An insurance on an enemy's goods, shipped before the commencement of hostilities, but exported afterwards, cannot be enforced against the underwriter, even after the restoration of peace, with the object of recovering a loss by capture during the war (s). on contraband. An insurance on articles which are contraband of war is Insurance absolutely void and not enforceable in the country of the belligerents. However, it will be valid and enforceable in the courts of a neutral power (†). The following articles are, inter alia, contraband of war:-Ships, naval stores, and all materials essential to shipbuilding (u); but provisions are not, unless destined to a place blockaded or besieged or for the use of the soldiers of the belligerents (x). CASES. 1. A French ship was insured on the 19th of October, 1792, "at and from Bayonne to Martinique, and at and from thence to Bayonne." While the ship was there, the island of Martinique was captured by the British, war having broken out between this country and France in February, 1793. The ship was condemned as prize. Held, that the underwriter was not liable in respect of the loss (y). 2. A policy of marine insurance was effected on goods from London to Bayonne. The goods were, on the 4th of February, 1793, shipped on board a neutral ship on account and at the risk of certain Frenchmen. Seven days afterwards, viz. on the 11th February, war was declared by England against France. The policy had been subscribed by the defendant on the 21st of January, 1793. On the 11th of February the ship sailed from Gravesend for Bayonne. The captain being under the necessity of putting into a Spanish port, the cargo was seized by the order of the Spanish government, Spain being then an ally of England. After peace was concluded between England and France, the insured brought an action on the policy. Held, that the underwriter was not liable (z). No premiums recoverable illegal. § 174. If the insured intended an illegal adventure, and the when policy policy covers it and is therefore void, the underwriter will not be entitled to recover the premium (a); neither will the insured be entitled to the return of any premium he has paid (b). Thus a premium paid on a marine policy intended to cover unlicensed trading with an enemy will not be recoverable, although the underwriter is not liable to make good any loss (b). But if the royal licence to trade with the enemy had actually been granted, though not received through some inevitable accident when the insurance was effected, the premium will be recoverable (c). The same rule will hold good in cases where the policy is intentionally effected in terms sufficiently large to cover an illegal adventure, and where the assured makes no formal renunciation of the contract to the underwriter before action brought. For in such a case any premium paid cannot be recovered, although the adventure never is in fact entered upon (d). CASES. 1. A broker effected a policy with a Lloyd's underwriter on goods on board a Spanish ship at and from New Orleans and Pensecola, both or either, to her port of discharge in the United Kingdom, with a memorandum of receipt of the premium from J. P., a merchant in London. The policy was made on behalf of a Spanish merchant at Vera Cruz. At the time of its being effected New Orleans belonged to the Americans, who were at war with Great Britain, and Pensecola to the Spaniards, who were neutrals. The object of the assured was to cover an importation of cotton wool in Spanish ships from New Orleans to Great Britain. Held, the underwriter could not recover the premium, the adventure from New Orleans with cotton wool being illegal (e). (a) Jenkins v. Power, 6 M. & S. 282; Palyart v. Leckie, 6 M. & S. 290; see "Cases" (1) and (2) at end of this §. (b) Vandyck v. Hewitt, 1 East, 96; Palyart v. Leckie, 6 M. & S. 290; Hentig v. Staniforth, 5 M. & S. 122; see Chap. X. § 178, p. 331. (c) Hentig v. Staniforth, 5 M. & S. 122. (d) Palyart v. Leckie, 6 M. & S. 290; see "Cases" (2) at end of this §. (e) Jenkins v. Power, 6 M. & S. 282. 2. Goods were insured on board the Audaz, a Spanish ship or any other ship or ships at and from New Orleans and Pensecola to a port in the United Kingdom. At the date of the policy Pensecola belonged to Spain, and New Orleans to America. America was then at war with England, but Spain was neutral. The insured intended by the policy to cover an importation of cotton from New Orleans to Liverpool. Held, that the assured could not recover the premium, although no cargo had been shipped on the Audaz or any other ship covered by the policy, he not having informed the underwriter of his intention to rescind the contract (ƒ). (f) Palyart v. Leckie, 6 M. & S. 290. N. Y CHAPTER X. ADJUSTMENT AND RETURN OF PREMIUM. effect of. § 175. Adjustment- UNLESS the underwriter can deny his liability to make a loss good to the insured, it will be incumbent on him immediately to proceed to adjustment, that is, to determine the sum which the insured can claim under the policy. At the same time it is usual to indorse on the policy the amount for which each underwriter is liable; the underwriters then initial the indorsement. If any underwriter at the same time passes the loss to the credit of the broker, he strikes through his subscription to the policy. This is called striking off the loss. Though an adjustment be on the face of it absolute, a prior agreement to regard it as conditional can be proved by parol evidence (a). The adjustment operates as an admission by the underwriter of all the facts necessary to make him liable (b); but it is not conclusive. In cases where the broker has possession of the policy, and the underwriter after the adjustment pays the broker the amount of the loss in money, the underwriter will be discharged. Again, if the underwriter can prove that the insured, either actually assented to, or acquiesced in, the usage which prevails at Lloyd's of striking off the loss, but not otherwise, the underwriter will be freed from all liability under the policy (c). (a) Russell v. Dunskey, 6 J. B. Moore, 233; see "Cases" (1) at end of this §. (b) Christianv. Coombe, 2 Esp. 489; Rogers v. Maylor, 1 Park, 194; underwriter If the underwriter has paid the loss, knowing all the Payment by facts of the case, but under a mistake of law, or under under miscompulsion of legal process, he cannot recover the amount take. so paid (d), but if the payment were made under a mistake of fact, he can recover it (e). Therefore, an adjustment will not be binding on the underwriter, if his attention was not, when he signed it, called to certain circumstances, which would discharge him from liability. This will be the rule, even although the underwriter possessed the means of acquainting himself with the history of the voyage, and the manner of the loss (ƒ). returnable. If the underwriter, after paying a loss, finds out that Foul lossthere was either fraud, misrepresentation, or concealment premium in the original contract of insurance, or that he paid under a mistake of fact, he can recover the money from the assured, or even from his broker if the broker has not yet paid over the insurance money to the assured. A payment by an underwriter, under the circumstances referred to, is termed a foul loss. If the insurance broker pays the insured the full amount of a loss, in ignorance of the fact that one of the underwriters had become insolvent before the date of the loss, the broker cannot recover any part of the amount he so paid from the insured (g). An agent or broker authorized to effect and subscribe a Broker can marine policy has an implied authority to sign the adjustment-when. sign ment of a loss, in the absence (as in the case of Lloyd's agents) of instructions to the contrary (h). If the policy be underwritten by two or more under- Underwriter writers, each of them is, as a general rule, only liable to only liable to extent of his subscription. |