to advance the money, then it might be considered as a payment on the day when it became due; but there was no evidence to shew that the country agent of the company was the agent of the assured, and I was of opinion that he could not so be considered. It seems to me that the provision that he should be debited as if the premium was paid, was to operate as a penalty on him; but does not authorize third persons to take advantage of that which was a mere private arrangement between the company and their agent, for the purpose of insuring the due payment of all monies which were to be received by him."

570

PART II.

SECTION THE FIRST.

OF FRAUD IN POLICIES.

I HAVE endeavoured in the preceding pages of this Treatise, which make up Part I, to perform the task which I proposed in the introduction to this subject, to go through the policy, sentence by sentence, from the beginning; thinking that to be the best method of treating every part of the contract, as well as to render the reference to the respective principles which are laid down, more easy to the student and to the practical lawyer; the first part contains the contract itself, which exists between the assured and the assurer; and we might have stopped here, if bona fides and propriety and regularity of acting between the parties, to this or to any contract, were always to be found. Unfortunately the law in most cases relating to express or implied contracts or the parts of the contracts has more than one object to keep in view, not only to explain clearly what is in fact the real state of the contract between the parties; but it has likewise to point out in what cases, and for what causes the policy is void, either from some impropriety or negligence on the part of either or both of the parties, and in some, it is needless to disguise it, the wickedness and the fraud, also, either of the one, or of both.

To leave these general observations, and to come at once to the contract that forms the subject of our present inquiry. These imperfections in the transactions of life between man and man, will in this instance, lead us naturally to inquire in what cases the assurer may be relieved and discharged from his responsibility; either on account of the contract being

In

void by law, from its commencement, if, I mean, it is illegal, the assured cannot recover according to the terms of it, and the assurer must generally give up the benefit which he expected. The late Mr. J. Park commences this part of his subject with some very sensible and suitable remarks, it is on his commencing his chapter upon "Fraud in Policies,” (a) he says, "in treating of those causes which make policies void from the beginning, or in other words, which absolutely annul the contract, it will be proper, in the first place, to consider how far it will be affected by any degree of fraud. every contract betwixt man and man, openness and sincerity are indispensably necessary to give it its due operation; because fraud and cunning once introduced, suspicion soon follows, and all confidence and good faith are at an end. No contract can be good, unless it be equal; that is, neither side must have an advantage by any thing of which the other is not aware. This being admitted of contracts in general, it holds with double force in those of insurance; because the underwriter computes his risk entirely from the account given by the person assured, and therefore, it is absolutely necessary to the justice and validity of the contract, that this account be exact and complete. Accordingly, the learned Judges of our Courts of Law, feeling that the very essence of insurance consists in a rigid attention to the purest good faith and the strictest integrity, have constantly held it is vacated and annulled by any the least shadow of fraud or undue concealment." And the learned author finishes these admirable observations by quoting authority for them from distinguished writers and jurists as well as laws (b). One plain illustration of these principles is this, if the contingent event has happened at the time of the execution of the policy, to the knowledge of one party only, the policy is void on the ground of fraud. If the loss of a vessel has happened at the

(a) Park Ins., vol. i. chap. x. page 403.

(b) 4 Black. Com. 460; Grot, de jure belli, lib. 2, c. 12, s. 23; Puff.

de jure nat. lib. 5, c. 9, s. 8; Bynk. quest. jur. p. iv. lib. 4, c. 26; Ord. de Iou. 14, s. 38; 1 Black. 594; 3 Burr. 1905; Carter v. Boehm.

time of the execution of the policy to the knowledge of the assured, or if the underwriter knows at the time of his subscribing the policy of the safe arrival of the vessel, it is clear, that in both of these cases the policy would be void on the ground of fraud. In the case of Mead v. Davison (a), Lord Denman says, "the case of the Earl of March v. Pigot (b), is a direct authority in principle in favour of the right to recover, if the loss was known to neither party at the time of making the insurance. According to the same case, and indeed on the plainest general principles, if the loss had been known to the assured alone the policy would have been void."

There appears to be three distinct cases, in which the policy may be rendered void by the assured or his agent: and as an agent is nearly always employed by the assured in this contract, the rules respecting agents will apply here, where the agent makes himself personally liable, but if he only acts on the false instructions received from the assured, the latter will of course have to suffer: but the rule will serve to apply to either.

The 1st is, "Where he has made some statement which he knew to be false." (c)

The 2nd is, "Where he has stated something as true which he did not know to be true, omitting, at the same time, to give such information to the other contracting party, as would enable him to judge equally with himself, as to the nature and description of the risk he proposes to him to take. (d)

Mr. J. Park in his division of the cases on this subject, mentions a third instance, though he admits that it comes under the first head of the "allegatio falsi :" because, whereever a person knowingly and wilfully misrepresents anything, he asserts a falsehood. But he says in this contract, "he thought it was necessary, because, if a material circumstance

(a) 3 A. & E. 303.

(b) 5 Burr. 2802.

(c) See Polhill v. Walter, 3 B. &

Ad. 114.

(d) See Smout v. Ilbery, 10 M. & W. 1.

be misrepresented, though by a mistake, the contract is void as much as if there has been actual fraud, for the underwriter has computed his risk upon information which was false." And for this reason he makes

A 3rd, which is "a misrepresentation of a material fact." ." (a) We will, therefore, now proceed to mention the cases which have occurred under these respective heads in their order. And, firstly, we will mention those cases which come under the first head, viz. "where the assured or his agent which he knew makes a statement which he knew to be false."

1. Where the agent has made

assured or his

some statement

to be false.

Where goods

were insured
as the goods of
were in fact
an ally, but
the goods of

In a case before Lord Chief Justice Holt, in the reign of William and Mary, that learned Judge held, that if the goods were insured as the goods of an Hamburgher, who was an ally, and the goods were, in fact, the goods of a Frenchman, who was an enemy, it was a fraud, and that the insurance is a fraud and was not good (b).

In another case, of Roberts v. Fonnereau (c), a letter being received, stating that a ship sailed from Jamaica for London, on the 24th of November, after which an insurance was made, and the agent told the insurer that the ship sailed the latter end of December, this was also held by Lord Chief Justice Lee to be a fraud, and the defendant had a verdict upon this point.

Upon a special case reserved for the opinion of the Court, in the case of Woolmer v. Muilman (d), the following circumstances appeared:

It was an action on case, brought for the recovery of a total loss, on a policy of insurance made on goods and merchandises on board the ship Bona Fortuna, at and from North Bergen to any ports or places whatsoever, until her safe arrival in London. It was underwritten thus: "Warranted neutral ship and property." The defendant underwrote the policy for 150%. The defendant pleaded the general issue, and paid into Court the premium received by

an enemy, this the policy is void.

Where an

agent received

a letter stating a ship to have sailed on the

24th Nov.,

and the agent told the under

writer she

sailed on the

latter end of Dec., this is a

fraud and the policy is void.

Where a policy

was underwrit

ten "warranted
neutral ship
and property,"
and the ship
and property
at and before
the time of the

loss were in
fact not

neutral, the

policy was held

to be void.