Since, however, it is most frequently entered into as a mercantile contract, and the greater part of the principles of insurance apply to it as such, this form of the contract is always understood to be intended, when the contrary is not expressed.

As to the essential part of this contract, it does not differ from a bond of indemnity, or a guaranty of a debt, since the obligor or guarantor takes upon himself certain risks, to which the obligee or creditor would otherwise be exposed. The only difference is in names, and the form of the instrument, the consideration for an insurance being always called a premium, and the instrument containing the terms of the contract, a policy, which is usually made in a form peculiar to this species of contract.

Insurances are usually described to be of two kinds, namely, policies on interest and gaming policies, in which latter the person insured is not required to have any interest in the thing insured, and needs not to be exposed to any risk against which the policy is intended to protect him. Gaming policies,' says Lord Mansfield,' are mere games of hazard, like the casting of a die.' They are wagers made in the form of policies, which in other respects, differ, no less than other wagers, from the contract of insurance. A wagering policy does not seem properly to belong to the subject of insurance, (b) since it is prohibited by positive law in many countries, and is considered to be

(6) Emerigon, c. 1. s. 1. says, a wager in the form of insurance, resembles it only in name. Christian, on the contrary, says, that insurance is in effect nothing more than a wager, for the underwriter, who insures at five per cent. receives five pounds to return one hundred, upon the contingency of a certain event, and it is precisely the same in its consequences, as if he had betted a wager of ninety-five pounds to five, that the ship arrives safe, or that a certain event does not happen.' 2 Bl. Com. 459. n.

Where wagers in general are enforced as legal contracts, wagers on the arrival of a ship are sometimes declared to be unlawful, as against public policy; for a community, it is said, has a great interest in its commerce, and it is wrong to permit any one to have an interest that may make him desire that a ship should be wrecked, as the cupidity of men cannot be trusted in such a case. Emer. c. 1. s. 1. Such wagers have, however, been allowed in some parts of Italy. Roc. de Assec. n. 73; Poth. par Estrangin, No. 11. n. By the French Ordinance, a. 22. h. t. wagers in the form of insurance are prohibited; so by the regulations of Amsterdam, a. 13. 2 Mag. 132. No. 524; and those of Genoa, Casar. disc. 7 and 15; of Stockholm, a. 2. s. 7. 2 Mag. 257. No. 1029; of Prussia, c. 6. a. 10. 2 Mag. 189. No. 780; of Middelburg, a. 2. 2 Mag. 68. No. 161.

Wagering policies were held to be lawful, and were very much in use in England before 1746, when they were prohibited, by the Stat. 19. Geo. II. cap. 37. 'because the permitting of them had been productive of many pernicious practices, whereby great numbers of ships with their cargoes had been fraudulently lost; and had encouraged prohibited and clandestine trades, to the diminution of the revenue, and the great detriment of fair traders.' In Massachusetts, wagering policies are considered void, though there is no statute against them; (1) in New York they are held to be legal. (2)

illegal, without any special provision, in others, and is very little used where it is held to be lawful; and especially since it is distinguished by one essential circumstance, from what is properly an insurance, in as much as insurance is universally considered to be a contract of indemnity, which a wager is not. The subject of gaming policies will therefore be noticed only for the purpose of distinguishing what policies belong to this class.

The contract of insurance, then, agrees in substance with a bond or any other contract of indemnity or guaranty, but differs in form; whereas it agrees with a wagering policy in form, but differs in its character, its object, and the rules by which it is interpreted.

Section 2. The Form of the Contract.

less strictly in

Where the subject, the relation of the parties, and the object of the contract, continue to be the same, some degree of uniformity is naturally preserved in the form of the contract. In The Old form England the ancient form of the policy has been adhered to very preserved in strictly, in the United States this instrument has been frequently England, but examined by skilful persons with a view to making alterations; U. s. the general form of it has, however, been pretty uniformly preserved, though particular clauses have been altered, and others added; yet these clauses are in general no more free from uncertainty than those belonging to the old form. A policy of insurance has been considered as an obscure, incoherent,(1) and (1) Per Buller, very strange instrument. (2) But the obscurity and uncertainty J.4 T.R. 210. complained of, does not probably arise, altogether from any held, C. J. 4 (2) Per Mansimperfection in the policy that might be remedied. (a) A con- Taunt. 380. tract embracing so many interests and parties, and liable to be affected by so many events, cannot but be subject to some difficulties of construction, however skilfully it may be drawn.

