CHAPTER II.

Of the Construction of the Policy.

A POLICY of insurance, being a contract of indemnity,

18.

and being only considered as a simple contract, must always be construed, as nearly as possible, according to the intention of the contracting parties; and not according to the strict and literal meaning of the words. The mercantile law, 1 Burr. 347. in this respect, is the same in every part of the world; for Roccus Not. from the same premises, the sound conclusions of reason and justice must ever be the same (a). Thus as the benefit of the insured, and the advancement of trade, are the great objects of insurance, policies are to be construed largely, in order to attain those ends; for it would be absurd to suppose that when the end is insured, the ordinary and usual means of attaining it can possibly be excluded; whatever, therefore, is done, by the master of the ship, in the usual course, necessarily, et ex justá causá, although a loss happen thereon, the underwriter 1 Burr. 348 shall be answerable.

But in the construction of policies, no rule has been more frequently followed than the usage of trade, with respect to the particular voyages or risks to which the policy relates: and in the cases about to be quoted in support of these principles, it will be found, that the learned judges have always called in the usage of trade, as one of the grounds upon which the construction turns.

(a) The liability of the underwriter is not restricted to the single amount of his subscription, but he may be subject either to several average losses, or to an average and total loss, or to money expended, or labour bestowed about the defence, safeguard, and recovery of the ship, to a much greater amount than the subscription. See Cheminant v. Pearson, 4 Taunt. 367.

VOL. I.

E

In

Anony

mous,

Skinn. 243.

Lockyer

and others v. Offley, I Term Reports, P. 252.

In stating the different cases upon this subject, as the point is nearly the same in all, the order of time, in which they were determined, is that which will be pursued, in order to prevent confusion.

The first to be mentioned is an anonymous case in the time of James the Second; but it is from a reporter of very good authority. A policy of insurance shall be construed to run until the ship shall have ended, and be discharged of her voyage; for arrival at the port to which she was bound is not a discharge till she is unloaded: and it was so adjudged by the whole court upon a demurrer.

66

But although this construction may be perfectly right, where the policy is general from A. to B. yet if it contain the words usually inserted, "and till the ship shall have moored at anchor twenty-four hours in good safety," the underwriter is not liable for any loss, arising from seizure after she has been twenty-four hours in port; though such seizure was in consequence of an act of barratry of the master during the voyage, for if it were extended beyond the time limited in the policy, it would be impossible to lay down any fixed rule, and all would be uncertainty and confusion.

This was decided in an action on a policy of insurance on the ship Hope from Hamburgh to London, subscribed by the defendant for two hundred pounds, at one guinea per cent. At the trial before Mr. Justice Buller, at Guildhall, a verdict was found for the plaintiffs, subject to the opinion of the court, upon the following case: that the plaintiffs were interested in the ship to the amount of the sum insured. That in the course of the voyage the master committed barratry, by smuggling on his own account, by hovering, and running brandy on shore in casks under sixty gallons. That on the first of September 1785, the ship arrived in safety at her moorings in the river Thames, and remained there in safety till the twenty-seventh of the said month of September, when she was seized by the revenue officers for the smuggling before stated. That about three weeks after the seizure, the plaintiffs informed the underwriters thereof; and that they would hold them liable on the policy. That on the twentieth of October,

the plaintiffs presented a petition to the commissioners of His Majesty's customs, in which they imputed all the blame (which was certainly the truth) to the captain, and praying that their vessel might be restored, on paying something to the seizing officer. The answer was, "that the prosecution "must proceed, as the ship had been guilty of a gross viola"tion of the laws, but that the owners should be at liberty "to compound, according to the rules of the Exchequer." That the ship was appraised at the sum of three hundred and forty-five pounds, and by the course of the court of Exchequer, the ship would have been restored to the plaintiffs, upon the payment of two hundred and thirty pounds, besides costs and charges, which would altogether have amounted to three hundred and twenty-nine pounds nine shillings and seven-pence. That in November a notice was indorsed on the policy, binding the underwriters for all costs and charges expended about the recovery of the ship. That this was shewn to the underwriters, who refused to subscribe it.

