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SECT. 84.

in safety at the time when the contract is concluded, the premium is not returnable unless, at such time, the insurer knew of the safe arrival.1

(c.) Where the assured has no insurable interest throughout the currency of the risk the premium is returnable, provided that this rule does not apply to a policy effected by way of gaming or wagering.2

(d.) Where the assured has a defeasible interest which is terminated during the currency of the risk the premium is not returnable.3

(e.) Where the assured has over-insured under an unvalued policy, a proportionate part of the premium is returnable.1

(f.) Subject to the foregoing provisions, where the assured has over-insured by double insurance, a

proportionate part of the several premiums is returnable.5


1. Goods are insured from London to a port in an enemy's country. The ship is captured. The insurance is void, as trading with an enemy, and the premium is not returnable.6

2. A ship insured at and from A, sails from A with an insufficient crew, and is lost. The insurer is not liable, and the premium is not returnable.7

1 Arnould, Ed. 6, p. 1111; and as to the proviso, see Bradford v. Symondson, 7 Q. B. D. 456, C. A.

2 Arnould, Ed. 6, p. 1109.

3 Boehm v. Bell (1799), 8 T. R. 154.

Arnould, Ed. 6, p. 1112.

5 Arnould, Ed. 6, p. 1113; McArthur, Ed. 2, p. 44.

Vandyck v. Hewitt (1800), 1 East, 96; 5 R. R. 516; see, too, Palyart

v. Leckie (1817), 6 M. & S. 290, when the voyage was abandoned.
7 Annen v. Woodman (1810), 3 Taunt. 299.

3. Cotton, at sea and overdue, valued at £30,000, is insured by SECT. 84. policies effected on the 12th of April for £20,000, and by policies effected on the 13th of April for £16,000. In case of safe arrival, no premium is returnable on the policies effected on the 12th, for they bore the whole risk till the other policies were effected. But premium on £6000, the extent of the over-insurance, is returnable on the policies effected on the 13th.1

4. Policy on goods at sea. The assured represents to the insurer that the ship sailed from Baltimore on the 12th of January. As a fact she sailed on the 1st of January. The insurer is not liable. If the representation was an honest mistake, the premium is returnable, aliter if it was made dishonestly.2

5. Insurance on profits and commission "without benefit of salvage." The policy is illegal under 19 Geo. 2, c. 37, and the premium is not returnable.3

6. A, who has insured the cargo on a ship believed to be overdue, re-insures his risk with B. At the time the re-insurance is effected the ship has safely arrived, but neither party knows this. The re-insurance policy attaches, and the premium is not returnable.

7. Insurance on 500 bales of cotton to be shipped by a particular ship. Only 250 bales are shipped. Half the premium is returnable.5

NOTE.-Apart from agreement, the return of the premium seems to rest on the doctrine of failure of consideration. The principle has been generalized in subsects. (1) and (2), as the subordinate rules in subsect. (3) may not be exhaustive.

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The general rule of law," says Bovill, C.J., "is that where a contract has been in part performed, no part of the money paid under such contract can be recovered back. There may be some cases of partial performance which form an exception to this rule, as, for instance, if there were a contract to deliver ten sacks of wheat, and six only were delivered, the price of the remaining four might be recovered back. But there the consideration is clearly severable." 6

The case of double insurance gives rise to complications. "The assured has the right to elect under which policy or set of policies he

1 Fisk v. Masterman (1841), 8 M. & W. 165.

2 Anderson v. Thornton (1853), 8 Exch. 425.

3 Allkins v. Jupe (1877), 2 C. P. D. 375, see at p. 388 as to possibility of salvage in such a case; cf. § 5, ante.

Bradford v. Symondson (1881), 7 Q. B. D. 456, C. A.

5 Cf. McArthur, Ed. 2, p. 44.

• Whincup v. Hughes (1871), L. R. 6 C. P. at p. 81.

SECT. 84. will claim for a loss, and under which policy or set of policies he will claim for a return of premium; but the underwriters, having settled with the assured, must proceed to readjust the entire claim among themselves, so that each underwriter shall ultimately bear his proportionate part both of the loss and of the return premium." "1 But as regards return premium this rule is subject to qualification. When, as commonly happens, the risk under some of the policies attaches before the risk under later policies, so that under the earlier policies the entire risk is run for a time, then the premium is only returnable by the underwriter of the later policies. This qualification is really a deduction from subsect. (3). (a).. To get rid of this complication, and to discourage over-insurance, Lord Herschell proposed that in case of double insurance premium should not be returnable.

Modifications in

Mutual Insurance.

