No. 97.

- Bradford v. Symondson, 7 Q. B. D. 456. — Rule.

recover the premium, unless it is proved that before the risks commenced or terminated they had consented to dissolve the contract; and we apprehend that these rules are just as applicable where the policy covers successive risks, as where it is confined to a single voyage; although when the risks are not merely successive, but distinct and independent, so that the premium may be apportioned, the non-inception of a portion of the risks will doubtless warrant a proportionate return or diminution of the premium."

In Waters v. Allen, 5 Hill (N. Y.), 421, Tyrie v. Fletcher is cited, and the observation of Lord MANSFIELD that the premium shall be returned "where the risk has not been run, whether its not having been run was owing to the fault, pleasure, or will of the insured," was applied in a case where the policy was on distinct risks, with a separate premium on each, and immediately after the first risk had commenced the insured had fraudulently destroyed the vessel, and consequently the other risks had not attached. BRONSON, J., observed: "Although this, like some other sweeping remarks made by that great man, must be taken with some allowance, I think it may safely be applied to this case." "I think this a safe rule, viz., that where the insured sues for a loss, and fails on the ground that his contract is void by reason of his own fraud in procuring it, or where he sues for a return of premium, and is obliged to show his own fraud in making title to the money, then he shall not have a return; but when the contract is valid, and the insured can make title to a return of premium without showing his own fraud, there he may recover, although but for his own fault the peril insured against might have been run."

No. 97. BRADFORD v. SYMONDSON.

(C. A. 1881.)

RULE.

IN a question of return of premium, the risk is considered to have been entered upon, if there is, at the time of making the contract, an uncertainty in contemplation of both parties as to the safety of the adventure; although in point of fact the risk may at that time have been determined by the safe arrival of the ship and cargo.

Bradford v. Symondson.

7 Q. B. D. 456–465 (s. c. 50 L. J. Q. B. 582; 45 L. T. 364; 30 W. R. 27).

Insurance. · Policy attaching.— Risk determined in Fact but not in [456] Knowledge of Parties. Action for Premium.

The defendant, who had insured a cargo by a certain vessel lost or not lost for a certain voyage, believing such vessel to be overdue, effected a policy of reinsurance with the plaintiff on the same cargo and risk.

Before effecting the policy of reinsurance, the vessel and cargo had in fact arrived safely at the port of destination; but this was not known to either the plaintiff or defendant at the time the policy was effected.

Held, that the policy had attached, and that therefore the plaintiff was entitled to the premium at which it had been effected.

On the 3rd of October, 1879, the Phoenix Insurance Company of New York, insured by declaration on an open policy of the 22nd of September, 1876, a cargo by the Alata, lost or not lost, from Philadelphia to Rochfort.

On the 23rd of December, 1879, the Phoenix Insurance Company, by the defendant as their agent, effected at a premium of 75 guineas per cent a Lloyd's policy, which was underwritten by the plaintiff, as a reinsurance to the extent of £1500 on the same cargo and risk as was so insured by the Phoenix Insurance Company.

The Alata sailed from Philadelphia to Rochfort, on the 1st of October, 1879, with the cargo on board, and arrived safely at Rochfort on the 14th of November, 1879, discharged there her cargo undamaged, and sailed thence on the 18th of December, 1879; but at the time of effecting the policy of reinsurance of the 23rd of December nothing had been heard of the arrival of the Alata, and neither the plaintiff nor the defendant nor the Phoenix Insurance Company knew that she and her cargo had then safely arrived. Under these circumstances the Phoenix Insurance Company, and the defendant as their agent, refused to pay the premium, contending that there had been nothing to insure and no risk by the plaintiff.

The plaintiff accordingly brought this action to recover the premium payable by the said policy. The action was tried before Lord COLERIDGE, Ch. J., without a jury, on the admitted [* 457] facts, at * the Middlesex Trinity sittings, 1880, when his Lordship gave judgment for the plaintiff for the amount

claimed.

From this judgment the defendant appealed.

March 1 and 3. Benjamin, Q. C., and French for the defendant. At the time the policy of reinsurance was made, there was no risk to be run, and therefore no consideration for the premium. The rule is thus stated by Lord MANSFIELD, in Tyrie v. Fletcher, 2 Cowp. 666, 668 (p. 502, ante), " 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." It is admitted, on the part of the plaintiff, that if the voyage had never begun there would have been no risk, and the premium would have to be returned; then, if the voyage is over and the ship has arrived safely, how can there be any risk? The reinsurance was made here, under circumstances of a mistake, in fact, by both parties, and the premium, therefore, ought not to be payable. Oom v. Bruce, 12 East, 225 (11 R. R. 367); Hentig v. Staniforth, 5 M. & S. 122; and nom. Henry v. Staniforth, 4 Camp. 270 (17 R. R. 293). No doubt" the insurers can, if such be the intention and agreement, make themselves responsible for a loss which has already happened when the policy is made: " 2 Parsons on Insurance, p. 44; and in Sutherland v. Pratt, 11 M. & W. 296, it was held to be no answer to an action on a policy on goods (lost or not lost), that the interest in them was not acquired until after the loss. "Such a policy," says Lord WENSLEYDALE, in that case," is clearly a contract of indemnity against all past as well as all future losses sustained by the assured in respect to the interest assured." But, as stated in 2 Arnould on Insurance, 5th ed. p. 1057, "in case the risk had no inception, whatever may have been the cause, even the neglect or fault of the assured himself, provided it be not his actual fraud, the premium is by law to be returned." Then he says, "The general law maritima agrees with our own on this point, and is based on the same principles, citing 2 Emerigon, c. xvi. § 1, p. 186. On behalf of the plaintiff reliance will be placed on * 2 Park on Insur- [* 458] ance, ca p. xix. 7th ed. p. 562, where there is the following pass age: "If the ship be arrived before the policy is made and the underwriter is acquainted with the arrival, but the insured is not, it should seem the latter will be entitled to have his premium restored on the ground of fraud. But if both parties be ignorant of the arrival and the policy be (as it usually is) lost or not lost, I think, in that case, the underwriter should retain it; because, under such a policy, if the ship had been lost at the time of subscribing, he would have been liable to pay the amount of his subscription." He, however, subsequently states, at p. 563, "The principle upon which the whole of this doctrine depends is simple and plain, admitting of no doubt or ambiguity. The risk or peril is the consideration for which the premium is to be paid; if the

