will be that the re-insurance is only against risks actually Sect. 328. existing at the date of the re-insurance policy, and not against other liabilities which the original insurer may subsequently undertake in relation to the same subject-matter. At any rate, if subsequent policies are to be covered, they must not differ in their terms from those of the original policies (o).

329. Besides re-insurances, properly so called, i.e., in- Of insuring the solvency surances effected by one underwriter with another to secure of the underhimself, the assured may also, if he pleases, insure the writer. solvency of the underwriter with whom he has effected the policy. As, however, this practice tends greatly to lessen the profits of the voyage by multiplying the charges of it, it will not frequently be resorted to in any country and appears never to have been in use in our own, though it was not in terms prohibited by the statute 19 Geo. 2, c. 37, nor would it be illegal at common law (p).

insurance.

330. Double insurance takes place when the assured makes Double two or more insurances on the same subject, the same risk and the same interest. It is therefore a totally different thing from a re-insurance, which, as we have seen, is effected by the underwriter to secure himself from having to pay a loss.

Double insurances are not prohibited by the law maritime unless made fraudulently: in fact, a moment's consideration will show that they are in many cases of necessary use.

A merchant, who expects consignments from abroad, may be ignorant of their exact value; he may, in the first instance, have effected an insurance on them only to an amount which subsequent information may lead him to think inadequate to cover their full value, and on that ground he may be desirous

(0) The Lower Rhine Co. v. Sedgwick, [1898] 1 Q. B. 739; [1899] 1 Q. B. 179. The facts of the case are somewhat complicated, but the decision supports the above conclusions.

(p) Park on Ins. vol. ii. p. 599,

seems to have thought that it would
be void as a wager policy under the
statute; but Arnould (2nd ed., p. 343)
agreed with Benecke that it would
be difficult to discover any satisfac-
tory ground for this opinion,

Over-insur

ance.

Sect. 330. of effecting a further insurance; or he may have insured as much as he is able in one place, and being desirous of further security may then proceed to effect additional insurances elsewhere. If it turns out that the whole amount insured in the different policies is greater than the whole value of the interest at risk, this is called an over-insurance (q); in such case it is clear, and nowhere disputed, that the assured can only recover upon all the policies put together (i.e., supposing them to be open policies) up to the amount actually at risk.

Rule of contribution in

insurance.

331. The rule that now prevails in this country was case of over- established by Lord Mansfield, and is as follows: In case of over-insurance the different sets of policies are considered as making but one insurance, and are good to the extent of the value of the effects put in risk; the assured can recover on the different policies no more than their value, but he may sue the underwriters on any of the policies, and recover from those he so sues to the full extent of his loss, supposing it to be covered by the policy on which he elects to sue, leaving the underwriters on that policy to recover a rateable sum by way of contribution from the underwriters on the other policy (r). Hence where a merchant, the value of whose whole interest was 2,2007., first effected a policy on this interest at Liverpool for 1,7007., and then (without fraud) another policy on the same interest (s) at London for 2,2007., he was allowed to recover the whole amount on the London policy, and the London underwriters were allowed to recover a rateable amount by way of contribution from the Liverpool underwriters (t).

Davis v.
Gildart.

Rule in
France and
the United
States.

This rule, however, is not that which formerly prevailed in this country, which now prevails in France, and which in the United States is generally rendered binding on the parties to

(9) Cf. the Marine Insurance Bill, 1899, s. 33.

(r) Newby v. Reid (1763), 1 W. Bl. 416; Rogers v. Davis, and Davis v. Gildart (1776), cited 1 Marshall,

Ins. 140, 141; 2 Park, Ins. 601, 602. (s) But for a different risk, see Rogers v. Davis, quà supra.

(t) Davis v. Gildart, quà supra.

the second policy by an express clause relating to prior Sect. 331. insurance.

That rule is, in the words of the Code de Commerce, "that where there exist several contracts (N.B., not necessarily 'policies' (u)) of insurance effected without fraud on the same subject, if the first contract insures the total value of the subject at risk, it alone shall be enforced." The insurers who have signed the subsequent contracts are freed from liability, and only receive per cent. on the sum insured.

If the whole value of the subject insured is not covered by the first contract, those insurers who have signed the subsequent contracts shall be responsible for the surplus in the order of the date of their respective signatures (x).