§ 85.-(1.) Where two or more persons mutually mutual agree to insure each other against marine losses there is insurance. said to be a mutual insurance, and such persons are called the members of a mutual insurance association.3

(2.) The provisions of this Digest relating to the premium do not apply to mutual insurance, but a guarantee, or such other arrangement as may be agreed upon, may be substituted for the premium.1

(3.) The provisions of this Digest, in so far as they may be modified by the agreement of the parties, may in the case of mutual insurance be modified by the terms of the policies issued by the association, or by the rules and regulations of the association.5

1 McArthur, Ed. 2, p. 44. See, too, § 33.

2 Fisk v. Masterman (1841), 8 M. & W. 165; Lowndes, Ed. 2, p. 36. 3 McArthur, Ed. 2, p. 345; and for history of mutual insurance, see Marine Mutual Ins. Assn. Ltd. v. Young (1880), 4 Asp. Mar. Cas. at p. 358.


McArthur, Ed. 2, p. 346; Lion Ins. Assn. v. Tucker (1883), 12 Q. B. D, at p. 187, C. A.

5 Ocean Iron Steamship Assn. v. Leslie (1889), 22 Q. R. D. 722; British Marine Mutual Ins. Co. v. Jenkins (1900), 1 Q. B. 299.

(4.) Subject to the exceptions mentioned in this SECT. 85. section, the provisions of this Digest apply to a mutual insurance.1

NOTE.-Mutual marine associations consisting of more than twenty members must be registered under the Companies Acts,2 and the insurances effected by them must be embodied in marine policies in conformity with the Stamp Acts.3 "Mutual insurance," says Mathew, J., "is the simplest thing in the world if you have not to record it in written documents. It is a system by which every one insured is at once underwriter and assured. This very simple principle was acted upon successfully for many years, till technical difficulties began to be interposed. The first technical difficulty was this: all mutual insurance associations were ordered by statute to be incorporated as joint stock companies. The second technical difficulty was, that under statutes framed for different purposes, which were positive in their terms, every contract of marine insurance had to be recorded in a written document; there must be a policy of insurance. These two conditions having to be complied with, the mutual associations set themselves to work to reconcile the rules of the law with the conduct of their business, and different regulations have been adopted to meet the decisions." 4

The policies issued by mutual associations omit the ordinary provision as to premium. The omission is provided for by rules of the association which regulate members' contributions to losses. Their policies therefore have to be construed together with the rules and regulations of the association.



§ 86. Where a contract of marine insurance is in good Ratificafaith effected by one person on behalf of another, the tion by person on whose behalf it is effected may ratify the contract even after he is aware of a loss.5

1 British Marine Mutual Ins. Co. v. Jenkins (1900) 1 Q. B. 299.

2 Re Padstow Ass. Assn. (1882), 20 Ch. D. 137, C. A.

3 Edwards v. Aberayron Mutual Ins. Society (1875), 1 Q. B. D. 563,

Ex. Ch.

✦ Ocean Iron Steamship Assn. v. Leslie (1889), 22 Q. B. D. at p. 724.

5 Arnould, Ed. 6, p. 166; Williams v. North China Ins. Co. (1876), 1 C. P. D. 757, C. A., see at p. 764.

SECT. 86,


varied by

NOTE. This is an old rule of insurance law. It was questioned in Williams v. North China Ins. Co.,1 but affirmed. "I think," says Cockburn, C.J., "that this is a legitimate exception from the general rule, because the case is not within the principle of that rule. Where an agent effects an insurance subject to ratification, the loss is very likely to happen before ratification, and it must be taken that the insurance so effected involves that possibility as the basis of the contract." The insurance can only be ratified by the person on whose behalf it is effected. Thus, if A takes out a policy in his own name on behalf of B, the transaction cannot be adopted by C.2

§ 87.—(1.) Where any right, duty, or liability would obligations arise under a contract of marine insurance by implication agreement of law, it may be negatived or varied by express agreement, or by usage, if the usage be such as to bind both parties to the contract.3

or usage.


(2.) The provisions of this section extend to any right, duty, or liability which may be modified by agreement.

NOTE. This section is suggested by § 55 of the Sale of Goods Act, 1893 (56 & 57 Vict. c. 71). The cases are analogous. As Pothier long ago pointed out, marine insurance is a consensual contract, and in the absence of positive legal prohibition, the parties may make any stipulation they please.


As regards express agreement," the maxims of the law are Expressum facit cessare tacitum, and Modus et conventio vincunt legem. For example, it is a well-known rule of law that deviation is ground for avoiding the insurance, but the parties may agree to a deviation clause.

As regards usage, it is to be noted that when one party relies on and gives evidence of usage, the other party is at liberty to prove "first, the non-existence of the usage; or, secondly, its illegality or unreasonableness; or, thirdly, that in fact it formed no part of the agreement between the parties." 4

1 Williams v. North China Ins. Co. (1876), 1 C. P. D. 757, C. A., see at p. 764.

2 Byas v. Miller (1897), 3 Com. Cas. 39.

3 McArthur, Ed. 2, pp. 33-35; Hart v. Standard Ins. Co. (1889), 22 Q. B. D. at p. 501, C. A.

Taylor on Evidence, § 1077. As to usage in maritime law generally, see Carver's Carriage by Sea, §§ 160-200.

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