mand it, the policy will not be avoided by the concealment; Sect. 577. if on the other hand the principal, knowing of the loss, fact known to his principal. effected the insurance through an agent who was ignorant of it, the non-communication of the fact of loss will of course vitiate the policy (k). to agent. Material facts, brought to the knowledge of the assured Duty of principal after orders given to insure, ought to be forwarded with the to send utmost degree of reasonable diligence, so as to reach the information underwriter before the insurance is actually effected (7). When the principal can communicate by telegraph with his agent, it is no doubt usually his duty to do so in case of a loss (m). If the order of countermand be not communicated in time, owing to the fraud, negligence, or mistake of the agent, this will affect the principal. It has been held not to be negligence in an agent to effect a policy in the morning before calling at his office, where news of a loss awaited him (n). knowledge imputed to principal. 578. There are certain persons employed by shipowners When and owners of cargo, such as masters and trading agents, of agent is whose duty it is to keep their employers informed of all matters affecting the property which it is sought to insure. If one of these agents has withheld information of a material fact from his principal which he might, in the ordinary course of things, have communicated to the latter at the time when the insurance is effected, the contract can be avoided by the underwriter on account of the non-disclosure of this fact, which, if the agent had done his duty, the principal would have been able to disclose. In such a case it may be said that the knowledge of the agent is the knowledge of the principal (0). (k) 2 Valin, 1. 3, c. 6, art. 40. (1) Grieve v. Young (1782), Millar, Ins. 65. It has been held in the United States that the diligence required of the principal is not in every case the utmost possible diligence that might be exacted, but a reasonable diligence to be judged of under all the circumstances of the (m) See Proudfoot v. Montefiore (n) Wake v. Atty (1812), 4 Taunt. 493. (0) Per Lord Watson and Lord Mac Sect. 578. Rule laid Proudfoot v. Agents whose knowledge is imputed to principal. The law on the subject of concealment through the fault of an agent who has taken no part in negotiating the insurance was comprehensively laid down by the Court of Queen's Bench in a judgment (p) which, with some qualifications, was adopted by the House of Lords in Blackburn v. Vigors. "If an agent," said the Court, "whose duty it is, in the ordinary course of business, to communicate information to his principal as to the state of a ship and cargo, omits to discharge such duty, and the owner, in the absence of information as to any fact material to be communicated to the underwriter, effects an insurance, such insurance will be void on the ground of concealment or misrepresentation. The underwriter is entitled to assume, as the basis of the contract between him and the assured, that the latter will communicate to him any material fact of which the assured has, or in the ordinary course of business ought to have, knowledge; and that the latter will take the necessary measures, by the employment of competent and honest agents, to obtain, through the ordinary channels of intelligence in use in the mercantile world, all due information as to the subject-matter of the insurance. This condition is not complied with where, by the fraud or negligence of the agent, the party preparing the insurance is kept in ignorance of a material fact which ought to have been made known to the underwriter, and through such ignorance fails to disclose it." 579. In Blackburn v. Vigors the House of Lords held that it is not every agent whose knowledge can be deemed to be the knowledge of his principal. "Some agents," said Lord Halsbury, "so far represent the principal that in all respects their acts and intentions and their knowledge may truly be said to be the acts and intentions and knowledge of the principal. Other agents may have so limited and narrow an authority, both in fact and in the common understanding of their form of employment, that it would be quite inaccurate to say naghten, Blackburn v. Vigors (1887), (p) Proudfoot v. Montefiore (1867), L. R. 2 Q. B. 511, 521. that such an agent's knowledge or intentions are the know- Sect. 579. ledge or intentions of his principal" (q). The agent whose knowledge is deemed to be that of his principal must be one to whom the principal looks for information concerning the property insured (»). The master of a ship and the general agent of a shipowner for the transaction of his shipping business are agents whose knowledge will be deemed to be the knowledge of the shipowner (s). Similarly, a factor employed to ship a cargo and forward the shipping documents and the general representative of the assured at a foreign port have been held to be agents with whose knowledge the owner of cargo is affected (t). There is an imperfectly reported Scotch case in the House of Lords, in which it seems to have been decided that a policy was vitiated owing to the knowledge of a clerk of the assured that a loss had taken place (u). Whether this be the ratio decidendi or not, it is certainly the duty of a clerk to disclose to his employer whatever information he receives