The penalty for not complying with the requirements of this Act is the nullity and avoidance of the policy.

It is to be observed that the words "and/ d/or as agents are a recent addition to the text of the policy; they are evidently intended to mean "as principals and/or as agents." Sometimes in their place is found the phrase 66 on behalf of whom it may concern." These two phrases appear merely to be brief modern forms of expression, covering, if anything, more than the content of the long phrase following. The words of that phrase are so wide that they admit to the benefit of any insurance, which has been from the beginning legally and properly effected, all parties who have in whole or in part, at the time of the insurance or thereafter, such an interest in the subject insured as the original assured had. They even admit to the benefit of an insurance such persons as may be willing to ratify ex post facto (i.e. after the effecting thereof) an insurance done as it were speculatively, in the hope that when these persons are advised of the insurance they will avail themselves of it.

The words of the policy taken literally demand that the subject insured "doth, may, or shall appertain" to the person assured; in other words, property in the subject insured is regarded as the only interest entitling a person to insure it. But there is one class of persons whose interest of this character does not entitle them to the indemnity afforded by a policy of marine insurance, namely alien enemies. This is simply a matter of public policy. The result is that in time of war no property belonging to a foreigner of a nation carrying on hostilities against England can be legally protected by an English policy.

As there are other persons besides those defined in 28 Geo. III. c. 56, quoted above, who may be and often are interested in an insurance, so there are other interests besides property, in goods, etc., which it is found desirable to cover by insurance. Consequently it has become the recognised practice to comply with the statute quoted, by naming in the policy some real person actually benefited by the insurance, or acting as agent for some beneficiary,

and to extend the protection to cover real interests, though of a less complete and manifest nature than actual ownership of a material object. Such are rights to obtain possession of objects at the close of a marine venture, or to obtain certain payments in respect of their delivery at destination, or to have the disposal of objects arrived at destination, in such a way that some profit or commission accrues to the disposer. Similarly, an insurance may be arranged to take effect regarding even more distant derivatives of property, such as liabilities arising out of ownership, e.g. to afford protection against these, or protection against loss by marine peril of lien arising out of liabilities of ownership. All persons exposed to loss in respect of any such interest, excepting alien enemies, are entitled to be assured and to have the benefit of marine insurance. The nature and character of such possession, rights, and liabilities as will entitle their proprietor to effect an insurance will form the subject of a later section entitled "Insurable Interest" (pp. 76-86).

Lost or not Lost

It has been suggested that this clause was first introduced into the policy to meet the case of what are known as missing ships, that is ships acknowledged at the time they are insured, to be so long at sea unheard of, that their safety is doubtful. It does not appear in the Florentine form of 1523. But as it is found in the English policy of 1613,1 it is rather more likely that it was devised for the protection of merchants against such losses as might occur to their ships or cargoes after starting on cross or homeward voyages from foreign ports. It is evident that in the conditions of trade in the sixteenth century, insurances of such voyages must frequently have been effected when there was no means of knowing whether the vessel had sailed or not, and almost certainly none of knowing whether at the moment of effecting the insurance the ship was in safety or not. But by 1613 the clause was used

1 See Appendix B.

D

also in London policies on outward voyages commencing in London.

The clause must be understood to be part of a contract of indemnity made in absolute good faith. If the merchant or shipowner knows that when he offers the risk his cargo or vessel is lost, he knows that he is not at that moment in possession of anything connected with the risk whose loss will further damnify him, and that nothing then exists against loss of which the underwriter can indemnify him. Similarly, if the underwriter knows that the venture proposed for insurance has safely arrived at the time of the proposal, he knows that there are no perils to be run against which he can give insurance. Consequently, in spite of the absolute wording lost or not lost, the underwriter does not propose to pay a loss known to the assured but not to himself, nor the assured to pay premium for the insurance of a risk known by the underwriter, but not by himself, to have run off safely. The effect of the clause is therefore to secure to the assured the insurance, and to the underwriter the premium on all lawful risks, in whatever position of safety or peril they may be at the time the insurance is made, so long as both parties are in a state of equal knowledge or equal ignorance. There is nothing to prevent an underwriter from accepting an insurance on some matter or object that both he and the assured know, when the risk is submitted, has met with some disaster or

