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now that it is established that stoppage in transit does not, as a rule, SECT. 7. rescind the contract?1 The facts, too, were peculiar.
§ 8. A partial interest of any nature is insurable.
NOTE.—An undivided interest in a parcel of goods shipped f.o.b. is insurable. So, too, a shareholder may insure his interest in the adventure of a company engaged in laying a submarine cable;3 and a "hotchpot" interest in cargo may be insured.4
"I do not see," says Heath, J., "why a joint tenant or tenant in common has not such an interest in the entirety as will entitle him to insure." 5
By § 5 of the Merchant Shipping Act, 1894 (57 & 58 Vict. c. 60), ships are divided into sixty-four shares, and any number of persons not exceeding five may be registered as joint owners of a ship or any share therein. But a part owner has no implied authority to insure on behalf of the other part owners.6
Lloyd's policy (post, p. 118) is expressed to enure for the benefit of all to whom the subject-matter appertains" in part or in all;" but these general words must be restrained by the circumstances of the particular insurance.
§ 9.—(1.) The insurer under a contract of marine Re-insurinsurance has an insurable interest in his risk, and may re-insure in respect of it.7
(2.) Unless the policy otherwise provides, the original assured has no right or interest in respect of such reinsurance.8
1 See Chalmers' Sale of Goods Act, 1893, § 48, and notes.
2 Inglis v. Stock (1885), 10 App. Cas. pp. 263, 274 (390 tons of sugar sent off to satisfy two contracts, for 200 tons each, without any appropriation to either contract).
3 Wilson v. Jones (1867), L. R. 2 Ex. 139, Ex. Ch.
Ebsworth v. Alliance Mar. Ins. Co. (1873), L. R. 8 C. P. at p. 613.
5 Page v. Fry (1800), 2 B. & P. 240, 243 (cargo).
• Bell v.
Humphries (1816), 2 Stark. 345; Arnould, Ed. 6, p. 160. 1 Uzielli v. Boston Mar. Ins. Co. (1884), 15 Q. B. D. at p. 16; and cf. Bradford v. Symondson (1881), 7 Q. B. D. at p. 463, C. A.
8 McArthur, Ed. 2, p. 332.
NOTE.-Re-insurance, that is to say, an insurance effected by an insurer to cover wholly or in part the risk he has undertaken, must be distinguished from double insurance, that is to say, a second insurance effected by or on behalf of an assured on a risk already covered, as to which see § 33.
At common law re-insurance was valid, but it was prohibited in 1745 by the 19 Geo. 2, c. 37, § 4, unless the insurer was dead or insolvent. The prohibition was removed in 1864 by the 27 & 28 Vict. c. 56, § 1 (since repealed), and re-insurance is now expressly recognized by § 92 of the Stamp Act, 1891 (54 & 55 Vict. c. 39), post, p. 137.
The common form of a re-insurance policy runs thus "being a re-insurance subject to all clauses and conditions of the original policy or policies, and to pay as may be paid thereon." Then follow the exceptions, if any. As to specifying in policy that it is a re-insurance, and as to notice of abandonment, see §§ 27 and 63, post.
Bottomry. § 10. The lender of money on bottomry or respondentia has an insurable interest in respect of the loan.2
1. The master of a damaged British ship requires money for necessary repairs. A merchant abroad advances the money, taking a bond mortgaging the ship, and making the money repayable whether she arrives or not. The merchant has no insurable interest, for the master has no authority to give such a bond, or do more than hypothecate the ship for the advances.3
1 As to construction of this provision, see Uzielli v. Boston Mar. Ins. Co. (1884), 15 Q. B. D. C. A. (re-insurer not liable for expenses under sue and labour clauses); Ex p. Western Ins. Co. (1892), 2 Ch. 423 (“pay as paid❞—payment by original insurer not condition precedent); Chippendale v. Holt (1895), 65 L. J. Q. B. 104 (re-insurer not bound by improper payment by original insurer); Crocker v. Sturge (1897), 1 Q. B. 330 (re-insurance of portion of risk—construction of “final port"); China Traders Assn. v. Royal Exchange (1898), 2 Q. B. 187, C. A. (right of reinsurer to discovery of ship's papers); Lower Rhine Ins. Assn. v. Sedgwick (1899), 1 Q. B. 199, C. A. (lapse of original policy, and issue of new one); Charlesworth v. Faber (1900), 5 Com. Cas. 408 (continuation clause exceeding twelve months' limit for time policy).
2 See McArthur, Ed. 2, pp. 59, 62, 214; and § 7.
3 Stainbank v. Fenning (1851), 11 C. B. 51; Carver's Carriage by Sea, Ed. 3, § 312; but see The Haabet (1899), P. 295, per Bucknill, J.
2. Policy on bottomry bond in old form. The ship becomes a SECT. 10. constructive total loss. The assured cannot recover, for the bond stands good unless there is an actual total loss.1
NOTE. By the law of the sea the master may, in case of necessity, and under certain restrictions, raise money on the security of the ship, freight, and cargo.2 The condition of a loan on bottomry or respondentia is that the money is not repayable if the ship or cargo does not arrive. Consequently it is the lender, and not the borrower, who must insure.3 As to specifying the nature of the interest in the policy, see § 27, post. As to the general law of bottomry, see Carver's Carriage by Sea, Ed. 3, §§ 310-319.
§ 11. [A seaman, as well as the master, has an Seaman's insurable interest in respect of his wages.]
