sea insurance are both paid and skilled agents, or, at all Sect. 145. events, either the one or the other. Generally speaking, therefore, the question of their liability for negligence turns on the point, whether they exerted such an amount of reasonable skill in effecting the policy as is ordinarily possessed and exercised by persons of common capacity, engaged in the same business or employment. From a policy broker, whose main occupation it is to manage sea insurance transactions, a higher degree of skill may fairly be claimed than from a merchant or commission agent, who may be expected, indeed, to possess a general knowledge of maritime and mercantile affairs, but no special knowledge of the business of sea insurance. party volun procure an another. Notwithstanding doubts which at one time prevailed, it may Liability of a now be considered as settled law, that a person who volun- tarily undertarily and without consideration undertakes to effect insurances taking to for another is liable for negligence in doing so, if he takes insurance for any steps towards performance of his undertaking (1). But if the person who voluntarily promises, without any kind of consideration, to procure an insurance never takes any steps whatever towards the performance of his promise, he is not liable to an action for the nonfeasance ("). 146. Generally speaking, a person to whom an order to insure has been transmitted is under no obligation to accept the trust; but there are certain cases in which an express order to insure, not only may, but must be complied with. 1. Where a merchant abroad has effects in the hands of his (9) Wallace v. Tellfair (1788), 2 T. R. 188, n., before Buller, J., at N. P., cited in Wilkinson v. Coverdale (1793), 1 Esp. 75. In the latter case Lord Kenyon held, that where the seller of a house had voluntarily undertaken to get a fire policy renewed for the plaintiff, and had in fact renewed it, but without procuring a proper indorsement, whereby plaintiff was deprived of the benefit of the insurance, this was actionable negligence. (r) Thorne v. Deas (1809), 4 Johns. N. Y. R. 84-a decision of Chief Justice (afterwards Chancellor) Kent. Duer approves of this decision as a correct exposition of the law, though he remarks forcibly on the hardship which may thus be inflicted on the party who trusts to the promise of the volunteer. 2 Duer, 128-130; see the Carpenters' Case, Year Books, xi. H. iv. p. 33, ed. 1679, Three cases in which agents requested to procure insurance must do so. Sect. 146. agent or correspondent here, he has a right to expect that the agent will comply with an order to insure; because he is entitled to call his money out of the other's hands when, and in what manner, he pleases. Where the obligation to insure arises from a previous course of dealing, 2. Where the merchant abroad has no effects in the hands of his correspondent here, but the course of dealing between them has been such that the one has been used to send orders for insurance, and the other to execute them, the former has a right to expect that his orders for insurance will still be obeyed, unless the latter give him notice to discontinue that course of dealing. 3. Where the merchant abroad sends bills of lading to his correspondent here, with an order to insure as the implied condition on which he is to accept the bills of lading, and the correspondent accepts the bills of lading, he must obey the order; for it is one entire transaction, and the acceptance of the bills of lading amounts to an implied agreement to perform the condition (8). The rules thus stated are believed to be as universal in their observance as they are unquestionably well founded in justice and equity. 147. Where the obligation to insure arises from a previous course of dealing, and the agent has no funds in hand, Duer suggests that he would be excused from compliance if, when he receives the order, he has just grounds for believing that This may be so; but in practice it will be the safer course for the agent to obey the order, unless his information of his correspondent's insolvency be of such a nature as leave him no ground for doubt. and the agent in hand. Where the insurances usual course. Duer also thinks that "the obligation to insure that arises are out of the from a previous course of dealing can only apply to insurances similar to those that the agent had been in the habit of effecting. If the past assurances had all been effected in a time of peace, at a low rate of premium, and requiring in (s) Per Buller, J., in Smith v. Lascelles (1788), 2 T. R. 189, 190. each case only a moderate advance, they would give the prin- Sect. 147. cipal no right to expect that an order to insure in a time of war, not accompanied by a remittance of the necessary funds, would be obeyed" (u). It may be a question, however, how far this would be so held in this country, where an immediate advance in respect of the premium is hardly ever required in practice at the time of effecting the policy. There can be no doubt as to another position of the very Where funds learned American jurist, "that where the necessary funds for are remitted. procuring the insurance are remitted to a commission merchant or insurance broker, he is under an equal obligation to apply them to the purpose directed as where the funds are in his hands when the order is received" (x). It also seems free from doubt that the duty of insuring may be imposed on an agent, even in the absence of express directions to insure, by the usage of the particular trade to which his agency and the insurance