The English law provides that no insurance shall be made on Gaming poliany ship belonging to the king or his subjects, interest or no cies. interest, or without further proof of interest than the policy, or

Parkinson,

by way of gaming, or without the benefit of salvage."(3) This (3) 19 Geo. II. statute has been interpreted not to make void a policy, contain- c. 37. ing the provision that a loss is to be paid, 'interest or no interest,' or 'without further proof of interest than the policy;' (4) but (4) Grant v. only to make those provisions void, and leave the party to prove Park, 402; his interest. It does not therefore prohibit any particular form Hodgson v. of the policy, nor enact that any particular form of words shall Glover, 6 East, 316. (5) Marsden (a) Mr. Justice Lawrence says, 'It is wonderful that policies should v. Reid, 3 be drawn with so much laxity; (5) Chief Justice Marshall, Policies East, 579. of insurance are generally the most informal instruments which are (6) 5 Cranch, brought into courts of justice;'(6) and again the contract of insurance 342. is very loosely drawn.' (7) Lord Mansfield said, the instrument is (?) 6 Cranch, conceived in an inaccurate form of words ;' (8) but that length of time and a variety of decisions have reduced it to a certainty.' (9) (9) Doug.270.

45.
(8)1 Bur. 347.

(1) Juhel v. Church, 2 Johns. Cas. 333.

conclusively determine the instrument to be a wagering policy. And the law is the same in the United States, as to the distinction between a wager and an insurance. Whether it be a wager or not, depends on the whole instrument; and though the assured have an interest in the subject and the risk, he may still Wager respecting them. (1) As, where a policy was, that a ship should save her passage to China that season, it was held to be a wager, though the insured had some goods on board. (2) The (2) Kent v. expressions mentioned in the above statute, or others equivalent Bird, Cowp. to them, are commonly used in wagering policies, yet, a great 583. See also variety of expressions might be used in this sort of policy, acr. Vigne, IT. cording to the subject to which it relates, and the event upon which the wager depends. It often happens in insurances intended to be on interest, that the assured has in fact no interest exposed to the risks enumerated, yet these are not therefore wagering policies, and he is entitled to have his premium returned. To make a policy a wager, it must appear to be such on the face of it. (3)

Kulen Kemp

R. 305.

(3) Cousins v.
Nantes, & al.

3 Taunt. 513;
Williams v.
Smith, 2
Caines, 13.

Accordingly, though the instrument contain phrases and provisions usually belonging to a wagering policy, still if it appear on the whole to be a contract of indemnity, by which the claims of the assured are to be commensurate with the damage he may sustain, and if it can be executed as such, the provisions contained in it, that are against law or inconsistent with the general tenor of the instrument, will be controlled and made. void. Where it was stipulated that, in case of loss, no proof of interest should be required, and that there should be no return of premium made, yet the court decided that those stipulations were void, and there should be proof of interest, and return of (4) Hemmen- premium, as in policies of the usual form. (4) But where it was way, r. Eaton, agreed in a policy that a total loss should be paid if the ship did 13 Mass. Rep. not return, and that no partial loss should be paid, and no benefit Clendining & of salvage claimed, and no proof of interest, except the policy, al. v. Church, required; it was held to be a wager on the return of the ship, for 3 Caines, 141; the contract provided that in such case the whole sum insured Grant . Par should be paid, and by the other parts of the policy, as well as this, it appeared plainly that it was not intended by the parties to be a contract of indemnity, under which the sum to be paid by the insurer, was to be measured by the damage sustained by the (5) Juhel v. assured. (5) Church, 2

108. See also

v.

kinson, Park,

402.

Johns. Cas.

333.

Code de Com.

If the policy appear on the face of it not to be intended by the parties as a contract of indemnity, and if it appear that the event insured against would not, were it to happen, cause any loss to the assured; or if it might cause a loss to him, and yet the sum to be paid by the insurer is not to be governed by such loss, or bear any proportion to it, such a policy is a wager.

The French code prescribes that the contract of insurance h. t. a. 143. shall be made in writing, bearing date on the day when it is subscribed, expressing whether made before or after noon, and that it shall contain other particulars specified, and that no blank space shall be left in the instrument.

Whether insurance must

In Great Britain and the United States, the law does not dibe in writing. rectly and positively prescribe the form of this contract, or the

Ves. Jun. 18.

mode in which it is to be executed. It has been held in England by Judges Eyre, Ashurst and Wilson, sitting as commissioners in chancery, that an insurance not in writing would be void (1) Morgan v. as an evasion of the stamp duty. (1) And the English statutes re- Mather, 2 quiring the assured in certain cases to be named in the policy, (2) 25 Geo. imply that the contract is in writing. (2) Mr. Justice Tilghman of III. c. 44. 28 Pennsylvania expressed a doubt, whether a valid insurance could Geo.III. c. 56. be made otherwise than in writing; (3) and the contract is uni- (3) Smith v. Odlin,4Yates, versally understood and spoken of, as being written.

