The broker is agent both for the assured writer. knowledge and consent of his correspondent, and debit him with the amount of premium, he would be guilty of gross misconduct, and that in the event of a loss, he would not only be liable to the consignor, but that the premium, having been received by him without a consideration, might be recovered back. I would not, however, by the above observations, be construed to insinuate that a practice of this description, illegal and dishonest as it would be, obtains at all in this country, the acknowledged integrity and honour of whose merchants are so well established over the whole world. There would likewise be this obvious objection to the consignee becoming the insurer himself, as having the cargo consigned to him, and consequently the control of it, he has the opportunity, in taking it out of the ship, of making the nature of an average loss appear different from that which it is, in fact, so as to keep it out of the exception of the common memorandum. The insurance broker is agent both for the assured and for the underwriter. His duty to the assured, besides in and the under- pursuing his instructions and exercising due care and diligence in effecting the policy, consists in his receiving from the underwriter the proceeds of a settlement of a loss, and his duty to the underwriter is to pay them, when received, to the assured, Russel v. Bangley (a). I propose to consider, in the first place, what are the rights and duties of the insurance broker; and, in the second place, I shall consider the general question of the settlement of accounts between the broker, the underwriter, and the assured, in which question will be involved the respective rights and liabilities of the several parties to each other. The rights and duties of the broker. He sometimes acts under a and may sue for the price I. First, then, we will consider the rights and duties of the insurance broker. 1. The insurance broker sometimes acts under a del credere commission, and an action lies against the assured for the price without waiting till the event is determined, Carruthers v. Graham (b). for the deter mination of the event. The broker has a lien on the policy. As the broker transacts the chief part of the business, and without waiting pays the premium, the law gives him a lien upon the policy in his hands without any notice given to the underwriters, so as to enable him to deduct not only the premium and commission due on the particular policy, but the general balance due to him on the account between him and his principal, Mann v. Forrester (a). And this is so, although the policy be not made on account of the party giving him the orders, for if he have no notice at the time that the policy is not on account of the party employing him, he has a right to satisfy his general balance out of money received on the policy both before and after notice that it belongs to a third party, for he must be supposed to have made advances on the credit of the policy which was allowed to remain in his hands: per Lord Ellenborough in Mann v. Forrester (b). And it has been decided, that if a broker parts with the possession of the policy so as to lose his lien upon it, and it gets back again into his hands, for any purpose whatever, the lien revives, Whitehead v. Vaughan (c). It has been also held in the case of Falkner v. Case (d), that such policies whilst pledged with the broker, are not in the order and disposition of the bankrupt assured within the meaning of the Bankrupt Act, although no notice is given to the underwriters. But in the case of Maanss v. Henderson (e), when an agent made a policy in his own name, he being an Englishman, and told the broker that the property was neutral, and to warrant it as such, it was held that this was a sufficient notification to the broker that the party acted only as agent; and, therefore, in an action against the broker by the foreign principal, it was held that the broker could only set off the money due for the particular premium, and not the general balance due from the English agent to him, (a) 11 Camp. 60. (b) 4 Camp. 60. (e) T. T. 25 Geo. 3, and Parker v. Carter, Trin. Term, 1788, which cases are in Mr. Cooke's Book on Bankruptcy. (d) Cited in Lempriere v. Pasley, 2 T. R. 491. (e) 1 East, 335. If the broker again into his lien revives. But if the ficient notice broker has suf that the party ordering the insurance acts as an agent only, he has a for the particular premium. lien on it only The broker, although he has a lien upon a policy, may be compelled to produce it at the trial; but he still keeps it in his possession and does not thereby lose his lien. And, although he has a lien on the policy, he is a competent witness between the parties. An action lies against the broker for not attending to the orders of his principal, or for executing them negligently. In what cases In Hunter v. Leathley (a), the broker who made the policy was called as a witness for the plaintiff, and required to produce the policy: this he refused to do, claiming to have a lien on it for the premiums advanced by him. But it appearing that he had been served with a subpœna duces tecum, Lord Tenterden held that he was bound to produce it, inasmuch as he would not thereby be deprived of his lien. His Lordship said, "if we allowed the broker to withhold the policy on account of his lien, we should permit that which would work great inconvenience, and we should enable brokers to assist the underwriters in defeating the just claims of the assured. We do not by this decision deprive the party of his lien, he still has the policy in his possession, and has the same right of lien as before." And it was held, likewise, that although he had a lien on the policy, he still was a competent witness at the trial between the assured and the underwriter. 