So in this country it was once pleaded, and "proved by all the exchange," to be the custom of merchants "that where a policy is subscribed by a number of underwriters, and the goods are not equal in value to the sums subscribed (taken together), the underwriters in case of loss shall be liable in the order in which they subscribe, and the remaining underwriters shall be exonerated from all liability and return the premium, deducting per cent." (y).

Formerly the country.

rule in this

The common law rule in the United States is that laid The American clause. down by Lord Mansfield; but the law as it anciently prevailed in England, and is now established in France, is deemed by the American merchants so preferable, in point of simplicity and convenience, that clauses are very generally introduced into their policies to prevent the rule of contribution, and to make the insurers responsible according to the order of date of their subscriptions.

The following clause has been used in the second policy for this purpose:-"It is further agreed, that if the assured shall have made any other assurance upon the premises prior

(u) Each subscription to the policy forms a new contract if it bears a separate date.

(x) Code de Commerce, art. 359. (y) The African Co. v. Bull (1690), 1 Show. 132; see also Malynes, Lex

Mercatoria, 112. But the rule in
France was never applied to several
subscriptions to one policy, unless
they bore different dates; and this
probably is the true meaning of the
English rule.

Sect. 331. in date to this policy, the assurers shall be answerable only for so much as the amount of such prior insurance may be deficient."

The following is a form adapted to the first policy:— "In case of any subsequent assurance, the insurer shall, nevertheless, be answerable for the full extent of the sum subscribed by him without right to claim contribution from subsequent assurers " (z).

In France and in the United States (in cases where this rule has been adopted), it has been decided that, even where the second policy is dated on the same day as the first, inquiry may be made as to which of the two was actually first effected in point of time, and that which was so will alone bear the loss (a).

This rule, however, does not in France extend to different subscriptions of uniform date to the same policy; for if they all bear one date they make but one contract, and the whole body of the underwriters, in case the sum insured in such policy exceeds the value at risk, contribute rateably to the loss and return a rateable share of premium for the excess (b).

332. It has been laid down by Marshall, as following from Lord Mansfield's rule, that where, by several policies made without fraud, the total sum insured exceeds the whole value at risk, "all the underwriters on the several policies would be equally bound to make a return of premium for the sum insured above the value of the effects in proportion to their respective subscriptions" (c).

The rule, however, as to this point must be now taken with this limitation, viz., that where two sets of policies of different date are effected on the same property, and the amount insured in the first set is not equal to the value at

(2) 3 Kent, Com. 281.

(a) 4 Boulay-Paty, Droit Mar. 122, 123; Brown v. Hartford Ins. Co. (1808), 3 Day's R. 58; cited 1 Parsons, 287; Potter v. Marine Ins. Co.

(1822), 2 Mason's R. 475; cited 3 Kent, Com. 281.

(b) 4 Boulay-Paty, Droit Mar. 116, 117.

(c) 2 Marshall, Ins. 649.

risk, though the aggregate sum insured in the two sets Sect. 332. exceeds it; in such case the underwriters on the last set of policies in point of date shall alone be called on for a rateable return of premium, if these policies were effected after the risk had attached on the earlier set-on the equitable principle that, as the underwriters on the first set of policies were at one time liable to the whole extent of the sum therein insured, so they are fairly entitled to retain the whole premium (d).

different

interests in

the same subject.

333. Although in cases of double insurance, properly so Insurances of called, i.e., where the same person insures the same interest by several policies on the same risk, he cannot recover more than an indemnity-i.e., more than the real or declared value of the thing insured, under all the policies put together-yet it is different where two or more persons insure the same thing against the same risks on distinct interests.

In such case each of the parties, having such distinct interests in the thing insured, may effect insurance in respect thereof to the full value of the thing insured, and each in case of loss may recover to the full extent of his interest.

This, as Lord Mansfield remarks, "is by no means within the idea of a double insurance, which is where the same man is to receive two sums instead of one, or the same sum twice over for the same loss by reason of his having made two insurances upon the same goods or the same ship; whereas the case now referred to is the insurance by two different persons of two different interests each to the whole value.

The doctrine of subrogation must, however, apply in cases where more than the value of the thing insured is recovered from the underwriters, so that in the result the whole sum retained by the assured will be no more than such value. The principle is well illustrated by the following passage from the judgment of Cotton, L.J., in an action arising out of a fire insurance :—

"The rule is perfectly established in the case of a marine

(d) Fisk v. Masterman (1841), 8 M. & W. 165.