66

66

This case was fully argued in the absence of Lord Mansfield, and the Court having taken time to deliberate, Mr. Justice Willes pronounced their unanimous opinion. "There " is no doubt in this case but that the master was guilty of "barratry, by smuggling on his own account, without the privity of his owners. Many definitions of barratry are to "be found in the books, but perhaps this general one may comprehend almost all the cases: barratry is every species "of fraud or knavery in the master of the ship, by which the "freighters or owners are injured; and in this light a cri"minal or wilful deviation is barratry, if it be without their consent. The general question here is, whether, as the "loss, which was occasioned by the barratry of the master, "did not happen during the continuance of the voyage, the "insurers are liable? I must own this appears to me to be a "novel question, and not to have been decided by any former "determinations. Difficulties occur on both sides in laying * down any rule. The first thing to be observed is, that the "policy, by the terms of it, is an undertaking for a limited "time, during the voyage from Hamburgh to London, till "the ship has moored twenty-four hours in safety; and the ship was not actually seized till near a month afterwards.

Easter,

23 Geo. 3. B. R.

Vide post,

c. 5.

"But it has been said, that under the 24th of George the "Third, chap. 47. and the excise laws, the forfeiture at"taches the moment the act is done, and that the barratry 66 was committed during the voyage. It may be so as to some 66 purposes, as to prevent intermediate alterations or incum"brances; but I think the actual property is not altered till "after the seizure, though it may be before condemnation. I "will put this case: suppose, before the seizure of the ship, "she had gone another voyage, and on her return had been ❝ seized, would the crown be entitled to an account of her " earnings, after deducting the expences of the outfit? surely Till the seizure it was not certain that the officers of "the crown knew of the illicit trade carried on by the "master, or whether they would take advantage of the for"feiture. It would be a dangerous doctrine to lay down, "that the insurers should, in all cases, be liable to remote "consequential damages. This has been compared to a "death's wound received during the voyage, which subjected "the ship to a subsequent loss. To this point the case of "Meretony v. Dunlop seems very material. That was an in

"not.

surance on a ship for six months; and three days before "the expiration of the time she received her death's wound, "but by pumping was kept afloat till three days after the "time: there the verdict, under the direction of Lord Mans "field, was given for the insurer: and it was afterwards con"firmed by the Court. I will put another case: suppose an "insurance upon a man's life for a year, and some short time "before the expiration of the term he receives a mortal "wound, of which he dies after the year, the insurer would "not be liable. The case of Vallejo v. Wheeler was cited for "the plaintiff, but that does not conclude this question, for "there the ship was lost during the voyage. It was also "argued, that this ship, even in the hands of a fair pur"chaser, would be liable to the forfeiture. I do not know "that it ever has been so decided; it may depend on circum"stances, such as length of possession, laches in seizing, or "other matters. But suppose the law to be so, it does not "follow from thence, that though the ship is always liable to "confiscation, that the insurer, at any distance of time, is "answerable for the loss, under a limited undertaking. And "this brings me to that part of the case, which weighs most

66

"with the Court, in favour of the defendant, and to which it ❝ does not appear to us that any satisfactory answer has been "given. It was agreed in the argument, that the custom"house officers might seize for the forfeiture within three years after the fact committed; and that the attorney-ge"neral might file an information at any time whilst the ship "was in being. Is the insurer during all this time to con"tinue liable? Suppose the ship had gone several voyages “afterwards; and suppose a partial loss paid, and the un"derwriter's name struck off, shall an action be afterwards brought upon the policy? His accounts could never be "settled, nor could he be finally discharged, whilst the ship "was in existence; such a position would be monstrous, and "attended with infinite inconvenience. There must be some "certain and reasonable limitation in point of time laid down "by the Court, when the insurer shall be released from his engagement. If he be liable for a month, he may be for a 66 year, and so on. We all think that the law of insurances "would be left unsettled, and in much confusion, if any ❝ other time were allowed than that prescribed by the policy, namely, the continuance of the voyage, and the ship's mooring twenty-four hours in safety."-Judgment for the defendant.

66

66

Lethulier's
Case,

2 Salk. 443.

See also

Warwick v

Scott,

62.

In an action upon a policy of insurance by the defendant at London, insuring a ship from thence to the East Indies, warranted to depart with convoy, the declaration shewed, that the ship went from London to the Downs, and from thence with convoy, and was lost. After a frivolous plea and demurrer, 4 Campb. the case stood upon the declaration, and it was objected, that there was a departure without convoy. But by the court, the clause, “warranted to depart with convoy," must be construed according to the usage among merchants, that is, from such place where convoys are to be had, as the Downs.

post.

It is true, Lord Chief Justice Holt differed from the rest of See Gordon the Court, being of opinion that it was no part of the law of v. Morley, merchants to take convoy in the Downs. His lordship's opinion, however, although it is one of the first legal authorities, is certainly contradicted by practice, it being almost the invariable custom for the convoy to meet the merchant ships only in the Downs.