plicable to policies of insurance. But where the validity of the contract depends upon the receipt of the premium, parol evidence is not admissible to contradict the written acknowledgment in the policy.1

In England contracts of insurance are made, generally, if not always, by brokers, who make themselves liable to the insurers for the premium, and stand, generally, as regards the underwriters, in the same position as the insured do in this country.2 And they are allowed to recover the amount from the insured as money paid, before they have actually paid it to the under

writers.3

The actual owner of the property or interest which is insured, being in fact the party for whose benefit the contract is made, is bound to pay the premium; and this even if the note of an

1 Goit v. National Protection Ins. Co., 25 Barb. 189.

2 For cases growing out of the peculiar relations of underwriters and brokers in England, see Airy v. Bland, Park, Ins. 34; Edgar v. Bumstead, 1 Camp. 411; Edgar v. Fowler, 3 East, 222; Grove v. Dubois, 1 T. R. 112; Bize v. Dickason, 1 T. R. 285; Minett v. Forrester, 4 Taunt. 541; Cumming v. Forester, 1 M. & S. 494; Koster v. Eason, 2 M. & S. 112; Parker v. Beasley, 2 M. & S. 423; Houstoun v. Robertson, 6 Taunt. 448.

This is allowed on

See Power v. Butcher, 10 B. & C. 329, cited post, next note. the ground that there are running accounts between the brokers and underwriters, on which the former are credited with the losses, and the latter with the premiums. The consequence of this practice is, that in ordinary cases, as against the assured, the underwriter cannot set up that the broker has not paid the premium of which he has acknowledged the receipt. Dalzell v. Mair, 1 Camp. 532; De Gaminde v. Pigou, 4 Taunt. 246; Anderson v. Thornton, 8 Exch. 425, 20 Eng. L. & Eq. 339. But if the assured has fraudulently induced the underwriter to give credit to the broker, the receipt will not estop the underwriter from claiming the premium of the assured. Foy v. Bell, 3 Taunt. 493. And so, where there is fraud on the part of the broker and the assured. Mavor v. Simeon, 3 Taunt. 497, note.

But it seems always to have been admitted in England that the policy would not be conclusive evidence of the payment of premium between the underwriter and broker. See the argument of Best, Sergt., in Foy v. Bell; Cumming v. Forester, 1 M. & S. 494. And it cannot be doubted that in the United States, when the underwriter looks in the first instance to the assured for the premium, the policy would not be conclusive evidence of its payment. Ins. Co. of Penn. v. Smith, 3 Whart. 520.

4 The practice in England in effecting insurances and paying premiums, is thus described by Bayley, J., in Power v. Butcher, 10 B. & C. 329, 340: " According to the ordinary course of trade between the assured, the broker and the underwriter, the assured do not, in the first instance, pay the premium to the broker, nor does the latter pay it to the underwriter. But as between the assured and the underwriter the premiums are considered as paid. The underwriter, to whom, in most instances, the assured are unknown, looks to the broker for payment, and he to the assured. The

other is taken who is agent or broker for the principal,1 unless the insurers knew that the agent was not acting for himself. In that case they are to be considered as electing to take the liability of the agent or broker, and can look no further. But they do not elect to take the agent, when they do not know that he is not the principal, or that there is another principal to whom they might look. Our policies usually contain a clause giving the insurers a right to deduct, or set off the premium due, against a loss. They would have this right as against the insured without any express agreement; but this clause secures to them their right, although the premium consist of the note of another party, if the note be unpaid.1

latter pay the premiums to the broker only, and he is a middle-man between the assured and the underwriter. But he is not solely agent; he is a principal to receive the money from the assured, and to pay it to the underwriters." But in this country there can be no question but that the underwriter can look to the assured in the first instance.

1 Ins. Co. of Penn. v. Smith, 3 Whart. 520. See Paterson v. Gandasequi, 15 East, 62, 2 Smith, Leading Cases, 222, note. But if the agent signs the note in his own name the principal is not liable on the note. Stackpole v. Arnold, 11 Mass. 27.

62.

2 Patapsco Ins. Co. v. Smith, 6 Harris & J. 166; Paterson v. Gandasequi, 15 East,

3 Ins. Co. of Penn. v. Smith, 3 Whart. 520. The policy in this case was of such a form that others might be interested, but not necessarily, and it was held that the taking the note of the agent was not a waiver of the right to look to the principal. But if the agent applies for insurance "for self and others," and the underwriters take the note of the agent only, the principals are not liable, though they were not known when the insurance was effected. Patapsco Ins. Co. v. Smith, 6 Harris & J. 166.

