to a friend gratis, to be used by him, and this is called commodatum, because the thing is to be restored in specie. (3) When goods are left with the bailee, to be used by him for hire, this is called locatio et conductio, the lender being the locator, and the borrower the conductor. (4) When goods or chattels are delivered to another as a pawn, to be a security to him for money borrowed of him by the bailor, and this is called vadium, a pawn, or pledge. (5) Locatio operis faciendi, when goods or chattels are delivered to be carried, or something is to be done about them for a reward, to be paid by the person who delivers them to the bailee, who is to do the * thing [* 226] about them. (6) Mandatum, when there is a delivery of goods or chattels to somebody, who is to carry them, or do something about them gratis, without any reward for such his work or carriage.

The above celebrated classification of bailments has been much criticised and found fault with, and for practical purposes may be greatly simplified. Inasmuch, however, as the liability of a bailee must be determined by reference to the degree of care which he has exercised in regard to the subjectmatter of the bailment, a tolerably precise meaning should at once be assigned to certain terms which are used in treating of the law of bailment.

Let us designate the degrees of diligence as slight, ordinary, and extraordinary, the degrees of negligence corresponding thereto will then be respectively gross, ordinary, and slight. (552) Common or ordinary diligence being defined as that degree of diligence which men in general exert in respect to their own affairs-that common prudence which men of business and heads of families usually exhibit in conducting matters which interest them (a), less than this degree of care will constitute slight, and more than this will constitute extraordinary diligence; and the corresponding degrees of negligence will therefore be known or ascertainable. Gross negligence will, according to this

(x) See Rooth v. Wilson, 1 B. & Ald. 59.
(y) Coggs v. Bernard, Ld. Raym. 909.
(z) See Southcote's Case, 4 Rep. 83.

(a) Sir W. Jones, Bailments, 6; Story, Bailments, 5th ed. 15-18.

(552) The theory that there are three degrees of negligence described by the terms, slight, ordinary, and gross, has been introduced into the common law from some of the commentators on the Roman law. It may be doubted if these terms can be usefully applied in practice. Their meaning is not fixed, or capable of being so. One degree, thus described, not only may be confounded with another, but it is quite impracticable exactly to distinguish them. Their signification necessarily varies according to circumstances, to whose influence the courts have been forced to yield, until there are so many real exceptions that the rules themselves can scarcely be said to have a general operation. CURTIS, J., in Steamboat New World v. King, 16 How. (U. S.) 474. And see Perkins v. N. Y. C. R. R., 24 N. Y. (10 Smith) 196, 207; Storer v. Gowen, 18 Me. 177; Briggs v. Taylor, 28 Vt. 185; Foster v. Essex Bank, 17 Mass. 479; Tracy v. Wood, 3 Mason, 132.

« ÀÌÀü°è¼Ó »