Óf re-insur so called. § 119. Re-insurance is defined to be a contract by which, ance, properly in consideration of a certain premium, the original insurer throws upon another the risk for which he has made himself foreign law as responsible to the original assured, to whom, however, he to re-insurance. alone remains liable on the original insurance. (h) View of the Definition of re-insurance. re-insurance is The contract of re-insurance is totally distinct from, and The contract of unconnected with, the primitive insurance; the original assured has no kind of claim against the re-insurer; the reassured remains solely liable on the original insurance, and alone has any claim against the re-insurer. (i) totally distinct from the original insurance. In order to re- the same proof amount of the against the reinsurer except in France, where the premium and costs of the first insurance are deducted. Hence, supposing the original insurer to have become bankrupt, and the assured to have been paid a small dividend out of his estate, the re-insurer is still liable to pay the whole amount of the re-insurance to the assignees of the original insurer, without deducting the dividend; and the original assured has no claim upon them in respect of the money so paid. (j) The re-insured, in order to recover against the re-insurer, must prove the landing and value of the goods, and the existence and extent of the loss, in the same manner as the original assured must have proved them against him. (k) In every other foreign country except France, the reassured is allowed to cover, by his re-assurance, the whole amount of the original insurance, without deducting therefrom the premiums of the original insurance, or the premium of the premium. (1) In France the great authority of Emerigon supports this practice (m); but Pothier (n), Valin (0), Monsieur reader can also consult Boulay-Paty, (h) Emerigon, chap. viii. sect. 14. (i) Le premier contrat subsiste tel qu'il a été conçu, sans novation ni alteration. La réassurance est absolu. ment etrangére à l'assuré primitif, avec le quel le réassureur ne contracte au cune sorte d'obligation. Emerigon, (k) See Kent's Comm., vol. iii. p. 278. ed. 1844. (1) Benecké, System des Assecuranz, cap. ii. sect. 4. tom. i. p. 284. ed. 1805. (m) Emerigon, chap. viii. sect. 14. § 4. vol. i. pp. 253-256. ed. 1827. (n) Pothier, Traité d'Assurance, No. 36. (0) Valin, Comment, sur l'Ordonn. tit. vi. art. 20. tom. ii. p. 279. ed. de Becane, A. D. 1828. Estrangin, the learned commentator on Pothier (p), and BoulayPaty (q), are all opposed to Emerigon on the point, upon the ground that the premium of the original insurance having been already paid to the underwriter, he runs no risk upon it, and therefore cannot insure it. The re-insurer is entitled to make the same defence to an action brought against him on the second policy, as the original insurer might on the first policy (r); and in cases of constructive total loss, the re-assured need not, it seems, abandon to the re-insurer as soon as the original assured has abandoned to him, for the second insurance has no connection with the first. (s) Of re-insur ance, properly so called. The defence to actions on the second policy is the same as on The re-assured the first. need not abandon in cases of constructive total loss. coverable. It has been held in the United States, that the amount of Amount reloss recoverable on a policy of re-insurance will include the expense of defending against the claim of the original assured, provided the original insurer was justified in contesting the claim. (t) ART. 2. Of Insuring the Solvency of the Underwriter. § 120. Besides re-insurances, properly so called, i. e. in- Of insuring the solvency of the surances effected by one underwriter with another to secure underwriter. himself: the assured may also, if he pleases, insure the solvency of the underwriter with whom he has effected the policy. Insurances on the solvency of the under writer have never been in As, however, this practice tends greatly to lessen the profits of the voyage by multiplying the charges of it, it will not frequently be resorted to in any country, and appears never to have been in use in our own, though it is not in terms use in this prohibited by the statute 19 G. II. c. 37., nor would it be country. illegal at common law (u): the real reasons of the non (p) Comment. on Pothier, No. 36. p. 46. ed. Estrangin. (2) Boulay-Paty, Cours de Droit Comm. Mar., tit. x. sect. 10. vol. iii. pp. 429. sqq. (7) So held in the United States, New York Marine Ins. Comp. v. Protection Ins. Comp., 1 Story's Rep. 458. U (s) † Hastie v. De Peyster, 3 Caines, 190. Phillips on Ins., vol. ii. p. 246. Kent's Comm., vol. iii. p. 278. ed. 1844. (t) Hastie v. De Peyster, 3 Johnson's Chancery Cases, 190., cited in Phillips on Ins., vol. ii. p. 749. () Park on Ins. 599. 8th ed., seems to think it would be void as a Of re-insur so called. Where the same existence of the practice in this country appear to be, as Mr. ance, properly Marshall suggests, that a double insurance would better answer the end proposed (v); or else, as M. Benecké thinks, that the same object is attained by the employment of brokers on a commission del credere, which implies, as we have seen, a guarantee of the underwriter's solvency. (w) object is attain ed by employ ing brokers del credere. Present French law on the point. The Ordinance de la Marine (x) expressly authorized the assured to insure "the solvability of his insurers:" the Code de Commerce omits all mention of this species of insurance (y), from which, says Boulay-Paty, it is not to be inferred that that Code prohibits it, but rather regards it as too clearly a matter The practice is of right to require any specific authorization. (z) The same learned author, however, admits that the practice is scarcely ever resorted to in