relate (y). structed to 148. If an agent is employed by a foreign correspondent Agent into procure an insurance under circumstances which, according insure will be to the rules laid down by Buller, J., in Smith v. Lascelles, liable for give the correspondent a right to expect such orders will be do so. complied with, a total failure to comply with such orders, without notice, will subject such agent to an action for all the loss which his correspondent may have sustained from the non-insurance (). It is his duty to give prompt notice of Unless he give his refusal to act upon such orders, in order that his employer of dissent. prompt notice may not be deprived of the opportunity of effecting the insurance elsewhere. If, in consequence of his failure to give such notice, no insurance be made, the agent will be answerable to his employer for the loss arising from his neglect (a). Hence, where a merchant in this country received from a merchant abroad, with whom he had no previous connection, (u) 2 Duer, 125. (x) Ibid. (y) Ibid. 127, 128. (2) Smith v. Lascelles (1788), 2 T. R. 187; Smith v. Price, coram Erle, C. J. (1862), 2 F. & F. 748. (a) Ibid. Observations of Ashurst, Sect. 148. a bill of lading, with a request to insure the goods, and the merchant, not wishing to take to the consignment, but without giving any notice to the consignor that he rejected it, handed over the bill of lading and the order to insure to a creditor of the consignor, who effected the insurance and received the goods, and afterwards became insolvent with the proceeds in his hands; it was held, that the merchant, who had his election either to accept or reject the bill of lading, was yet bound, if he accepted it, to comply with the terms of the consignment, and was liable for the consequences of not having done so (b). So also, in the event of any difficulties in procuring the insurance on the terms prescribed by the principal, it is the duty of the parties employed to give notice of such difficulties to their employer within a reasonable time. Or of difficulties. Callander v. 149. The plaintiff, a merchant in this country, had instructed the defendants, who were his commission agents and correspondents in America, to effect an insurance for him, on certain prescribed terms (viz., that the insurers should be liable for every average loss above 107. per cent.), upon a cargo of wheat shipped by him from London to Baltimore, and consigned to the defendants, to be sold and disposed of on commission. The defendants attempted in vain to procure an insurance on the terms prescribed, but gave no notice to the plaintiff of their failure to do so, and instead thereof effected an insurance on the usual terms, (by which the insurers on wheat are exempted from all liability for average, unless general, or the ship stranded). The Court of Common Pleas held, that the giving of such notice was part of the common law duty of the defendants, to be implied from their retainer as commission agents with express orders to insure, and that the plaintiff, therefore, was entitled to recover in an (b) Corlett v. Gordon (1813), 3 Camp. 472. The action, however, was in trover and conversion, for allowing the creditor to obtain possession of the goods. It does not necessarily follow from this case that if the defendants had done nothing they would have been liable. The case might be different where there have been previous dealings between the parties. See the cases above cited. action brought against them for the breach of such duty (c). Sect. 149. In this case the damage alleged was, that by reason of the defendants' failure in giving notice, the plaintiff had been prevented from effecting an insurance on the wheat on the terms proposed, and thereby precluded from recovering for an average loss. As Judge Duer remarks, no proof appears to have been given that an insurance could have been effected on the terms proposed; as, however, by agreeing to refer the amount of damages, it was conceded that some damnum had been incurred, (and none could have been incurred if no insurance could have been effected as ordered), it must be taken to have been admitted that the protection which the plaintiff wished might, with due diligence and a proper exercise of discretion, have been procured (d). the skill and prudent man 150. A foreign principal has a right to expect the same A correspondent for a amount of ordinary care, skill, and diligence in procuring an foreign house insurance that the principal himself, as a man of common must show prudence and knowledge of business, might reasonably have diligence of a been expected to exercise, had he been upon the spot and of business. himself engaged in endeavouring to effect it. Hence, where the foreign correspondent of a mercantile firm in this country directed them, as his agents, to procure an insurance for him, without prescribing any limit of premium, and they limited the broker to so low a rate of premium that it was impossible to effect an insurance on such terms, they were held liable to their foreign employer for the loss arising from the failure to insure (e). On the same principle, where a policy had been effected, but the agents neglected to ascertain the solvency of the underwriters, and to communicate the names of the brokers, by whom it was effected in their own names, so that, when a loss on the property occurred, the assured were unable to obtain payment of the whole insurance money, the agent (c) Callander v. Oelrichs (1838), 5 Bing. N. C. 58; 6 Scott, 761. (e) Wallace v. Tellfair (1788), 2 T. R. 188, in notis, |