Loccenius de jure

marit. 1. 2. c. 5. s. 8.

1 Mag. 90.

CHAPTER XIX.

Of Return of Premium.

HAVING in several chapters spoken fully of the various cases, in which policies of insurance are either absolutely void, or are rendered of no effect by the failure of the insured in the performance of some of those conditions, which he had taken upon himself: the next object of our inquiry will be, in what cases, and under what circumstances, there shall be a return of premium.

In all countries, in which insurances have been known, it has been a custom, coeval with the contract itself, that where property has been insured to a larger amount than the real value, the insurer shall return the overplus premium; or if it happen that goods are insured to come in certain ships from abroad, but are not in fact shipped, the premium shall be returned. If the ship be arrived before the policy is made, and the underwriter is acquainted with the arrival, but the insured is not, it should seem the latter will be entitled to have his premium restored, on the ground of fraud. But if both parties be ignorant of the arrival, and the policy be (as it usually is) lost or not lost, I think in that case the underwriter should retain; because under such a policy, if the ship had been lost, at the time of subscribing, he would have been liable to pay the amount of his subscription. The parties themselves frequently insert clauses in the policy, stating, that upon the happening of a certain event, Dougl. 268. there shall be a return of premium. (a) These clauses have a binding operation upon the parties; and the construction of

them is a matter for the Court, and not for the Jury, to deter

1 Ves. 319. mine. In short, if the ship, or property insured, was never

May v.
Christie,

I Holt, 67.
see ante,

P. 197.

brought within the terms of the written contract, so that the insurer never has run any risk, the premium must be returned.

(a) And where the assured claims and receives the return premium due upon the arrival of the vessel, and the policy is adjusted upon that footing, he cannot, without express previous notice and stipulation, resort again to the underwriter in any contingency of the adventure.

The

n. 179.

3 Burr,

The principle upon which the whole of this doctrine depends, is simple and plain, admitting of no doubt or ambiguity. The risk or peril is the consideration for which the premium is to be paid: if the risk be not run, the consideration for the premium fails; and equity implies a condition, that the insurer Pothier, shall not receive the price of running a risk, if, in fact, he runs none. It is just like the contract of bargain and sale; for if 1240. the thing sold be not delivered, the party who agreed to buy, is not liable to pay. (a) Thus to whatever cause it be owing, that Cowp. 668. the risk is not run, as the money was put into the hands of the insurer, merely for the risk of indemnifying the insured, the purpose having failed, he cannot have a right to retain the sum so deposited for a special cause.

Roccus,

Not. 88.

Martin v.

Sitwell,

I

Accordingly in an action of indebitatus assumpsit brought by the plaintiff for 57. received by the defendant to the plaintiff's 1 Show.156. use, where the general issue was pleaded; it appeared in evidence, that one Barkdale had made a policy of insurance upon account for 51. premium in the plaintiff's name, and that he had paid the said premium to the defendant, and that Barkdale had no goods then on board, and so the policy was void. To this action two objections were taken: 1st, That it should have been brought in Barkdale's name, which was over-ruled. 2dly, That this ought to have been a special action on the custom of merchants: Lord Chief Justice Holt cited a case of money deposited upon a wager concerning a race, that the party winning might bring an action of indebitatus assumpsit, for money received to his use; for now by the subsequent matter it is become as such. And as to the case in question, the money is not only to be returned by the custom, but the policy is made originally void, the party, for whose use it was made, having no goods on board; so that by this discovery

Oom v.
Bruce,

12 East,225. Furtado v.

3Bos.& Pull.

(a). Thus if the assured has become an alien enemy before the policy was subscribed, but the agent here not knowing it, the policy is void; but the agent, in whom there was no fraud nor illegality, shall recover the premium. Otherwise if the policy had been made before hostilities, and consequently Rogers, the risk had attached. So if a licence has been obtained with intent to legalize a voyage commenced, but failed in that, being only a prospective licence; 191. though a loss cannot be recovered under these circumstances, still, as the parties made the insurance, bona fide, contemplating a licence, the premium may be recovered. Ruled by Lord Ellenborough at Nisi Prius, confirmed by the Court. Henry v. Staniforth, 4 Campb. 270.

the

Simond and another v.

the money was received without any reason, occasion, or consideration, and consequently it was received originally to the plaintiff's use. And so judgment was given for the plaintiff.

I cite this case for two purposes; because it serves to shew in what form of action the plaintiff ought to demand a return of premium and it also points out, that as early as the beginning of the reign of William & Mary, the true principle, on which the premium ought to be returned, was fully established. It was said in the introduction to this chapter, that clauses are frequently inserted in policies of insurance, containing conditions, on the performance or non-performance of which, the premium is returnable; and that to decide upon the construction of such conditions is the province of the Court, and not of the jury. Such a case occurs, which may properly be mentioned here.

