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CHAP. V.

ILLEGALITY OF THE RISK: ILLEGAL VOYAGES AND

ILLEGAL TRADING.

General doc

No species of property or interest at risk on a sea venture can be the subject of a valid contract of marine insurance, if the course of trade, or the voyage, in the prosecution of which it is so exposed to risk, be in contravention either of the laws of the land or the laws of nations.

There are, therefore, two main divisions of illegal risks: 1st, Those on which the insurance is effected to protect trade or voyages prohibited by the positive laws of the state where the policy is made or sought to be enforced. 2dly, Those where it is designed to protect trade, or voyages contravening the laws of nations as they affect either belligerents or neutrals: we will treat of these several kinds of illegal risks in their order, after having first stated generally how the illegality of the risk affects the rights and liabilities of the parties to the policy.

The following, then, will be the division of the chapter:

Sect. I. General doctrine of illegality as it affects the policy. Sect. II. Insurances on voyages, or trading illegal by the laws of the land.

Sect. III. Insurances on voyages or trading illegal by the laws of nations as they affect belligerents.

Sect. IV. Insurances on voyages or trading illegal by the laws of nations as they affect neutrals.

SECT. I. General Doctrine of the Illegality of the Risk as it

affects the Policy.

§ 259. "Where a voyage is illegal," says Chief Justice illegality of the Tindal, "an insurance upon it is invalid; for it would be sin

'trine of the

risk as it affects

the policy.

gular if, the original contract being invalid and incapable to be enforced, a collateral contract founded upon it could be enforced." (a)

General docillegality of the

trine of the

risk as it affects the policy.

Principle on

Such is the rule and the reason for it. The following decided points will show within what limitations the rule which insurapplies:

If the voyage on which the ship sails (iter navis) be an integral and entire voyage, under charter-party or otherwise, any illegality at the commencement, or in the course, of such entire voyage will make the whole illegal; so that the assured cannot recover on a policy effected to protect any part of it, although there may have been no illegality in the part of the voyage so insured. (viaggium) (b)

ances are void on illegal voy

ages.

in the course of an entire and integral voyage discharges the

Any illegality

underwriter

from all liability on a po

licy intended to protect any

part of it.

gral voyage

makes the

whole illegal.

Any infirmity, in fact, in any part of an integral voyage The principle makes the whole illegal, so that the assured cannot recover is, that any infirmity in any on a policy on any part of it. Thus, if a ship be chartered part of an inte for one entire voyage "from London to Madeira, and thence to the East Indies," and a policy be effected on ship only "from Madeira to the East Indies," then, if the ship have been engaged in smuggling, or any other illegal act, between London and Madeira, this will prevent the assured from recovering on the policy "from Madeira to the East Indies,” although there may have been no illegality in this latter stage of the voyage.

An attempt was made on one occasion to carry this principle still further, and it was contended that if an entire voyage under a charter-party consist of two distinct stages separately insured, an illegality on the latter stage of the voyage will vitiate a policy on the former, although in itself quite free from the taint of illegality: e. g., supposing a ship to be chartered for a voyage out and home, as from A to B, and back again to A, and two separate policies to be effected, one on the outward and another on the homeward passage; it was urged, that although there might be no illegality on

(a) Redmond v. Smith, 7 Man. & expressly ruled by him at N. Pr. in Bird v. Pigou, 2 Selw. N. P. 1006. 9th ed.

Gr. 474.

(b) Admitted by Lord Kenyon in Wilson v. Marryat, 8 T. Rep. 46., and

Where an enunder a charterparty consists passages out

tire voyage,

and home, each

of which is insured by a

separate policy, query whether an illegality on the homeward

vitiate a policy on the outward, although the latter may be quite free from any taint of illegality: Semble not.

passage will

General doctrine of the

the outward passage, yet the policy thereon would be vitiated illegality of the by a subsequent illegality on the homeward passage. The risk as it affects court gave no express decision on the point, but the inclinathe policy. tion of their opinion seemed decidedly unfavourable to the doctrine thus advanced. (c)

At all events, a

mere contem

plated or contingent illegality on the homeward passage will not in such case

vitiate the outward policy. Sewell v. Royal Exchange As

surance Company, 4 Taunt.

855.

Where the voyage of the ship is not thus integral and entire, but the

case is one in which, out of

several distinct

voyages of the

ship, only one is
insured in the
policy on

which the ac-
tion is brought,
no illegality
can affect the
policy, which

does not occur

in the course

of the very voy

age insured.

Bird v. Appleton, 8 T. Rep. 562.

At all events, where, as in the case before them, the loss had occurred before the commencement of the risk under the homeward policy, so that no illegality had, in fact, taken place on the homeward passage, and there was nothing to show that the master might not before sailing on it have taken steps for performing such passage with all due legal requisites, they held that there was no pretence for saying that such contemplated, or rather contingent, illegality on the homeward passage could vitiate the policy on the outward passage. (d)

Of course, if the voyage of the ship is not thus integral and entire, but the case is one in which either several distinct voyages of the ship are insured in several distinct policies, or, out of several distinct voyages of the ship, only one is insured in the policy on which the action is brought, an illegality on any such other voyages cannot possibly affect the claims of the assured.