2. It has been observed, that an action will lie against broker for either not attending to the orders of his principal in effecting an insurance when required to do so, or for being guilty of remissness in the execution of it. When a man undertakes either by an implied, or an express promise, to do a thing for another, and he neglects to do it, or does it unskilfully, the law gives the person in general an action for the remedy. And this is the case with respect to an insurance broker; and the only difference between the action against him and that on the policy against the underwriters, is in point of form; for the plaintiff is in this action entitled to recover from the broker the exact sum he ordered to be insured; and the defendant is entitled to every benefit of which the underwriter could have taken advantage, such as fraud, deviation, non-compliance with warranties, and the like. In the case of Smith v. Lascelles (b), the whole law of this a merchant has action was very fully laid down by Mr. Justice Buller, and assented to by the whole Court; and upon this occasion that a right to expect that a broker will obcy an order to insure. learned Judge mentioned the three instances in which such an order to insure must be obeyed, otherwise an action will lie. merchant abroad has First, where a merchant abroad has effects in the hands of 1. Where a his correspondent here, he has a right to expect that he will obey an order to insure, because he is entitled to call his money out of the other's hands when and in what manner he pleases. The second class of cases is, where the merchant abroad has no effects in the hands of his correspondent, yet if the course of dealing between them is such, that the one has been used to send orders for insurance, and the other to comply with them, the former has a right to expect that his orders for insurance will still be obeyed, unless the latter give him notice to discontinue that course of dealing. to Thirdly, if the merchant abroad sends bills of lading his correspondent here, he may engraft on them an order to insure, as the implied condition, upon which the bills of ladings shall be accepted, which the other must obey, if he accept them, for it is one entire transaction. For if the commission from abroad consists of two parts, the one to accept the bill of lading, the other to cause an insurance to be made, the correspondent cannot accept it in part, and reject it as to the rest. effects in his agent's hands here. 2. Where the merchant has been used to give orders for insurance and the agent to former has a his orders will be obeyed, till notice given tinue the him to discon course. 3. Where the merchant sends bills of lading, with a condi tion to insure engrafted on them. an order, ac 3. But it was held in the case of Wilkinson v. Cover- But if a party, though not dale (a), if a person, though not legally obliged to comply legally called with an order to insure, nevertheless accepts it, it is incum- upon to obey bent on him to carry it into execution, and to perform it with diligence and ordinary skill, or he will be liable to the principal for the consequence arising from his unskilfulness or neglect. Thus in Wallace v. Telfair (b), where a merchant here accepted an order for insurance, but limited the broker to too small a premium, in consequence of which no insurance could be procured, it was held that he was liable to make good the loss to his correspondent. acept it, he will be liable for a mal-perform ance of it. Where a broker employ. ed another but did not give him all the instructions, be was furnished with, it was held that he was liable. If in making state circum- And in Sellar v. Work (a), where a broker employed another, but omitted to give him all the instructions he was furnished with, it was held that he was liable to answer for the loss occasioned by his omission, though he derived no profit from the transaction. But if an agent, to whom insufficient orders are sent, does all that is usual to get the insurance made, that is sufficient; because he is no insurer, and is not obliged to get the insurance made at all events (b). 4. In the case of Park v. Hammond (c), where a broker was informed that the assured would take upon himself the risk of the cargo from Malaga to Gibraltar, and was ordered to insure from Gibraltar to London, and neglected to state to the underwriters that the goods were not laden at Gibraltar, inasmuch as this omission vacated the policy, he was held liable to the assured for this neglect. And in the case of Mallony v. Barber (d), where an insurance broker was instructed to make a policy at and from Teneriffe to London, and he omitted to insert in it a liberty to touch and stay "at all or any of the Canary Islands," he was held liable for that negligence, because it was proved that that liberty was invariably inserted in such policies. And in Campbell v. Rickards and others (e), if the broker, when he makes a policy, omits to state any circumstance, which, on the trial between the assured and the underwriter, would constitute a sufficient answer for the latter, on the ground of there having been a material concealment, he is to an action by liable in an action to the assured for this omission. And, omission of which will constitute a good defence the assured against the underwriter. The assured can maintain an action against the broker for this omission. therefore, where a merchant at Sydney shipped goods for England on board a ship, and, by another ship that sailed after her, wrote to an agent in England, and desired him, if he received that letter before the ship in question arrived, to (a) At Nisi Prius, 1801, Marsh. 305. (b) Smith v. Cologan, 2 T. R. 188, n. (c) 2 Marsh. 189. (d) 4 Camp. 150. (e) 5 B. & Ad. 840. |