Form of underwriting.

accessible to the subscribers at Lloyd's :-The written lists, containing the latest intelligence; Lloyd's books, containing this intelligence condensed, methodized, and alphabetically arranged; the printed lists, filed for those who may wish to consult them.1

Lloyd's underwriters individually sign their names at the foot of the policy, and opposite thereto the sum insured by each in figures and also in words, with the date of so doing.2 This is technically called underwriting the policy for so much, and each thereby makes a separate contract in the terms of the instrument with the assured of the particular amount set opposite to his name. The right of action in the assured is consequently against each separately, and not against all jointly.

It appears that of late, say about the year 1853 in particular instances, and since 1869 generally from all the underwriting members, the Committee of Lloyd's have required a written guarantee to cover the engagements of each in his capacity as an underwriting member, usually of the amount of 50007., with a view to maintaining the credit of the room. The Corporation of Lloyd's being thus constituted trustees of the guarantee on behalf of those who have sustained damage

1 "The receipt of official news of capture," &c. being a term in a policy, the question was, what would satisfy it. News of the embargo reached a mercantile firm, the agents of the ship, in London, by telegraph; the telegram was carried by the insurance broker to Lloyd's, where, upon its being authenticated with the name of the receiving firm, the contents were entered in Lloyd's "Lost Book." This was held by a special jury at Guildhall, Erle, C. J., presiding, to be official news; Fowler v. The English and Scottish Marine Ins. Co., Guildhall Sitt. post. M. T. 1864.

230 & 31 Vict. c. 23, s. 7. Rule 4 in the sched. to the special Act,

34 Vict. c. xxi, incorporating the Society of Lloyd's is as follows:

"An underwriting member shall not, by himself or by any partner or other substitute, directly or indirectly underwrite in the city of London a policy of insurance, as follows: (1) In the name of a partnership, or otherwise than in the name of one individual (being an underwriting member of the Society) for each separate sum subscribed; or (2) For the account, benefit, or advantage of any company or association, unless they are subscribers to the Society, nor unless every policy underwritten for their account, benefit, or advantage is underwritten in their ordinary place of business."

by the failure of the underwriting member in respect of his engagements in that capacity, are entitled to put it in suit, although they have themselves suffered no loss.1

About the beginning of the Great Bubble Year, that is, The two Old Companies. 1719-1720, certain persons desirous of forming a Company for the purposes of insurance, headed respectively by Lord Onslow (who afterwards formed the Royal Exchange Assurance Company), and by Lord Chetwynd (who afterwards formed the London Assurance Company), made sundry unavailing attempts to interest the House of Commons in their favour for that end. At length, hearing that the debts of the Civil List were heavy, and the Government in difficulty for the means of meeting them, these two sets of gentlemen offered a contribution of 300,0007. each, provided the Crown would incorporate them with a monopoly as insurance companies. The 6 Geo. 1, c. 18, founded on a message sent down to the House of Commons the 4th of May, 1720, passed the same year, and the King, in consequence, incorporated the two Companies with the exclusive right of making sea insurances in their corporate capacity, and restraining all others from granting insurances as companies or partnerships on a joint capital. By an Act of the next year, 7 Geo. 1, c. 27, 150,000l. was remitted to each Company of the price originally offered for its incorporation. An Act of the following year, 8 Geo. 1, c. 15, relieved them of any liability to double damages or costs at law; and the 11 Geo. 1, c. 30, gave them the right of pleading the general issue to any action on their policies, which they still retain. These latter two statutes, as the law stood then, conferred privileges of a value almost inappreciably great. Her Majesty's subjects are now, by the amelioration of the law, generally

1 Lloyd's v. Harper, 16 Ch. D.

290.

2 They retain this right still, notwithstanding the 5 & 6 Vict. c. 97, s. 3; Carr v. The Royal Exch. Ass.

Co., 31 L. J. (Q. B.) 93; 1 B. & S.
956; and amid the recent changes
effected by the Judicature Acts,
this privilege appears to remain un-
changed.

Shipowners' associations or clubs.

placed on a level with them in respect of the subject of the
former of the two; and the privilege under the latter, though
it be still preserved to them, is reduced by changes in the
system of pleading to what is little better than an empty
form.

Their main privilege of exclusively granting marine poli-
cies as corporate bodies was retained by them till the year
1824, when the 5 Geo. 4, c. 114, repealed so much of the
6 Geo. 1, c. 18, as restrains "any corporation or body politic,
society or partnership, or persons acting in any society or
partnership," from underwriting sea policies or lending
money on bottomry. During this long interval of a century
the assured could not obtain in Great Britain the joint
security of any number of individuals to a marine policy
except from these two companies; and they, it seems, clogged
their acceptance of risks with so many conditions that the
chief current of business flowed in the direction of Lloyd's.
It is hardly a subject for wonder, therefore, that Lloyd's
underwriters should have assisted these two Companies
in making a vigorous resistance to any repeal of their
monopoly.