* In Hurlbert v. Pacific Ins. Co., 2 Sumner, 471, the insurance was for "H. & Co. for whom it may concern, payable to H. & Co.," and by a clause in the policy all sums due to the company from the insured when the loss should become due, were to be deducted. H. & Co. were mere agents for the parties in interest. It was held, in an action brought by H. & Co., for the benefit of the parties in interest, that the company could not set off debts due from H. & Co. in their own right; but that the premium note, whether given by the agent or principal, was to be deducted, and that the words, the assured, applied not to the party who procured the insurance, but to him for whose benefit it was made. See also, Wiggin v. American Ins. Co., 18 Pick. 158; Wiggin v. Suffolk Ins. Co., 18 Pick. 145, cited ante, p. 42, note.

SECTION II.

OF THE RETURN OF THE PREMIUM.

The premium, although due and payable in one sense as soon as the policy is made, is, in another, not due, unless that risk is incurred for insurance against which the premium is paid.1 If, therefore, there be no such risk, the premium cannot be claimed if it has not been paid, and if it has been paid by cash or by a note, it must be returned. This rule gives to the insured the power of avoiding the contract, in whole or in part after it is made; because this contract is, substantially, a promise by the insurers to indemnify the insured against a certain risk if that risk be incurred, and a promise of the insured in return to pay the premium to the insurers if their promise of indemnity attaches. If no part of the risk attaches, either because no part of the goods is shipped,2 or because no part of the voyage takes place, or because the insurance was predicated on a fact about which the parties were mistaken, or because the insured had no interest, or because the vessel was

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1 In Tyrie v. Fletcher, 2 Cowp. 666, Lord Mansfield, C. J., states the law as follows: 'There are two general rules established, applicable to this question: the first is, that where the risk has not been run, whether its not having been run was owing to the fault, pleasure, or will of the insured, or to any other cause, the premium shall be returned; because a policy of insurance is a contract of indemnity. The underwriter receives a premium for running the risk of indemnifying the insured, and whatever cause it be owing to, if he does not run the risk, the consideration, for which the premium or money was put into his hands, fails, and, therefore, he ought to return it. 2. Another rule is, that if that risk of the contract of indemnity has once commenced, there shall be no apportionment or return of premium afterwards.”

2 Martin v. Sitwell, 1 Show. 156; Graves v. Mar. Ins. Co., 2 Caines, 339; Waddington v. United Ins. Co., 17 Johns. 23; Scriba v. Ins. Co. of N. A., 2 Wash. C. C. 107; Toppan v. Atkinson, 2 Mass. 365; Bermon v. Woodbridge, 2 Doug. 781; Richards v. Mar. Ins. Co., 3 Johns. 307; Murray v. Col. Ins. Co., 4 Johns. 443.

3 Forbes v. Church, 3 Johns. Cas. 159; Murray v. Col. Ins. Co., 4 Johns. 443.

* As a blockade. Taylor v. Sumner, 4 Mass. 56.

Routh v. Thompson, 11 East, 428. In this case a Danish vessel was captured and taken into port before war was declared against Denmark, though subsequent to a proclamation by the king in council to detain and bring into port all Danish vessels. Insurance was made by order and on account of the captors. Held, that the captors had no claim of right, but only ex gratia of the crown, the vessel being seized before

unseaworthy and consequently the risk never attached,1 the whole premium is returnable. And, generally, the premium is to be returned if the risk never commenced on account of a breach of warranty.2

But the assured cannot annul the insurance by serving on the underwriters a notice of his desire to put an end to the contract, if the voyage is not actually abandoned.3

Many insurance companies by a clause in their policies, retain one half of one per cent. on the premium returnable; but in some cases, other terms are agreed upon for the return premium. This half per cent. is allowed by foreign laws of insurance, and may have been derived from them. If the policy is on time at an entire premium, there is no apportionment, although the loss

war was declared, and that they had no insurable interest and were entitled to a return of premium. In the subsequent case of M'Culloch v. Royal Exch. Ass. Co., 3 Camp. 406, Lord Ellenborough ruled that if the premium was paid, and it afterwards appeared that the insured had no insurable interest, he could not recover back the premium after the safe performance of the voyage. This case, we think, is manifestly incorrect. The head note of Boehm v. Bell, 8 T. R. 154, seems to support Lord Ellenborough's doctrine, but the case was decided on the ground that as the captors had an insurable interest, they could not recover back a portion of the premium, although their interest was not so great as they expected.

1 Porter v. Bussey, 1 Mass. 436; Taylor v. Lowell, 3 Mass. 331; Penniman v. Tucker, 11 Mass. 66; Russell v. De Grand, 15 Mass. 35, 38; Merchants' Ins. Co. v. Clapp, 11 Pick. 56; Commonwealth Ins. Co. v. Whitney, 1 Met. 21, 23; Scriba v. Ins. Co. of N. A., 2 Wash. C. C. 107.

