VII CONSIDERATION—ATTESTATION OF POLICY 129

to be insured. There is no joint - and - several liability (solidarity) among the underwriters subscribing a Lloyd's policy, as the binding clause expressly provides that the underwriters subscribe "each of his own part." Such a clause is obviously unsuitable for the use of limited liability companies, which have consequently adopted such words as the following:

In witness whereof the undersigned, on behalf of the said Company, according to a Resolution duly passed by the Board of Directors, have hereunto set their hands, in London, the

189-.

day of

The Articles of Association of the various marine insurance companies and the resolutions of their boards respecting the proper attestation of their policies differ very much from one another. In some cases the signature of one director is all that is required: few policies require more than two signatures, whether both of directors, or the one of a director and the other of an official. Most companies do

not seal their policies.

This clause completes the policy as it existed in 1748. The remainder of the policy consists of what is termed "The Memorandum" added in May 1749 (with which addition to the 1748 policy, it is the same as appears in the schedule of 35 Geo. III. c. 63; the Stamp Act of 1795). No later additions have been made to the body of the policy; they are made as required, either as marginal clauses or written in on the face of the policy. The effect of these clauses will be the subject of discussion below.

K

CHAPTER VIII

PRINCIPLES OF INTERPRETATION OF THE POLICY

LAWYERS and text-book writers have not spared their language when they have had the opportunity to describe the ordinary English policy of marine insurance (v. p. 28). It has been described as a badly drawn, illogical, and altogether hopeless document. Arnould (p. 16), citing Mr. Justice Buller (4 T.R. 210), says it has always been regarded by our courts of law as an absurd and incoherent document; and he gives the remark of Mr. Justice Lawrence (in Marsden v. Reed, 1803):1 "It is wonderful that policies should be drawn with so much laxity." In Pelly v. Royal Exchange, 1757,2 Lord Mansfield spoke of the "ancient and inaccurate form of words in which the instrument is conceived." It consequently behoves those who have to deal with this instrument to try to discover the principles on which the courts have ascertained its meaning in the cases that have come before them.

It will have been noticed that in the words of the policy and in the explanatory remarks offered above, there is constant reference to the conditions of trade as it used to be, or as it is now. It will also be remembered that in the description of the simplest form of a marine insurance (p. 10) the common intention of assured and assurer was mentioned as the basis of the whole transaction. It will be found that the policy cannot be interpreted properly without reference to both of these factors, and the reconciliation of them is attended with so many difficulties, that

1

3

East 579.

2

I Burr. 341.

it has become hard to judge any particular case without careful examination.

Judge Duer (M. I. i. pp. 158, 159) states that, with one exception,1 "the actual intention of the parties is the controlling principle from which all the special rules of interpretation flow, and to which they are all subsidiary and subordinate. These rules have no positive and arbitrary force."

The great leading dictum is that of Lord Ellenborough in Robertson v. French, 1803:2 "The same rule of construction which applies to other instruments applies equally to this, namely, that it is to be construed according to the sense and meaning, as collected in the first place from the terms used in it, which terms are assumed to be understood in their plain, ordinary, and popular sense, unless they have generally in respect to the subject matter, as by the known usage of trade or the like, acquired a peculiar sense distinct from the popular sense of the same words, or unless the context evidently points that they must in the particular instance, and in order to effectuate the immediate intention of the parties, be understood in some special and peculiar sense."

From this it is evident that while indemnity is recognised as the object which the parties framing the contract have in view, account is still taken of the phraseology actually employed.

Consideration of the phraseology of the policy leads to two conclusions somewhat divergent but still actually complementary to one another. First, each word must have its proper value and effect given to it. Should it become necessary to ascertain the intention of the parties in an ambiguous clause, if one interpretation of the clause would add nothing to what the contract clearly expresses elsewhere or necessarily implies, and another interpretation renders it operative by adding to the effect of the instrument, then the latter interpretation is to be adopted. It is unlikely that the parties intended only to repeat what had

1 Namely, such conditions as are construed as warranties: in respect to these a rule of strict and literal interpretation prevails. 2 4 East 140.

been already stated or implied. Second, the policy being an agreement entered into with one intention, its true meaning should be gathered from a consideration of the whole instrument, and not of the separate clauses of which it is composed and which may in detail be contradictory.

The words of the policy being, according to Lord Ellenborough's dictum, understood in their plain sense, unless they

(1) Have a special customary sense,

(2) Have such a context that their ordinary sense is inapplicable,

it becomes necessary to examine in some detail the effects of (1) custom and (2) context.

(1) Custom.--As the contract of a marine insurance is a document of maritime trade, the policy is properly understood only when interpreted with constant reference to that trade. Further, as all branches of maritime trade do not agree in the details of their management, the policy is interpreted not in accordance with what may be termed the customs of maritime trade generally, but of the particular trade in which the venture insured is engaged or employed. Such general and notorious customs are enforced judicially as if they were explicitly set forth in the contract. It often becomes a question whether the evidence produced proves that a custom really possesses the requisite general and notorious character. But even in the case of a usage which falls short in respect of these attributes, the courts will enforce it if it can be shown that it was in the mind and intention of the parties when they drew up and entered upon the contract (Bartlett v. Pentland, 1830).1 The other qualities required to entitle a custom to legal sanction are that it is reasonable in itself and not repugnant to the expressed words of the contract. The latter quality is very closely allied to that congruence of the words of the contract that forms the subject of the next section.

The great difficulty about usage is that from its nature it does not appear on the face of the contract while it is 1 10 B. & Cr. 760.

still true in the words of Judge Duer (i. 271) that a valid usage is a part of the contract. In Preston v. Greenwood, 1784,1 Lord Mansfield said, "Usage is always considered in policies of insurance, even when the words are plain." In Long v. Allen, 1785,2 Mr. Justice Buller states that, “Usage not only explains but controls the policy." Judge Duer (i. 245) gives the weight of his authority in favour of the distinction drawn by Mr. Justice Buller, and proceeds in these words, "Where the words to be interpreted are indeterminate or ambiguous, the usage explains them; but when they convey a definite meaning that the Court would be bound to adopt, or their construction has been settled by law, the usage controls them; and in these cases it does set aside what, judging alone from the terms of the policy or the rule of the law, was the plain intention of the parties; but, in controlling, the usage does not contradict the words it merely varies by extending or enlarging their application." It is in practice often extremely difficult to distinguish between the control (or modification) of a policy by a usage of the special trade it refers to, and the contradiction of a policy by the same usage. The case of Brown v. Carstairs, 1811,3 is in point. It was formerly the usage at Archangel to seal down a vessel's hatches immediately on her arrival, and put a custom-house officer on board until the goods were discharged and conveyed to a government warehouse, where they remained until the duty was paid. A merchant insured his goods from London to Archangel until they should be there discharged and safely landed. It was held by Lord Ellenborough that no action lay against the underwriter for any loss occurring after the sealing of the hatches and boarding of the revenue officer, "for the goods were then landed, according to the usual course of trade at Archangel, which was all the underwriter undertook for." The point that occurs to most readers of this decision is that here control has come very near to contradiction, and it is difficult to reconcile with this the view of Judge Duer that the 4 Dougl. 276. 3 Camp. 160; Arnould, p. 75.

1

4 Dougl. 28.

3

2