This action was brought against an underwriter, for a reBoydell, turn of premium. The material part of the policy was in Dougl. 255. these words: "At and from any port or ports in Grenada to "London, on any ship or ships that shall sail on or between "the first of May and the first of August 1778, at 18 guineas

per cent. to return 81. per cent. if she sails from any of the "West-India Islands, with convoy for the voyage, and arrives.” At the bottom there was a written declaration that the policy was on sugars (the muscovado valued at 20l. per hogshead) for account of L. Q. being on the first sugars which shall be shipped for that account. The ship the Hankey sailed with convoy, within the time limited, having on board 51 hogsheads of muscovado sugar, belonging to L. Q. She arrived safe in the Downs, where the convoy left her; convoy never coming farther, and indeed seldom beyond Portsmouth. After she had parted with the convoy, she struck on a bank called the Pan Sand, at Margate, and 11 of the 51 casks of sugar were washed overboard, and the rest damaged. The ship was afterwards got off the bank, and proceeded up the river, arrived safe in the port of London, and was reported at the custom-house. The sugars saved were taken out at Margate, and, after undergoing a sort of cure, by a person sent from town for that purpose, they were carried to London in other vessels; and the 40 hogsheads being sold, produced 340%. in

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stead of 800l. which was their valuation in the policy. The defendant had paid into Court the value of the sugars lost, and a return of 8 per cent. on 340l. The plaintiffs insisted, that they were entitled to have 81. per cent. also returned on the valued price of the eleven hogsheads of sugar which were lost, and on the difference between what the remaining forty hogsheads produced, and their valued price. At the trial, before Lord Mansfield, the plaintiffs had a verdict to the full amount of their demand. The chief question, upon the motion for a new trial, was, To what the word "arrives" was intended to apply?

Lord Mansfield. "The ancient form of a policy of insurance, which is still retained, is, in itself, very inaccurate; but length of time, and a variety of discussions and decisions, have reduced it to certainty. It is amazing, when additional clauses are introduced, that the merchants do not take some advice in framing them, or bestow more consideration upon them themselves. I do not recollect an addition made, which has not created doubts on the construction of it. Here a word or two more would have rendered the whole perfectly clear. However, I have no doubt how we must construe this policy. Dangers of the sea are the same in time of peace and of war; but war introduces hazards of another sort, depending on a variety of circumstances, some known, others not, for which an additional premium must be paid. Those hazards are diminished by the protection of convoy, and if the insured will warrant a departure with convoy, there is a diminution of the additional premium. If the insured will not warrant a departure with convoy, he pays the full premium, and in that case the underwriter says, "If it turn out that the ship departs "with convoy, I will return part of the premium." But a ship may sail with convoy, and be separated from it by a storm, or other accident, in a day or two, and lose its protection. Vide ante, On a warranty to sail with convoy, that would not be a breach c. 18. of the condition; but to guard against that risk, the insured adds, in policies of the present sort, "the ship must not only "sail with convoy, but she must arrive to entitle me to the "return." The words, and arrives, do not mean that the ship shall arrive in the company of the convoy, but only that she herself shall arrive. If she does, that shews, either that

she

Simond and another v.

Boydell,

the money was received without any reason, occasion, or consideration, and consequently it was received originally to the plaintiff's use. And so judgment was given for the plaintiff.

I cite this case for two purposes; because it serves to shew in what form of action the plaintiff ought to demand a return of premium and it also points out, that as early as the beginning of the reign of William & Mary, the true principle, on which the premium ought to be returned, was fully established. It was said in the introduction to this chapter, that clauses are frequently inserted in policies of insurance, containing conditions, on the performance or non-performance of which, the premium is returnable; and that to decide upon the construction of such conditions is the province of the Court, and not of the jury. Such a case occurs, which may properly be mentioned here.

This action was brought against an underwriter, for a return of premium. The material part of the policy was in Dougl. 255. these words: "At and from any port or ports in Grenada to "London, on any ship or ships that shall sail on or between "the first of May and the first of August 1778, at 18 guineas "per cent. to return 81. per cent. if she sails from any of the "West-India Islands, with convoy for the voyage, and arrives." At the bottom there was a written declaration that the policy was on sugars (the muscovado valued at 20l. per hogshead) for account of L. Q. being on the first sugars which shall be shipped for that account. The ship the Hankey sailed with convoy, within the time limited, having on board 51 hogsheads of muscovado sugar, belonging to L. Q. She arrived safe in the Downs, where the convoy left her; convoy never coming farther, and indeed seldom beyond Portsmouth. After she had parted with the convoy, she struck on a bank called the Pan Sand, at Margate, and 11 of the 51 casks of sugar were washed overboard, and the rest damaged. The ship was afterwards got off the bank, and proceeded up the river, arrived safe in the port of London, and was reported at the custom-house. The sugars saved were taken out at Margate, and, after undergoing a sort of cure, by a person sent from town for that purpose, they were carried to London in other vessels; and the 40 hogsheads being sold, produced 340l. in

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