Upon the same notion that freight is the price paid for the transportation of goods, it was objected on the part of the insurers in a policy on the freight of the brigantine Rose,' that the description did not sufficiently designate the interest, because the assured was owner of both ship and cargo, and so no freight was to be paid. But the court said that, in such case, the profits of the voyage might be insured under the denomination of freight."(1)

Insurance being made upon freight from Jamaica to the United Kingdom, with leave to call at any of the West India Islands to take on board goods,' the description was held to apply to the freight of goods taken on board at Havana.(2)

It has been held in Pennsylvania that the description of 'freight advanced,' applied to the interest of a charterer of a part of the ship, who was to pay the charter money at all events.(3) It was so held in New York also; where it was decided at the same time, that the owner of goods who had advanced the freight or a part of it, with an understanding that it was not to be refunded in any event, could not insure the money so advanced under the description of freight.'(4) It was adding so much to the cost and charges of the goods.

In reinsurance the same general rules apply as to the description of the subject, namely, the former policy subscribed by the assured; and if this be not sufficiently described the reinsurance will fail. James Prince having underwritten one policy on the Columbia and cargo, another on property on board of the Columbia, and another on effects, on board of the same vessel, was reinsured on the Columbia and cargo,' with a provision that the reinsurers should indemnify him against all losses on the same amount underwritten by him on a former policy.' It was held that the reinsurance extended to but one of the original policies, which was the policy on the Columbia and cargo,' as only this one answered to the description in the policy of reinsurance.(5) Christian says, a reassurance must be expressly mentioned to be a reassurance, in the policy.'(6) But the case cited by him(7) does not appear particularly to support the proposition; which nevertheless may be true, as it does not seem to be easy to describe this interest without showing the policy to be a reinsur

ance.

CHAPTER VI.

THE PREMIUM.

Donaldson, 3 (2) Pollock v.

THE contract of insurance must include a stipulation for the The premium premium, the rate per cent of which is always expressed in the must be policy. But as the underwriter is liable to loss and entitled to agreed upon. a premium, only as far as the property is at risk, it does not necessarily appear by the policy what amount will be actually and effectually insured, and accordingly it does not show what amount of premium will be eventually earned. The amount intended to be insured appears in some cases, by the policy itself, to be uncertain, as in a policy on money advanced or to be advanced, for the use of a ship,' during an India voyage.(1) (1) 3 Burr. Insurance was made on a cargo to be valued as interest should 1712. appear,' at the rate of premium of 15 per cent for six months; and the value of the cargo at risk during that time, varied from 1500 to more than 5000 dollars. It was held, on the ground of a usage to that effect in Philadelphia, that the premium was to be estimated at that rate on the value on board at successive periods, and for the time during which it remained on board.(2) Generally, however, the premium on the whole sum named in The premium the policy as insured, is considered in practice to be due imme- is due immediately, though in the United States it is not usually payable un- diately, but, til after the expiration of a credit of from two or three, to eighteen months or more, according to the length of the voyage. It appears that in England the premium is payable on demand; but where the policy is subscribed by individual underwriters, the broker generally keeps a running account with them, and gives them credit for the premiums received or due from. the assured, out of which he pays such losses as accrue on policies put into his hands by the assured to be settled. He has a similar running account with the assured, whom he charges with the premiums, and credits with losses. He settles with each at stated periods or otherwise, according to the custom of the place, or the particular agreement of the parties.

The practice is much the same in the United States in respect to policies effected through the agency of brokers. But these policies constitute only a small part of the business of insurance, a greater part of which is done by incorporated companies that do not employ brokers. Where the contract is made through a broker, the premium note is generally made payable to him or his order, and not to the underwriters. In the case of insurance by an incorporated company, the premium note is generally made payable to the company by its corporate name, or to some of its officers. Accordingly the broker in one case, and the company or its officers in the other, may negotiate the note immediately, and compel the assured to pay it at its maturity, with

Dal. 510.

in the U.S.

is not immediately payable.

