.259 CHAP. CHAPTER THE FOURTEENTH. Of Wager-Policies. HAVING in the four preceding chapters ftated the va rious cafes, in which the contract of infurance is void from its very commencement, on account of its repugnancy to those principles of juftice, equity, and good faith, which are the great foundation of all contracts between man and man; we proceed to treat of thofe policies, which by the pofitive ftatute law of the country are declared to be abfolutely null and void. Of thefe the largest clafs are wagerpolicies, or policies as they are called, upon interest or no intereft. The nature of the contract of infurance, in its original ftate, was, that a fpecific voyage fhould be performed free from perils; and in cafe of accidents, during fuch voyage, the infurer, in confideration of the premium he received, was to bear the merchant harmless. It followed from thence, that the contract related to the fafety of the voyage thus particularly defcribed, in respect either of fhip or cargo and that the person infured could not recover beyond the amount of his real lofs. In procefs of time, however, variations were made, by exprefs agreement, from the firft kind of policy; and in cafes where the trader did not think it proper to disclose the nature of his interest, the insurer difpenfed with the infured having any intereft either in the fhip or cargo. In this laft kind of policy (of which we are now to treat) "valued free from average," and "intereft or no intereft," it is manifeft, that the performance of the voyage or adventure, in a reafonable time and manner, and not the bare existence of the fhip or cargo, is the object of the infurance. Such an object as that, from a reference to the real nature of an infurance, as stated in the outfet of the chapter, namely, that it is a contract of indemnity from a real and manifeft, not XIV. not from a fuppofed and ideal loss, must have been original- CHA P. ly bad. Indeed it has been declared from the bench, in the reign of queen Anne, that such insurances were formerly bad; Allievedo v. for it is faid in that cafe, that in former times, if one had no Cambridge, intereft, though the policy ran, intereft or no intereft, the in- to Mod. 77. furance was void; because insurances were made for the benefit of trade, and not that perfons unconcerned therein, or uninterested in the subject matter, fhould profit by them. : The idea thus ftarted is very much confirmed by what fell from the court in the cafe of Depaiba v. Ludlow for the Depaiba v. court there observed, that insurances upon intereft or no interest were introduced fince the revolution. Ludlow, Co. myus Rep. 360. Taking it for granted then, that the law of England in this refpect, previous to the revolution, was fuch, as these cafes fuppofe it to be, it was perfectly confonant to the laws of most of the commercial ftates and countries in Europe. For we find that by positive regulations of Middlebourg, Ge- 2 Mag. 7o. 55. 88. 189-257noa, Konyngsburg, Rotterdam, and Stockholm, all infurances upon wagers, or as interest or no intereft, are declared to be abfolutely void, and of no effect. But though this mode of insuring thus gained a footing in England, yet when introduced, the courts of justice looked upon these contracts with a jealous eye; and by their determinations fhewed the ftrong prejudices which they entertained against them. The Courts of Equity in particularmanifefted that their inclination would lead them as much as poffible to fupprefs fuch a species of contract: nay, that they still confidered them as void. This is evident from two cafes in Vernon's Reports. In one of them, the defendant had lent money on a bot- Goddarty.Cirtomry bond, but had no interest in the fhip or cargo; the rett, 2 Vern. 269. Trin. money lent was 300l. and he insured 450/. on the hip: the Term, 1692. plaintiff's bill was to have the policy delivered up; because the defendant was not concerned in point of intereft, as to the fhip or cargo. Per curiam. Take it that the law is fettled, that if a man has no intereft, and infures, the insurance is void, though it be expreffed in the policy, interested or not interefed. The XIV. CHA P. reason the law goes upon is, that infurances were made for the benefit of trade, and not that perfons unconcerned therein, and who were not interested in the ship, should profit thereby; and where one would have the benefit of the infurance, he must renounce all intereft in the fhip. And the reason why the law allows that a man having some intereft in the ship or cargo, may infure more, or five times as much, is, that a merchant cannot tell how much or how little his factor may have in readinefs to lade on board his fhip. Per Cur. Decree the policy to be delivered up to be cancelled. Le Pyprev. Farr, 2 Vern. 716. In Chancery, Mich. Term, 1716. 