In such cases the only question is, was there any illegality in the course of the very voyage insured in the policy?

Thus, where it appeared that an American ship had sailed from London to Canton, and thence back to Europe, but it was distinctly found that the voyage from London to Canton and that from Canton to Europe were two distinct voyages, it was held that an illegality committed in the course of the ship's voyage between London and Canton could not possibly affect a policy intended to protect the voyage from Canton to Europe. (e)

(c) Sewell v. Royal Exch. Ass. Comp., 4 Taunt. 855. Gibbs, J., at the trial seems to have been clear that the homeward voyage would not contaminate the outward voyage (see ibid. 858.), and Sir J. Mansfield, in giving judgment, shows clearly the bias of his

opinion to be the same way. (Ibid. 864.)

(d) Sewell v. Royal Exch. Ass. Comp., 4 Taunt. 855.

(e) Bird v. Appleton, 8 T. Rep.

562.

If, indeed, a policy be effected on the ship "at and from," and there be any illegality in the risk while the ship is at the place, that will vitiate the policy on the entire voyage insured, though the illegality may cease before the ship sails.

Thus, where a policy was effected on an American ship "at and from Canton to Hamburgh," and it appeared that the ship, on arriving at Canton, and for a short time while she lay in harbour there (consequently after the inception of the risk on ship under this policy) had on board an illegal cargo, which she had taken in at Bombay for sale at Canton, in the course of a separate and distinct voyage: this was held to vitiate the policy on the ship, though she disposed of all her illegal cargo at Canton, and sailed thence for Hamburgh with another. (f)

The principle is, that "an illegal cargo on board but for an hour after a policy attaches will avoid that policy and discharge the underwriters from all subsequent liability.” (g)

i. e.,

In the same case a policy was effected for the same voyage, "at and from Canton to Hamburgh," on goods which were purchased at Canton for the homeward voyage partly with the proceeds of the illegal cargo, and none of which were, consequently, shipped on board till the whole of the illegal cargo was unloaded: this policy the court held to be good: the risk on the goods under it did not attach till they were loaded on board, when all illegality was at an end by the prior discharge of the illegal cargo with whose proceeds they were purchased. There was, therefore, no illegality in this case, after the risk had once attached under the policy, on the voyage insured; and as to the illegality that had taken place on the ship's voyage outwards from London to Canton, that could not affect the question. "The voyage homeward from Canton," says Lord Kenyon, "being found to be a separate and distinct voyage from that to Canton, the homeward voyage cannot be affected by the former outward voyage.” (h)

(f) Bird v. Appleton, 8 T. Rep. 562.

(g) Marshall on Ins. 68.

(h) Bird v. Appleton, 8 T. Rep.

566.

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General doc

trine of the

risk as it affects the policy.

The fact that the goods in

sured have been

With regard to the objection that the risk on the goods in

illegality of the sured was illegal, because they had been purchased with the proceeds of an illegal cargo taken on board in the course of a separate adventure, Lord Kenyon and the rest of the court wholly refused to entertain it. "In such a case as the purchased with present," says Mr. J. Lawrence, "we cannot inquire into the means by which the merchant gains the money that is afterwards laid out in the purchase of goods; if the money were obtained by robbery on the highway, and afterwards laid out in the purchase of a cargo, I do not know why that cargo may not be insured. (i)

the proceeds of

an illegal cargo, taken on board in the

course of another risk,

makes no difference to the policy.

Result of the

cases.

Where the

policy is void for illegality,

cannot be called

on to pay losses.

Nor is the as

The positions, therefore, derivable from the cases appear to be 1. That any illegality in the prior stages or at the outset of an integral voyage vitiates a policy, though effected only to protect some later stage of it on which there is no illegality. 2. That an illegality in any part of an entire risk, or voyage insured, vitiates the insurance as to the whole of it. 3. That the illegality of a wholly distinct and separate voyage can have no effect on the voyage described in the policy.

§ 260. Where the policy is thus avoided in consequence of the illegality of the risk, the underwriter is entirely disthe underwriter charged from all liability, and this, although he himself was aware of the illegal nature of the adventure. (j) Nor is the assured (even though a foreigner) entitled to any return of premium (k), except under very special circumstances, from which the court may fairly infer that at the time of making cept under very the policy he was not, nor, in fact, could have been aware, of the real nature of the transaction. (1) And the circumstances must be very special to induce the court to depart from the

sured entitled

to any return of premium ex

special circum

stances.

(i) Bird v. Appleton, 8 T. Rep. Lubbock v. Potts, 7 East, 449. Palyart v. Leckie, 6 Maule & Sel. 290. See post, Chap. on Return of Premium.

566.

(j) Bynkershoek, Quæst. Juris
Public. lib. i. c. 21. Roccus (No. 21.)
mistakenly advanced the opposite doc-
trine. See Lord Mansfield's judgment
in Holman v. Johnson, Cowp. 343.
(k) Vandyck v Hewitt, 1 East, 96.

(1) Oom v. Bruce, 12 East, 225. Hentig v. Staniforth, 5 Maule & Sel. 122. See post, Chap. on Return of Premium.

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