1

even total loss. This occasionally occurs in practice, underwriters accepting insurances after news of a disaster. The courts have upheld such insurances (Mead v. Davison, 1835). As regards the position of the assured in case the underwriter concealed his knowledge of the safe arrival of a risk offered to him for insurance, Lord Mansfield said (Carter v. Boehm, 1766):2 "The policy would be void against the underwriter if he concealed as having insured a ship which he privately knew to be arrived, and an action would lie to recover the premium."

In the case of floating policies underwriters frequently receive together notice of interest declared and of disaster 3 Burr. 1906.

1 3 A. & E. 303.

2

occurred and the validity of declarations made in such circumstances has also been upheld by the courts (Gledstanes v. Royal Exchange, 1864).1

Marshall (p. 339) considers that though this clause may not be inserted in the policy yet it must in many cases be necessarily implied in the contract, and Arnould (p. 21) reports that if both assured and underwriter were equally ignorant of a loss at the time an insurance was effected, the policy would be, in Mr. Justice Story's opinion, binding without the words lost or not lost. As all English forms now contain the clause, and many if not all of the American contain it, this point is not now likely to arise, but it is worth notice that Mr. Justice Story's view is different from that expressed by Mr. Justice Park. Park says (p. 33): "It is the general practice to insure lost or not lost, which is certainly very hazardous, because if the ship or goods be lost at the time of the insurance, still the underwriter, provided there be no fraud, is liable. The premium," he continues, "is however in proportion depending upon the circumstances stated to show the probability or improbability of the ship's safety. These words lost or not lost are peculiar to English policies, not being inserted in the policies of foreign nations." The statements contained in the two last sentences may have been exact in 1817; nowadays the peril in question is accepted without any consideration of its being an extraordinary risk. But it is true that the form lost or not lost is peculiar to English and American policies. Still in the French Code de Commerce (§ 367) provision is made that in case of insurances effected sur bonnes ou mauvaises nouvelles (on good or bad news) the contract is not void unless it is proved that before the signature of the contract either the assured knew of the loss or the underwriter of the arrival. The penalty for such fraud is the payment to the offended by the offending party of double premium and thereafter the criminal (correctional) prosecution of the offender. The German form is similar, auf gute oder schlechte Nachricht (on good or bad news). The German General

1 34 L.J. Q. B. 30, 35.

Maritime Code provides in § 785 that "the validity of the insurance contract is not affected by the question whether at the time of its conclusion there is no longer any possibility of a claim occurring for damage, or whether claimable damage has already occurred. The contract,

If

however, is invalid as an insurance contract if both contracting parties were aware of the position of affairs. the underwriter alone was aware that the possibility of a claimable damage no longer existed, or if the assured alone was aware that claimable damage had already occurred, the contract is not binding upon the party to whom the position of affairs was not known. In the second case, the underwriter is entitled to the full premium, even when he establishes the invalidity of the contract." The important

point of difference between English and German law is in the treatment of cases in which both parties are aware that the risk has either run off or resulted in some disaster; English law upholds the contract, German law annuls it.

Insurances lost or not lost are expressly permitted by the Commercial Codes of Holland, Spain, and Portugal.

At and From

In the blank following these words is inserted the description of the voyage intended to be insured. The formula at and from is one of considerable antiquity in England, and was adopted in the statutory form of policy for private underwriters appended to the Act of Parliament of 1795 (30 Geo. III. c. 63): its very existence implies that it is intended to include more than would be covered by the word from.

Phillips (927) distinguishes as follows: "Under a policy on a vessel against sea perils 'at' a place as distinct from a voyage, the risk commences when the vessel is at the place in reasonable safety and on the goods from the time of their being exposed to sea perils within the conditions of the policy in respect of the vehicle and custody in which they are."

:

Arnould (p. 23) completes the distinction thus: "An