2 Burr. 683. Vide ante, P. 150. Vide ante, c. I. p. 8, 9. From the fpirit of this decifion, it may likewife appear, that the Court of Chancery inclined to think, that an infurance made without the benefit of falvage to the insurer, was unconfcientious, and a proper fubject for relief in equity; for the Chancellor exprefsly fays, where one would have the benefit of the infurance, he muft renounce all intereft in the ship. In another cafe alfo, which was on a policy of infurance on goods, by agreement valued at 600l. and the insured not to be obliged to prove any intereft: the Lord Chancellor ordered the defendant to difcover what goods he put on board; for although the defendant offered to renounce all intereft to the infurers, yet it must be referred to the Mafter to examine the value of the goods faved, and to deduct it out of the value or fum of 600l. at which the goods were valued by the agreement. There was one very remarkable difference between poli cies upon intereft, and fuch as were not, of which I believe notice has already been taken in a former part of this work; namely, that in policies upon intereft, you recover for the lofs actually fuftained, whether it be total or partial: but upon a wager-policy, you can never recover but for a total lofs. All the doctrine, which turns upon this diftinction be tween interest and wager policies was confidered at much length by Lord Mansfield, in the famous cause of Gofs v. With» ers, to which we have had occafion more than once to refer. It has already been obferved, that the fecurity given to the infured was very confiderably increased by the erection of two Affurance Companies, which were incorporated by royal charter in the year 1720; for the legislature had taken care XIV. care that thofe corporations fhould have fufficient funds to CHAP. anfwer any demands that might be made upon them, in the common courfe of business. But this additional fecurity for the infured foon produced many dangerous and alarming confequences, which, if they had not been checked, would have proved very detrimental to the trade of this country. For instead of confining the business of insurances to real risks, and confidering them merely as an indemnity to the fair dealer against any lofs, which he might fuftain in the course of a trading voyage, which, as we have seen, was the original design of them; that practice, which only prevailed fince the revolution, of infuring ideal risks, under the names of intereft or no intereft, or without further proof of intereft than the policy, or without benefit of falvage to the underwriters, was increasing to an alarming degree, and by fuch rapid ftrides as to threaten the fpeedy annihilation of that lucrative and most beneficial branch of trade. All these various kinds of insurance juft enumerated, (and many others, which the ingenuity of bad men found no difficulty in devifing,) having no reference whatever to actual trade or commerce, were very justly confidered as mere gaming or wager-policies; and therefore the legislature thought it neceffary to give them an effectual check, and, by pofitive rules, to fix and af certain what property or intereft a merchant fhould be per mitted to infure. Accordingly an act of parliament paffed, in the 19th year of the reign of king George II, entitled "an act to regulate "insurance on fhips belonging to the fubjects of Great "Britain, and on merchandizes or effects laden thereon." As this act is the most important and most extenfive in the whole code of ftatute law, with regard to infurances, I fhall now cite as much of it at length, as relates to the present chapter, and afterwards the other claufes of it under those heads, to which they more immediately apply. The caufes, which co-operated to induce the legislative 19 Geo. 2. c. 37. body to pass fuch an act, are fully stated in the preamble. "Whereas it hath been found by experience, that the mak"ing affurances, intereft or no, intereft, or without further "proof of intereft than the policy, hath been productive of "many pernicious practices, whereby great numbers of fhips, with their cargoes, have either been fraudulently loft and "and deftroyed, or taken by the enemy in time of war; and "fuch affurances have encouraged the exportation of wool, "and the carrying on many other prohibited and clandeftine "trades, which by means of fuch affurances have been con"cealed, and the parties concerned fecured from lofs, as "well to the dimunition of the public revenue, as to the great detriment of fair traders; and by introducing a mis"chievous kind of gaming or wagering, under the pretence "of affuring the risk on thipping, and fair trade, the infti"tution and laudable design of making affurances, hath been "6 perverted; and that which was intended for the encour66 agement of trade and navigation, has, in many inftances, "become hurtful of, and destructive to the fame." "For remedy whereof be it enacted, that no affurance "or affurances fhall be made by any perfon or perfons, "bodies corporate or politic, on any fhip or fhips belonging "to his majesty, or any of his fubjects, or on any goods, "merchandizes or effects, laden or to be laden on board of 66 any such ship or ships, interest or no intereft, or without fur"ther proof of intereft than the policy, or by way of gaming, or wagering, or without benefit of falvage to the affurer; and "that every fuch infurance shall be null and void to all in "tents and purposes." 66 "Provided always, that affurance on private ships of war, "fitted out by any of his majesty's fubjects folely to cruize against his majesty's enemies, may be made by or for the "owners thereof, intereft or no intereft, free of average and "without benefit of falvage to the infurer; any thing here"in contained to the contrary thereof in any wife notwith “standing," "Provided alfo, that any merchandizes or effects from any ports or places in Europe or America, in the poffeffion "of the crowns of Spain or Portugal, may be affured in fuch way and manner, as if this act had not been made.” The fourth fection relates to re-infurances, which will be the fubject of the following chapter. "And be it enacted, that all and every fum and fums of money to be lent on bottomry, or at refpondentia, upon any "fhip or fhips belonging to any of his majefty's' fubjects, દર "bound |