France; and he considers that it ought never to be adopted, except in cases where the solvency of the underwriters is exceedingly doubtful. (a) scarcely known in France. What is requisite in order to recover on such insurance. In order to recover upon such an insurance the first insurer must be put legally in default by a legal demand, but the better opinion of the French jurists seems to be that he need not also be prosecuted to judgment and execution. (¿) ART. 3. Practice in case of the Insolvency of the Practice in case § 121. There is no doubt that the assured in this country, as elsewhere, may effect a new insurance in of underwriter's insolvency. If the underwriter becomes insolvent during the pendency of the consequence of the insolvency of the underwriter during the continuance of wager policy under the statute; but I () Marshall, 139. (w) Benecké, quâ suprà. See also Boulay-Paty, tom. iii. pp. 445, 446. ed. 1834. (x) Tit. vi. art. 20. (y) Code de Commerce, art. 342. (z) Boulay-Paty, tom. iii. pp. 439, 440. ed. 1834. (a) Boulay-Paty, Comment. on Emerigon, vol. i. p. 259. ed. 1827. (b) Emerigon, chap. viii. sect. 15. vol. i. p. 258. Boulay-Paty, tom. iii. p. 441., contrà, Pothier, Traité d'As surance, No. 36., and Valin, Comment, sur l'Ordinance, tit. vi. art. 20. tom. ii. p. 278. ed. 1828. the risk: for this, though incorrectly called a re-insurance, is not such a re-insurance as alone is contemplated by the 19 "a contract made by the underwriter – viz., G. II. c. 37. § 4., It was laid down by the French jurists, and is now established by the Code de Commerce as the law of France, that, in case of the bankruptcy of the underwriter during the pendency of the risk, the assured may either demand the dissolution of the contract, or security for payment in case of loss, from the body of the creditors (or, as we should say, from the assignees.) (d) In England the law in this respect is, that when the obligor in any bottomry or respondentia bond, or the insurer in any policy of insurance made upon good and valuable consideration, becomes bankrupt during the pendency of the risk, the obligee, or assured, shall be admitted to claim, and, after the loss or contingency shall have happened, to prove his debt or demand in respect thereof, and receive dividends with the other creditors, as if the loss or contingency had happened before the issuing of the commission (now "the fiat.") (e) It is also provided, that in all cases where the parties really interested in the insurance "are not within the united realm," the loss may be proved under the commission (fiat) by the party who has actually effected the policy. (ƒ) SECT. V. Of Double and Over-Insurance. § 122. Double insurance takes place when the assured Of double and makes two or more insurances on the same subject, the same risk, and the same interest. (e) Per Lord Mansfield in Davis v. Gildart, see Park on Ins. 602. 8th ed. (d) See Emerigon, chap. viii. sect. 16. vol. i. p. 259. Valin, Comment, sur l'Ordinance, tit. vi. art. 20. Pothier, Traité d'Assurance, No. 190. Code de Commerce, art. 346. (e) 19 G. 2. c. 32. s. 2., and 6 G. 4. c. 16. s. 53. (f) 6 G. 4. c. 16. s. 53. See also Archbold's Bankrupt Law, 155. 9th ed. 1842. over-insurance. Double insurance. What it is. Of double and over-insurance. How it differs from a reinsurance. Double insur ance in no case prohibited: in avoidable. It is therefore a totally different thing from a re-insurance, which, as we have seen, is effected by the underwriter to secure himself from having to pay a loss; and is not, therefore, on the same subject as the first insurance, nor on the same interest, nor on the same risk. Double insurances are not prohibited by the law maritime unless made fraudulently in fact, a moment's consideration many cases un- will show that they are in many cases of necessary use. A merchant, who expects consignments from abroad, may be ignorant of their exact value; he may, in the first instance, have effected an insurance on them only to an amount which subsequent information may lead him to think inadequate to cover their full value, and on that ground he may be desirous of effecting a further insurance; or he may have insured as much as he is able in one place, and, being still desirous of further security, may then proceed to effect additional insurances elsewhere: on these and other grounds the practice of double insurance is every where per What an overinsurance is. Amount recoverable on several open policies in case of over-insur ance. Rule that prevails in Eng. land for adjust ing the claims of the assured against the underwriters on the different policies, in case of over-insur ance, and also of the several underwriters inter se. Lord Mansfield's rule of contribution. mitted. If it turns out that the whole amount insured in the different policies is greater than the whole value of the interest at risk, this is called an over-insurance: in such case it is quite clear, and no where disputed, that the assured can only recover upon all the policies put together (i. e. supposing them to be open policies) up to the amount actually at risk; that is, in this country the precise cost of the goods, or their invoice price, coupled with the expenses of putting them on board and the premiums of insurance. Thus far the maritime laws of all states are agreed: there exists, however, a difference of practice as to the mode in which this principle is to be applied to settling the claims of the assured against the underwriters on the different policies, and of these underwriters inter se. The rule that now prevails in this country was established by Lord Mansfield, and is as follows: In case of over-insurance the different sets of policies (g) (g) It must be remembered that if subscriptions in the same policy, each there be several dates to the several date makes a separate contract; if the |