Construction

for the premium.

out any deduction for a loss or return of premium that may accrue before the period of credit expires. But these notes are rarely negotiated, and as the term of credit exceeds the usual length of the voyage, it is commonly known before the premium note is payable, whether any claim has accrued for a loss or return of premium, and only the excess of the demand of either party over that of the other is actually paid.

Both in England and the United States in the case of policies effected by the agency of brokers, the parties, in respect to the premium, are usually the assured and the broker. In respect to the policy and to all claims for return of premium and for losses, the parties are the assured and the underwriter.

The usual form of the policy contains a clause by which the of the receipt insurers confess themselves to have been paid the premium. Where a negotiable note is given for the premium, this is a sufficient payment to be the ground of such a receipt. In England, where such a note does not appear to be usually given, questions have arisen respecting the intention and effect of this acknowledgment. The intention of the parties in inserting the acknowledgment appears to be plain enough from its import, and not to require explanation, any more than a receipt for money paid in other cases.

(1) p. 335.

But as the premium is not always paid at the time of subscribing, some reason has been sought after for inserting an acknowledgment in those instances. Mr. Marshall (1) says, an action will lie for the premium notwithstanding this formal acknowledgment of the receipt of it in the policy, which is not inserted there as conclusive evidence of the actual payment, but to preclude the necessity of proving it in case of loss.' The same reason is given by Mr. Campbell.(a) But it implies that if this acknowledgment were not inserted in the policy, the assured would be obliged to prove that the premium had been paid, before he could recover for a loss. It does not appear, however, why the acknowledgment must be inserted for this purpose, since a consideration for the undertaking on the part of the insurer is shown as much by a promise of the assured by which he is bound to pay, as by a payment.

It seems to be a sufficient reason for inserting this acknowledgment, that a written contract, whether of insurance or of any other sort, ought to contain all the terms agreed upon, and the considerations that pass between the parties. In acknowledg ing the receipt of the premium, the parties adopt the form used in deeds of conveyance of land, which contain the same acknowledgment, though in the greater number of instances the payment is not in fact made at the time of the conveyance. The same form is used in other instruments. It is not at all remarkable that the receipt of the premium should be acknowledged in England, where it is paid at the time of subscribing the po

(a) 1 Camp. 534. n. Mr. Park cites this note of Campbell in his Edition of 1817, p. 34, and calls it a 'sensible and acute observation of the reporter,' but it was the observation of Mr. Marshall.

licy, or is a debt due from the assured to the broker, who, instead of the assured, becomes the debtor of the insurer; or in the United States, where it is paid, or the assured makes a promise in writing to pay it. If an underwriter in the United States acknowledges a receipt of the premium, without receiving a note, or in England, without the intervention of a broker, he subscribes an instrument in a form adapted to the general practice, when he himself departs from that practice. According to the general practice the acknowledgment is substantially true. In regard to the effect of the acknowledgment, it was formerly made a question whether the underwriter could, notwithstanding it, maintain an action against the assured for the premium.(1) It was supposed that such an action might be (1) Park, 35; maintained, which led to the above ingenious construction, as Marsh. 335. Mr. Park considers it, of the acknowledgment. There are a few cases in which the underwriter has recovered the premium of the assured, where, if he had not, an effect would have been given to fraudulent and unfair dealing. Foy, of Pillau, promised a consignment of goods to Gordon, of London, a young man just beginning business, who obtained insurance on the goods upon the credit of this promise, the insurers supposing he would thus be supplied with funds out of the proceeds of the goods to pay the premium. Foy consigned the goods to another merchant, and a loss happening, and a claim for return of premium accruing, the insurer claimed the right to set off the premium. The court allowed the set-off with harsh expressions respecting the conduct of Foy.(2) In another case, Haynes, an (2) Foy v. insurance broker, being indebted to Simeon and not able to pay Bell, 3 Taunt. him, Simeon proposed that Haynes should procure insurance 493. for him until the premiums should amount to his debt. Thus Haynes would be left indebted to the insurers for the premiums, and Simeon's debt be discharged. The insurances were accordingly effected. But the insurers, learning the purpose of the broker and the assured, brought suits against Simeon for the premiums. The jury, however, being of opinion that the broker alone was debtor for these, found in favour of the assured. But the court was dissatisfied with their verdict, and would have granted a new trial had not the matter been settled by the ties.(3)

