The effect of the clause is simply that where no provision to the contrary referring to any particular point is found in the policy, the assured is entitled to recover from the underwriter whatever it has been the custom of assured to recover from London underwriters. The burden of proof accordingly lies on the assured.

THE BINDING CLAUSE

And so we the assurers are contented, and do hereby promise and bind ourselves, each one for his own part, our heirs, executors, and goods, to the assured, their executors, administrators, and assigns, for the true performance of the premises.

This is the form still employed by Lloyd's and other private underwriters; but being obviously not suitable for the limited liability companies which engage in the business of marine insurance, has had to be altered for their use into something like the following :

Now this policy witnesseth that the said company takes upon itself the burden of this insurance to the amount of pounds, and promises and binds itself to the assured, their executors, administrators, and assigns for the true performance and fulfilment of the contract contained in this policy.

There is only one difficulty in connection with the words: it is to determine what constitutes "true performance of the premises," or as it is expressed in the later form, "the burden of this insurance "" or "the true performance and fulfilment of the contract contained in this policy." Where the policy contains a reference to the custom of Lombard Street, such as has just been discussed, the difficulty is slightly lessened. But the fact remains that the policy contains no definite statement of what is to be paid in event of certain casualties, no account of the method in which the liability of the underwriter is to be determined. These important points have from time to time been determined by the courts, as naturally disputes arose regarding the duties and obligations of the parties to this contract. Enlightened by the decisions of the judges, it is

comparatively easy for modern commercial men to know what the words of the policy contain; they have learnt to read into the policy a certain meaning. But the first reading of a marine insurance policy usually leaves the reader in a state of utter uncertainty of its real purport and effect, and it is only after experience or research that he becomes aware of what is involved in "the true performance" of the contract, namely, the payment of material losses in whole and in some cases in part, of certain deteriorations and of certain liabilities, provided that these losses, deteriorations, and liabilities result immediately from some of the perils insured against enumerated in the policy. These will be treated later in detail.

THE CONSIDERATION

Confessing ourselves paid the consideration due unto us for this assurance by the assured . . . at and after the rate of ...

This form of the consideration clause is an absolute receipt for the premium, so that delivery of the policy can be alleged as proof of the payment of the premium. As the use of such a form has not always been found convenient, many companies now word their policies thus :-

In consideration of the person or persons effecting this policy promising to pay to the said company a premium at and after the rate of . . .

The employment of this form enables underwriters to part with policies without previously receiving payment of premium and without thereby vitiating their claim for payment.

THE ATTESTATION

In witness whereof, we the assurers have subscribed our names and sums assured in London.

This clause is followed in a Lloyd's policy by a list of names and sums; the aggregate amount of the different sums subscribed by each underwriter equals the amount required

to be insured. There is no joint - and - several liability (solidarity) among the underwriters subscribing a Lloyd's policy, as the binding clause expressly provides that the underwriters subscribe "each of his own part." Such a

clause is obviously unsuitable for the use of limited liability companies, which have consequently adopted such words as the following:

In witness whereof the undersigned, on behalf of the said Company, according to a Resolution duly passed by the Board of Directors, have hereunto set their hands, in London, the

190-.

day of

The Articles of Association of the various marine insurance companies and the resolutions of their boards respecting the proper attestation of their policies differ very much from one another. In some cases the signature of one director is all that is required: few policies require more than two signatures, whether both of directors, or the one of a director and the other of an official. Most companies do

not seal their policies.

This clause completes the policy as it existed in 1748. The remainder of the policy consists of what is termed "The Memorandum" added in May 1749 (with which addition to the 1748 policy, it is the same as appears in the schedule of 35 Geo. III. c. 63; the Stamp Act of 1795). No later additions have been made to the body of the policy; they are made as required, either as marginal clauses or written in on the face of the policy. The effect of these clauses will be the subject of discussion below.

K

CHAPTER VIII

PRINCIPLES OF INTERPRETATION OF THE POLICY

LAWYERS and text-book writers have not spared their language when they have had the opportunity to describe the ordinary English policy of marine insurance (v. p. 28). It has been described as a badly drawn, illogical, and altogether hopeless document. Arnould (p. 16), citing Mr. Justice Buller (4 T.R. 210), says it has always been regarded by our courts of law as an absurd and incoherent document; and he gives the remark of Mr. Justice Lawrence (in Marsden v. Reed, 1803):1 "It is wonderful that policies should be drawn with so much laxity." In Pelly v. Royal Exchange, 1757,2 Lord Mansfield spoke of the "ancient and inaccurate form of words in which the instrument is conceived." It consequently behoves those who have to deal with this instrument to try to discover the principles on which the courts have ascertained its meaning in the cases that have come before them.

It will have been noticed that in the words of the policy and in the explanatory remarks offered above, there is constant reference to the conditions of trade as it used to be, or as it is now. It will also be remembered that in the description of the simplest form of a marine insurance (p. 10) the common intention of assured and assurer was mentioned as the basis of the whole transaction. It will be found that the policy cannot be interpreted properly without reference to both of these factors, and the reconciliation of them is attended with so many difficulties, that 2 1 Burr. 341,

1 3 East 579.

it has become hard to judge any particular case without careful examination.

Judge Duer (M. I. i. pp. 158, 159) states that, with one exception,1 1 "the actual intention of the parties is the controlling principle from which all the special rules of interpretation flow, and to which they are all subsidiary and subordinate. These rules have no positive and arbitrary force."

The great leading dictum is that of Lord Ellenborough in Robertson v. French, 1803:2 "The same rule of construction which applies to other instruments applies equally to this, namely, that it is to be construed according to the sense and meaning, as collected in the first place from the terms used in it, which terms are assumed to be understood in their plain, ordinary, and popular sense, unless they have generally in respect to the subject matter, as by the known usage of trade or the like, acquired a peculiar sense distinct from the popular sense of the same words, or unless the context evidently points that they must in the particular instance, and in order to effectuate the immediate intention of the parties, be understood in some special and peculiar sense."

From this it is evident that while indemnity is recognised as the object which the parties framing the contract have in view, account is still taken of the phraseology actually employed.

Consideration of the phraseology of the policy leads to two conclusions somewhat divergent but still actually complementary to one another. First, each word must have its proper value and effect given to it. Should it become necessary to ascertain the intention of the parties in an ambiguous clause, if one interpretation of the clause would add nothing to what the contract clearly expresses elsewhere or necessarily implies, and another interpretation renders it operative by adding to the effect of the instrument, then the latter interpretation is to be adopted. It is unlikely that the parties intended only to repeat what had

1 Namely, such conditions as are construed as warranties: in respect to these a rule of strict and literal interpretation prevails. 2 4 East 140.