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.2 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.

4 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. 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

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.

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

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

5 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.

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. So if insurance is effected "at and from " a place, it is no defence that the risk "from" the place was never incurred;3 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," 6 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.

3 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.

* 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.

voyage is composed of severable passages, for which the risk is severable, a pro rata premium may be returnable because some of those passages were prevented. But generally, if the premium is entire, the risk is not severable, although the voyage consist of several passages.1 If the insurance be on two subjectmatters, as ship and cargo, and the ship goes without cargo, the premium on the cargo will be returnable.2 And if a part only of the goods is shipped, then a due proportion of the premium is earned and a due proportion returnable.3

1 Thus in Bermon v. Woodbridge, 2 Doug. 781, the insurance was on a vessel “at and from Honfleur to the coast of Angola, during her stay and trade there, at and from thence to her port or ports of discharge in St. Domingo, and at and from St. Domingo back to Honfleur." The vessel deviated after leaving the coast of Angola. It was held that no part of the premium was returnable. See also, Moses v. Pratt, 4 Camp. 297; Tait v. Levi, 14 East, 481. In Homer v. Dorr, 10 Mass. 26, the insurance was on a cargo from Boston to Archangel and back to Boston. The risk was held entire, although the usage in Boston was shown to be to sever it. And the same rule applies to charter-parties. See ante, Vol. I. p. 259. In Waters v. Allen, 5 Hill, 421, the insurance was at and from New York to Monte Video and Buenos Ayres, and at and from thence back to New York. The premium was one and three quarters per cent. each way. Held that, otherwise, the contract would have been entire. And the risk was held to be severable in a case where the court said the spirit of the agreement showed that the parties so intended. Donath v. N. A. Ins. Co., 4 Dall. 463, 471. 2 Amery v. Rogers, 1 Esp. 207. In Horneyer v. Lushington, 15 East, 46, the insurance was for £3,500 on cargo and £1,000 on ship. The policy on the ship was avoided by the carrying of simulated papers, and that on the cargo because it was not loaded at the place agreed. No question appears to have been made as to the return of premium on the ship, but Lord Ellenborough said: "It seems to me, therefore, that under the terms of this policy, the risk upon the goods never commenced, and there must be therefore a proportional return of premium."

8 In Holmes v. United Ins. Co., 2 Johns. Cas. 329, the insurance was to the amount of $25,000, interest as might appear. The plaintiff's interest was less than $13,000. There was a proportionable return of premium. Kent, J., said: "There is no doubt but that if property be insured to a larger amount than the real value, the overplus premium is recoverable, because the insurer shall not receive the price of a risk which he has not run." In Pollock v. Donaldson, 3 Dallas, 510, the insurance was on cargo for six months "to be valued as interest shall appear." On a voyage from Hamburg to Dunkirk, the value of the cargo was $5,333, from Dunkirk back to Hamburg, $1,500, and from Hamburg to Philadelphia, $2,500.

The underwriters contended that fifteen per cent. premium should be allowed for the whole $5,333. But the court "allowed the premium of fifteen per cent. upon the value of the different cargoes for the time that they were respectively on board the brig." See also, Forbes v. Aspinall, 13 East, 323; Foster v. United States Ins. Co., 11 Pick. 85; Eyre v. Glover, 16 East, 218. The same rule applies if the cargo be valued and only a part of the valued cargo be placed on board. See ante as to valued policies.