in regard to the latter's business, and it is submitted that the employer is responsible for not disclosing a fact which was within the knowledge of his clerk. broker not information to 580. An insurance broker who is employed to obtain an Insurance insurance on a particular risk is not one of the agents whose under a duty duty it is to give information to the principal. Therefore, a to send policy is not avoided by concealment or by the non-disclo- his principal. sure of facts, unknown to the principal, but within the knowledge of an insurance broker employed by him, but through whom the policy in question was not made. The case in which this was decided was as follows: Blackburn & Co., of Glasgow, the plaintiffs, finding that a Blackburn v. Vigors. (2) 12 App. Cas. 537, 538. (r) Per Lord Watson, ibid. 541; per Lord Macnaghten, ibid. 542. (s) Gladstone v. King (1813), 1 M. & S. 35; per Lord Halsbury, 12 App. Cas. 537; per Lord Watson, ibid. 540. (t) Fitzherbert v. Mather (1785), 1 T. R. 12; 1 R. R. 134; Proudfoot v. Montefiore (1867), L. R. 2 Q. B. 511. (u) Stewart v. Dunlop (1785), Park, vol. i. P. 446. Sect. 580. ship on which they were insurers was overdue, instructed Rose, Murison & Co., of the same place, to procure a reinsurance, and the latter applied to their London agents, Rose, Thompson & Co., for that purpose. One hour later on the same day, Murison was informed of facts tending to show that the ship had been lost some days previously. Soon after came the reply from London quoting a higher rate than the limit fixed. Murison showed the plaintiffs the reply, and then, without communicating to them the information as to the loss, telegraphed in the name of the plaintiffs to London, and thus put the plaintiffs in direct communication with their agents in London, through whom re-insurances to the amount of 8007. were effected in London the same afternoon; but as rates continued to rise, the plaintiffs closed their communications with Rose, Thompson & Co., and next day through their own brokers, Roxburgh & Co., in London, effected the policy with the defendant Vigors. The ship had, in fact, been lost some days before the plaintiffs tried to re-insure; but they and Roxburgh & Co. both acted in good faith and did not conceal any material fact within their knowledge. The Court of Appeal decided (Lord Esher dissenting) that the insurance effected by Roxburgh & Co. was void on account of the concealment by Murison (a). Lindley, L. J., held that the assured could not take advantage of the ignorance in which they had been improperly kept by someone whose legal, or even whose moral, duty it was to inform them of the facts concealed. Lord Esher declined to follow, or distinguished, the cases on which the majority of the Court relied. He thought that the underwriter cannot be assumed to rely upon the diligence and accuracy of an agent of the assured of whose existence, as in this case, he could not have had a suspicion ; further, that there was no agent or servant of a shipowner, still less of an owner of cargo, whose implied duty it is to communicate immediate information. Lord Esher, therefore, held that a contract of insurance is not vitiated by the con (x) Blackburn v. Vigors (1886), 17 Q. B. D. 553. cealment of any agent, other than an agent by or through Sect. 580. whom the contract was made. The House of Lords held, as has already been said, that the insurance is not vitiated by the non-disclosure to the underwriter of facts unknown to the assured, but within the knowledge of an agent of his, unless the agent is one to whom the principal looks for information relating to the property insured. They considered that a broker employed to effect an insurance on a particular risk is not an agent whose knowledge can be imputed to his principal, except, of course, in respect of insurances effected by him. He is not employed to gain such knowledge, nor can any insurer suppose that he has knowledge, in the ordinary course of his employment, like the master of a ship or the owner himself, as to the condition or history of the property. Consequently, the House of Lords held that the assured could recover on the policy effected by Roxburgh & Co. (y). Some stress was laid by Lord Halsbury, in Blackburn v. Vigors, upon the fact that Murison's agency had terminated when the policy was effected with the defendant. It is submitted that this fact was immaterial. If the agent be one whose duty it is to communicate his information to his principal, the underwriter is entitled to assume that he did, while his agency lasted, fulfil this duty. If the agent has done so, the principal will, in his turn, be able to disclose the information to the underwriter when the policy is effected, and it can make no difference that in the meanwhile the agency has been terminated. 581. Two reasons have been given in earlier cases for the rule, Reason why under which the assured has been affected with the knowledge agent imputed knowledge of of an agent who has taken no part in the negotiations for the to principal. insurance. One is, that where a loss must fall on one of two innocent parties through the fraud or negligence of a third, it ought to be borne by the party by whom the person guilty of the fraud or negligence has been trusted or employed (z). The (y) 12 App. Cas. 531. (z) Fitzherbert v. Mather (1785), 1 T. R. 12, 16; Proudfoot v. Monte- |