par

But where there is no such reason for controlling the effect of the acknowledgment, the insurer has been held to be estopped by it from demanding the premium of the assured, and from denying, as between himself and the assured, that he had received it. An action being brought by the assured for a return of premium, the underwriter offered to prove, notwithstanding his acknowledgment in the policy of the receipt of the premium, that he had never received it. Lord Ellenborough instructed the jury, that the insurer was bound by the receipt in the policy. If a man acknowledge that he has received a sum of money of a broker, and credits him with his principal to that amount, he shall not afterwards, as between himself and the principal, be allowed to say that the broker never paid him.

(3) Mavor v.

Simeon, 3

Taunt. 497.n.

I should completely knock up the insurance business if I were to allow this acknowledgment to be impeached."(1)

Again, the same decision was given by the whole court in a case in which Lord Ellenborough said, 'In the usual course of things the underwriter acknowledges, upon the face of the policy, the receipt of the premium, which is an admission that he has received it through the intervention of the broker, and has no claim against the assured. His claim is against the broker.'(2)

These cases establish the principle, that in England, at least, where a policy is effected through the intervention of a broker, the acknowledgment precludes the underwriter from afterwards demanding the premium of the assured. But how far this principle is the effect of the acknowledgment in the policy, or the general course of business, is a matter of some doubt.

In 1802, Mr. Marshall expressed some doubt whether the premium was the debt of the broker, being of opinion at the same time, that it would be for the interest of all parties that the rule that the broker alone could maintain an action against the assured for premiums, should be fully established and constantly adhered to.'(3) An old case,(4) and a dictum of the judges in another,(5) are cited; which however seem to be of very little weight, as it does not appear that the policies referred to contained the acknowledgment, but rather that they did not, for Wild, J. said, the insurer only subscribes 100l. not the premium, which is never expressed in the printed policy.'(6) In Lord Mansfield's time an action was commenced on the part of the underwriter, against the broker, for premiums on policies made in the broker's name on behalf of his foreign correspondents, and no question was made whether the broker was debtor for the premiums.(7) It is stated by a witness in another case to have been the general practice in London as early as 1764, for underwriters to look to the brokers only for premiums.(8) And in many subsequent cases this is directly decided, or obviously recognized to be law, without any express distinction between policies in the name of the broker, and those in the names of his employers.(a)

These decisions have, however, in some measure grown out of the usage of London, and the usage is distinctly referred to by judges in giving their opinions. As far as the opinions are founded upon such a usage, they are not applicable in the United States, where the premium is not understood to be a debt from the assured to the broker, which the broker could demand in his own name, unless it is made so by a special agreement, or understanding, between the parties. An insurance broker is not distinguished in this particular from any other agent. Where the

(a) Bize v. Dickason, 1 T. R. 285; Edgar v. Fowler, 3 East, 222; Edgar v. Bumstead, 1 Camp. 411; De Gaminde v. Pigou, 4 Taunt. 246; Parker v. Smith, 16 East, 382; Minott v. Forrester, 4 Taunt. 541; Cumming v. Forrester, 1 M. & S. 494; Koster v. Eason, 2 M. & S. 112; Parker v. Beasley, 2 M. & S. 423; Houstoun v. Robertson, 2 Marsh. Rep. 138; 6 Taunt. 448; 1 Holt, 88.