Necessity, meanwhile, gave rise to the shipowners' clubs for the mutual assurance of their respective vessels. One of the conditions of membership usually exacted in these societies is the possession of a certain amount of ship property insured in the club. An essential peculiarity of their practical working is the absence of premiums. Each member is both assured and insurer; assured, as to his own property in the club by all the other members in the ratio of their respective properties in it; and e converso insurer, in the ratio of his own property in the club for that of each of the others. Their mutual covenants or agreements are the quid pro quo, the consideration of the contract. The expense of their insurance is determined by the amount of their contributions to losses for the year in addition to the expenses of the club.

policy indis

Contrary to an opinion formerly existing, and even Stamped expressed on the bench,' that a policy was unnecessary to pensable. the validity of such insurances, it is now the law that no such insurance is valid unless expressed in a stamped policy, and unless such policy shall specify each of the following particulars, viz., the particular risk or adventure, the names of the subscribers or underwriters, and the sum or sums insured. As neither the sum insured, nor the names of the underwriters are capable of being ascertained, this provision of the statute has proved fatal to these clubs as originally constituted, probably without any intention of so affecting them on the part of the legislature.

3

liabilities.

During the monopoly already described, it was essential Legal
to the legality of such clubs that their members should be
liable individually only, each for his own proportion, and not
jointly, or the one for the other or others of them, and
therefore a club that transgressed this rule only so far as to
make the members collectively liable for the share of an
insolvent member, was held to be illegal. The character
thus originally impressed upon these clubs by the interests of
a monopoly, is without exception still retained by them as an
advantage, namely, the individual liability of each member
for his own proportion only. Since the Companies Act of
1862, however, and after a variety of opinions among the
Judges had been expressed as to the legality of these clubs,
an adverse opinion was decisively given by Sir George Jessel,

1 Bromley v. Williams, 32 L. J. (Ch.) 716. And see Harvey v. Beckwith, 12 W. R. (coram Wood, V.-C.) 819, (on appeal) 996; Mead v. Davidson, 3 A. & E. 303; Turpin v. Bilton, 3 Man. & Gr. 455.

2 In re London Marine Ins. Ass. (Smith's Case), L. R., 4 Ch. App. 611; Re The Arthur Average Ass., Ex parte Hargrove & Co., L. R., 10 Ch. App. 542; 30 & 31 Vict. c. 23, ss. 7 and 9.

3 Harrison v. Millar, 7 T. R. 340, note; Lees v. Smith, ibid. 338; and

see Strong v. Harvey, 5 Bing. 304.

Lees v. Smith, 7 T. R. 338.

5 It was argued that a policy which did not express this proportion was invalid; but Gibbs, C. J., held it to be good without that; indeed, pointing out that the amount of it could not be known at the time of effecting the policy; Borrell v. Moore, 4 Camp.

166.

6 Per Lord Westbury, C., Turnbull v. Woolfe, 9 Jur., N. S. 57; In re London Marine Ins. Ass. (Andrew's Case, &c.), L. R., 8 Eq. 176.

Consequences of the repeal

of the monopoly.

and that opinion conclusively affirmed by the Court of Appeal in 1882;1 and now these clubs, to maintain their existence in accordance with law, have been formed into companies registered under the Companies Act, but still based upon the principles and continued for the purposes of mutual assurance.

In favour of these clubs or companies, an exception is made in respect of stamping these policies subsequently to their being underwritten. The statute provides that it shall not be lawful to stamp any policy at any time after it is signed or underwritten by any person, on any pretence whatever, except in two cases: the first is, any policy of mutual insurance having a stamp or stamps impressed thereon may, if required, be stamped with an additional stamp or stamps, provided that, at the time such additional stamp or stamps shall be required, the policy shall not have been signed or underwritten to an amount exceeding the sum or sums which the stamp or stamps previously impressed thereon will warrant.2

Companies formed for the purposes of mutual insurance are usually limited by guarantee, say of 51., to meet the costs, charges, and expenses of the company on being wound up; but that sum of 57. is not the fund from which losses under the policy are to be met; for in respect of such losses the company may sue, and be sued by, the individual member.3

The repeal of the monopoly formerly possessed by the two old companies has been succeeded by the rapid multiplication of public companies, some of them incorporated by special

1 The Master of the Rolls (Sir G. Jessel) gave a definition of the term gain used in the 4th and 21st sections of the Companies Act, 1862 (25 & 26 Vict. c. 89), which, beyond all doubt, had the effect of including these clubs among the companies declared illegal by that statute unless registered under its provisions; Re Arthur Average Ass., L. R., 10 Ch. App. 542;

adopted by the Court of Appeal in Re Padstow Total Loss Ass., 20 Ch. D. 137.

2 30 & 31 Vict. c. 26, s. 9; post, Chap. V.

3 Lion Ins. Ass. v. Tucker, 12 Q. B. D. 176; 53 L. J. (Q. B.) 185; Marine Mutual Ins. Ass. v. Young, 43 L. T., N. S. 441.