NOTE. This provision is in the form in which the Lords Select Committee settled it, but the law is doubtful at present. The master of a ship could always insure his wages, but formerly at any rate a seaman under the rank of master could not (Arnould, Ed. 6, p. 45). "Wages of seamen," said the judges in an old case, are in their nature insurable, though universally prohibited to be insured on principles of policy."4 But when this was laid down the doctrine prevailed that "freight was the mother of wages," and if freight was not earned the seaman was not entitled to his wages. This doctrine was abandoned in 1854, and § 183 of the Merchant Shipping Act of that year (17 & 18 Vict. c. 104) provided that the right to wages should not be dependent on the earning of freight, but that in all cases of wreck or loss of the ship, proof that the seaman had not exerted himself to the utmost to save the ship and cargo should bar his claim to wages. This provision is now reproduced in § 157 of the Merchant Shipping Act, 1894 (57 & 58 Vict. c. 60). On the principle cessante ratione cessat ipsa lex, it may be that seamen's wages are now insurable in England, but the effect of the statute still awaits decision.
1 Broomfield v. Southern Ins. Co. (1870), L. R. 5 Ex. 192. Modern forms provide for constructive total loss.
2 Abbott on Shipping, Ed. 12, pp. 110, 121.
3 For forms of insurance on bottomry, see Owen's Notes and Clauses, Ed. 3, p. 143, and for modern forms of bottomry and respondentia bonds, see ibid. pp. 209, 211.
Lucena v. Crauford (1806), 2 B. & P. at p. 294, H. L.
Quantum of interest.
§ 12. In the case of advance freight, the person advancing the freight has an insurable interest, in so far as such freight is not repayable in case of loss.1
NOTE.-By English law advance freight, as such, is not repayable in case of loss; the shipowner therefore has not an insurable interest in it, but the person advancing it has.2 But by special contract it may be repayable,3 and then the positions are reversed.
Though advance freight may not be repayable in case of loss, the shipowner may be liable in damages to the cargo owner if the loss is occasioned by his negligence or fault, and in estimating the damages the amount advanced for freight must be taken into account.1
An advance to a shipowner by a shipper or charterer in respect of a voyage may fall into three categories: (a) It may be advance freight not repayable in case of loss; (b) it may be advance freight specially repayable in case of loss; or (c) it may be a mere loan repayable in any event. In the last case it is not at risk, and therefore not insurable. As to the tests for determining within which category a given advance falls, see Carver's Carriage by Sea, Ed. 3, §§ 562, 566. By the law of most foreign countries, prepaid freight is repayable in case of loss.6
§ 13. The assured has an insurable interest in the charges of any insurance which he may effect."
NOTE. Ordinarily the charges of insurance consist of the premium, the broker's commission, and the stamp.
§ 14.—(1.) A carrier or other bailee who is responsible
1 Arnould, Ed. 6, p. 62; McArthur, Ed. 2, p. 65; cf. Smith v. Pyman (1891), 1 Q. B. at pp. 744, 745, C. A.
2 Allison v. Bristol Ins. Co. (1876), 1 App. Cas. 208, 238, H. L., reviewing the cases.
* Ibid. at p. 221, citing Hall v. Janson (1855), 4 E. & B. 500.
• Dufourcet v. Bishop (1886), 18 Q. B. D. 373.
The Salacia (1862), Lush. 578, at p. 582.
6 Byrne v. Schiller (1871), L. R. 6 Ex. at p. 325.
7 McArthur, Ed. 2, p. 68; Phillips on Insurance, § 1221; Usher v. Noble (1810), 12 East. 639. As to the premium in case of re-insurance, see Arnould, Ed. 6, p. 104.
for insurable property has an insurable interest to the SECT. 14. extent of his responsibility.1
(2.) Where the subject-matter insured is mortgaged, the mortgagor has an insurable interest in the full value thereof, and the mortgagee has an insurable interest in respect of any sum due or to become due under the mortgage.2
(3.) Where a mortgagee insures for the benefit of the mortgagor as well as for himself, he has an insurable interest in respect of the full value, though he effect the insurance in his own name only.3
(4) Where a consignee, having an interest in the consignment, insures for the benefit of other persons interested as well as for himself, he has an insurable interest in respect of the full value of his and their interests in the consignment, though he effect the insurance in his own name only.4
(5.) The owner of insurable property has an insurable interest in respect of the full value thereof, notwithstanding that some third person may have agreed, or be liable, to indemnify him in case of loss.5
(6.) Nothing in this section affects the provisions of this Digest relating to double insurance, or the right of subrogation."
1 Crowley v. Cohen (1832), 3 B. & Ad. 478; and Ebsworth v. Alliance Mar. Ins. Co. (1873), L. R. 8 C. P. at p. 641; but see ibid. at p. 612.
2 Arnould, Ed. 6, pp. 84, 118; Irving v. Richardson (1831), 2 B. & Ad. 193; North British Ins. Co. v. London, &c., Ins. Co. (1877), 5 Ch. D. at pp. 583, 584, C. A.
3 Ebsworth v. Alliance Ins. Co. (1873), L. R. 8 C. P. 596, at pp. 608 and 611; Castellain v. Preston (1883), 11 Q. B. D. at p. 398, C. A. Ebsworth v. Alliance Ins. Co. (1873), L. R. 8 C. P. 596.
5 Hobbs v. Hannam (1811), 3 Camp. 93.
• See §§ 33, 80, and 81.