2 Murray v. United Ins. Co., 2 Johns. Cas. 168; Elbers v. United Ins. Co., 16 Johns. 128; Colby v. Hunter, 3 Car. & P. 7; Delavigne v. United Ins. Co., 1 Johns. Cas. 310; Duguet v. Rhinelander, 1 Johns. Cas. 360. But not if the breach is subsequent to the attaching of the risk. Vos v. United Ins. Co., 2 Johns. Cas. 180.

8 New York Fire M. Ins. Co. v. Roberts, 4 Duer, 141.

4 Emerigon, ch. 16, § 6, Meredith's Ed., p. 662, says: "The half per cent. which is due to the insurers in case of return, is granted them, not for damages and losses for the non-execution of the contract by the act of the assured, as Pothier pretends (n. 181), but rather for the trouble of having signed and put the party to bed on their money." The practice prevails at Lloyds, where there is no stipulation against it. Stevens on Average, 206; 2 Arnould, Ins. 1238. It is the practice with many underwriters in the United States to insert a clause, fixing the percentage to be retained, in case the premium is returned. But we are not aware that it is the practice to retain part of the premium where there is no stipulation in regard to it. In Boston the usage is for the underwriter to return the whole premium. According to the usage on the continent, the one half per cent. is not to be returned in case the underwriter has been guilty of fraud. Emerigon, Meredith's Ed., p. 663. This usage is in accordance with the common law principle that money cannot be held, when obtained by fraud. See Marsh. on Ins. 677.

3

takes place when only a small portion of time has expired.1 And the rule is the same if a gross sum is to be paid at once, although it be calculated at a specified rate per month.2 So if insurance is effected "at and from " a place, it is no defence that the risk "from" the place was never incurred; or that the ship was unseaworthy at the inception of the voyage if the risk once attached. And an action for the return of premium on account of short interest, will not lie if the interest of the party to the extent insured was covered at any time during the voyage.5 But if a vessel is insured "at and from a port warranted to depart with convoy," or to sail on or before a certain day, the risk is severable, if a usage to that effect is proved. So if the

1 Tyrie v. Fletcher, 2 Cowp. 666.

2 Loraine v. Thomlinson, 2 Doug. 585. In Lovering v. Mercantile Mar. Ins. Co., 12 Pick. 348, a ship was insured for twelve months or until her arrival, at four and a half per cent. per annum, and at the same rate for a longer or a shorter period, but warranting two and a half per cent. for six months. The assured was not entitled to abandon for capture or detention until proof should be exhibited of the detention having continued ninety days. The ship was captured just before the expiration of the six months, and, after proof of detention for ninety days was exhibited, was abandoned. The abandonment was held to relate back to the time of the capture, and the underwriters to be entitled to a premium for only six months.

* Col. Ins. Co. v. Lynch, 11 Johns. 233; Marine Ins. Co. of Alexandria v. Tucker, 3 Cranch, 357.

* Annen v. Woodman, 3 Taunt. 299; Taylor v. Lowell, 3 Mass. 331; Merchants' Ins. Co. v. Clapp, 11 Pick. 56.

Howland v. Comm. Ins. Co., Anthon, N. P. 26.

6 Stevenson v. Snow, 3 Burr. 1237. In this case the insurance was on a vessel "lost or not lost at and from London to Halifax, warranted to depart with convoy from Portsmouth for the voyage." The jury found that there was a usage in such a case to return part of the premium, without finding the proportion. Lord Mansfield held the risk severable, not on the ground of usage because that was indefinite, but because "the principle was agreeable to the general sense of mankind." In Long v. Allan, 4 Doug. 276, the risk was held to be divisible on the express ground of usage. In Gale v. Machell, 2 Marsh. Ins. 3d Ed. 667, Park, Ins. 529, the question was not settled. See also, Rothwell v. Cooke, 1 B. & P. 172.

In Tyrie v. Fletcher, 2 Cowp. 666, Lord Mansfield, C. J., said: “A case of general practice was put by Mr. Dunning where the words of the policy are, 'at and from, provided the ship shall sail on or before the 1st of August.'. . . . A loss in port before the day appointed for the ship's departure, can never be coupled with a contingency after the day but if a question were to arise about it, as at present advised, I should incline to be of opinion, that it would fall within the reasoning of the determination in Stevenson v. Snow, and that there were two parts or contracts of insurance, with distinct conditions." See also, Long v. Allan, 4 Doug. 276; Scott v. Rae, cited 2 Doug. 787. But in other cases where no usage was shown, the risk was held to be entire. Meyer v. Gregson, 3 Doug. 402; Hendricks v. Com. Ins. Co., 8 Johns. 1.