Insurance is most frequently made by an incorporated company; and such a company is the mere creature of the act to which it owes its existence, and may be said to be precisely what the incorporating act has made it, to derive all its powers from that act, and to be capable of exerting its faculties only in the manner which that act authorizes.' (4) insurance binding upon such a company, therefore, it must be executed in pursuance of its charter.

468.

To make a contract of (4) Head and

Section 3. An Agreement for Insurance.

Amory v.

Prov. Ins. Co. 2 Cranch, 167.

It is often desirable to conclude an agreement for insurance Agreement for immediately, lest some intelligence should induce one party or Insurance. the other to recede. Accordingly it is the practice with some of the English insurers, on agreeing upon a risk, to subscribe a slip, or short memorandum of the proposed insurance, (5) which, (5) Marsh. according to the statement of one of a special jury, and so proba- Ins. 236. n. bly a man practically acquainted with the course of business, is considered to be binding on the parties; but Lord Kenyon held that it was not legally binding for want of a stamp, (6) and Lord (6) Rogers v. Ellenborough gave, in effect, the same opinion. (7) The reason M'Carthy, here given why this slip, signed by the insurer, is not a valid Park, 45. n. agreement in England, shows that it would be so in the United (7) Marsden v. Reid, 3 States, while they have no stamp act, provided it contained the East, 572. terms of the contract sufficiently expressed. It is not the general practice in the United States for insurers to subscribe any slip, though a memorandum of the contract is sometimes subscribed previously to executing the policy. The terms of the insurance being agreed upon, and nothing remaining but to make out the policy, the parties consider the risk to be assumed and the premium due, from that time. (a) But it does not appear that the parties

(a) The President of an insurance company in Providence, giving his testimony, said, in effecting or settling a policy, the assent of the parties to doing a thing, is in all respects as binding as the thing done, 2 Cranch, 164 according to the usage and practice among underwriters.' And the practice and understanding of insurers generally, is according to this statement.

At Marseilles instead of a slip signed by the insurer, the broker made out a note containing an abstract of the risk and terms, and the Emer. c. 2. underwriter subscribed to the policy in blank, leaving it to be filled s. 4. up by the broker according to the note. But this note constituted no part of the contract, nor could it be used to correct any mistake in the policy. Signing policies in blank is contrary to the French

M'Culloch v.

Eagle Ins. Co.

Sup. Jud. C.
Mass. Essex,

are legally bound until the policy is filled up, or some memorandum of the contract signed, and either actually or constructively delivered to the assured. Where the parties make an agreement for insurance by correspondence through the mail, it has been made a question what will amount to a completion of the agreement. Mr. M'Culloch of Kennebunk wrote to an insurance company in Boston, for the terms on which they would insure his vessel. The company answered, on the first of January, that they would take the risk proposed, at a premium of two and a half per cent. M'Culloch received this letter on the the case will third of January, and the same day wrote in reply, that he wishprobably ap ed to have a policy filled on the terms proposed, for 2500 or ering's Rep. 3000 dollars, as the company should prefer. On the second of See 1 M. & January, the company wrote that they declined taking the risk, S. 95; 2 Ves. but M'Culloch did not receive this letter, until after he had sent by mail his letter accepting their proposal. It was held that Lindsall, 1 B. the company could not be bound, until they received notice of M'Culloch's acceptance of their proposal, and that no contract was made in this case, since they had revoked their proposal before receiving such notice.

Nov. 1822;

pear 1 Pick

Jun. 118;

Adams v.

& A. 681;

Cooke v. Oxley, 3 T. R.

653.

Deviation.

Seaworthi

ness.

Express warranties.

Section 4. The usual Stipulations of the Contract.

A marine policy contains, in general, that the underwriters cause the assured to be insured in a certain sum, on ship, cargo, freight, or profits, for a certain voyage, or time, against the enumerated risks; for which they confess themselves to have been paid a premium at a certain rate per cent. These are the leading and substantial parts of every policy, and in connexion with these are introduced all the provisions, stipulations, conditions, and warranties.

It is an implied condition of every policy, and of the same force as if it were expressly inserted in the instrument, that the assured, at the time of procuring the policy, shall fairly disclose to the underwriters every fact material to the risk, which is exclusively within his knowledge, and which is not embraced by some agreement in the policy; and if this condition is not complied with, the policy is void.

It is always an implied condition, that the voyage shall be pursued by the usual route and in the usual manner.

The assured is understood, by the act of procuring the policy, to warrant that the vessel is sea-worthy, and in every respect fit for the voyage or service on which she is employed. This agreement is uniformly a part of the contract, though it is never expressed in the policy.

The warranties most frequently expressed in the policy, are, that the ship sailed or will sail, on or before a certain day; that

Ordinance, and is disapproved of by Emerigon as exposing insurers to frauds, since they often found that the policy did not correspond to the broker's note.