"

No. 97. Bradford v. Symondson, 7 Q. B. D. 458, 459.

risk be not run, the consideration for the premium fails; and equity implies a condition that the insurer shall not receive the price of running a risk, if, in fact, he runs none." In 2 Phillips on Insurance, sect. 1826, it is also said, "The risk may have terminated before the policy is made, yet if it be so made that it would have applied to any loss that might have happened during the risk, no return of premium can be demanded." Here the policy of reinsurance was made on the assumption that the voyage had not terminated, and that the Phoenix Insurance Company might be liable to pay for a loss. This was a mistake; there never was any risk, and the policy of reinsurance never did and never could attach. Next, the defendant never had any insurable interest when the policy of insurance was effected. "The rule, in fact, is, that if through mistake, misinformation, or any other innocent cause, an insurance be made without any interest whatsoever, the assured is entitled to recover back the whole premium." 2 Arnould on Insurance, 5th ed. p. 1066.

[BRETT, L. J. — That second point seems to be the same as the first, for during the whole time of the insured voyage the assured had insurable interest, but as the voyage had terminated, it is said there was no insurable interest.]

There was no interest when the second policy was effected. [BRETT, L. J. You say there was no insurable interest when that policy attached; but then when did it attach? Might it not attach to a time before it was made?]

[* 459] It might cover losses before it was made, but it could not attach unless there was something then existing to which it could attach, and that was not so here.

Cohen, Q. C., and Hollams for the plaintiff. With regard to the first point, there was a risk when the policy of reinsurance was made. The policy would cover past as well as future losses, and there is no condition, expressed or implied, that if the voyage be ended when it is made, the premium shall be returned. "The form of the policy in England and the United States contains the words 'lost or not lost; and if the subject insured be lost or has arrived in safety when the contract is made, it is still valid if made in ignorance of the event, and the insurer must pay the loss or not pay it, as the case may be. This is laid down by the foreign jurists as a general principle of insurance without reference to those words which are said to be peculiar to the

No. 97. - Bradford v. Symondson, 7 Q. B. D. 459, 460.

"

English policies. 3 Kent's Commentaries, 12th ed. p. 259. In case of fraud on the part of the insurer, the premium must be returned, as if he knew at the time of making it that the vessel had arrived. 2 Arnould on Insurance, 5th ed. 1064, citing Lord MANSFIELD in Carter v. Boehm, 3 Burr. 1905. That would seem to imply that where the insurer did not so know of the arrival of the vessel the premium would not be returnable. The French and German law is to the same effect.

Code de Commerce, arts. 366

The cases of Oom v. Bruce,

and 367; German Code, art. 789. 12 East, 225 (11 R. R. 367), and Hentig v. Staniforth, 5 M. & S. 122 (17 R. R. 293), are very different from the present one. They were cases where the policy was void, and never attached at all. The second policy, in the present case, was never void, and the consideration, which, in fact, was the plaintiff's undertaking to indemnify against past and future losses, did not wholly fail. Suppose the vessel had been lost, being at the bottom of the seal when the policy was made, there might equally be said to be then no risk to be run, for the event was certain in the sense that it had happened, though uncertain in the sense that it was unknown, but the undertaking to indemnify against this loss would be a good consideration for the premium. There is a case of Natusch*v. Hendewerk,1 exactly in point, in which the [* 460] late Mr. Justice WILLES decided that an insurer had a right to the premium on a policy of insurance which was effected, as in the present case, after the vessel had in fact arrived at her port of destination. In Emerigon, cap. xv. § 3, ed. translated by Meredith, p. 635, it is said: "If there is no fraud, and one of the

1 Not reported. It was an action by insurance brokers to recover the premium due in respect of a policy of insurance against war risk only, effected by them for and at the request of the defendant on the Friede, a German vessel, on a voyage from Dantzic to Hull, during the war of 1870 between France and Germany. Some few hours before the policy was effected, the Friede had arrived safely at her port of destination, but the insurance was ordered and effected in ignorance by either party of such arrival, and upon the supposition that the said vessel was still at sea. By arrangement the action was not tried at Nisi Prius, but left to the decision of WILLES, J., who heard the case at cham

bers in April, 1871, where it was argued on the admitted facts by J. C. Mathew, for the plaintiffs, and Cohen, Q. C., for the defendants. That learned Judge was of opinion that in the absence of knowledge that the vessel had arrived at Hull, the policy ought to be treated as a contract that during the voyage, which was an existing one, the vessel, which was also an existing one, had not been and should not be captured, and that if the policy did so protect the assured from any damage that might have been sustained, it was difficult to see why the underwriter was not entitled to his premium. He accordingly directed a verdict to be entered for the plaintiffs for the amount of their claim.