confidence in the skill and judgment of him whose name stood first, and their belief that he had duly ascertained and weighed all the circumstances material to the risk.1 This Limitations. rule, however, is subject to many limitations. extends to perti nent to an 1. It must be strictly confined to intelligence pertinent to It only the proposed insurance as expressed in the slip, such as an representaunderwriter would require, and without which it may be pre- tione perti sumed he would not initial the slip or subscribe the policy. ordinary policy. It cannot, therefore, extend to such representations as relate to matters of collateral agreement which a subsequent underwriter can have no reason to infer from the terms of the policy to have been communicated to the first. Thus, in Pawson r. Watson, Lord Mansfield held, that a representation that "the ship mounts twelve guns and twenty men," being in effect an engagement that the ship should sail with that armament, could not affect subsequent underwriters to whom it had never been communicated, merely upon proof that it had been made to the underwriter whose name stood first in the policy. "A representation to the first underwriter," says his Lordship, "has nothing whatever to do with that which is the agreement, or the terms of the policy; no man who underwrites a policy subscribes, by the act of underwriting, to terms of which he knows nothing, but he reads the agreement and is governed by that; matters of intelligence, such as that a ship is, or is not missing, are things in which a man is guided by the name of the first underwriter, who is a good man, as to which another will therefore give faith and credit to him, but not as to a collateral agreement, which he can know nothing of."2 Of course if the representation to the first underwriter be of immaterial facts, it cannot avail anyone; and if it was of 1 The English cases which establish the rule are, Pawson v. Watson, 2 Cowp. 785; Barber v. Fletcher, 1 Doug. 306; Stackpoole v. Simon, 2 Park, Ins. 932; Marsden v. Reid, 3 M. East, 572; Feise v. Parkinson, 4 2 2 Cowp. 788. N N The rule includes only representations that lower the terms. The rule not favoured. such a nature as ought to have put the first underwriter on further inquiry, it will be equally imputed to the negligence of the subsequent underwriters that no such inquiry was made.1 2. Until the recent alteration of the law by the 30 Vict. c. 23,2 the applicability of this rule was restricted to the policy, because the slip could not even be given in evidence for any purpose whatever :3 but now as the slip, though not a valid contract of sea-insurance unless stamped, may be given in evidence whenever it is material, the rule becomes applicable to either the policy or the slip, and will probably, in consequence of the state of facts, be more frequently applied to the latter than the former. 3. A still further limitation of the same rule is, that it only applies where the tendency of the representation is to induce the underwriters to take the risk on lower terms. Where the first underwriter was called to prove a representation made to him, the tendency of which would have been to increase the estimate of the risk, Lord Tenterden decided, at Nisi Prius, that this evidence was not admissible as against a subsequent underwriter.5 Even under these limitations the English Courts have regarded the rule with great jealousy, and on many occasions have expressed their dissatisfaction with it. Heath, J., on one occasion said, "That the evidence had been admitted rather on precedent than on reason;" and Lord Ellenborough-" Whenever the question comes distinctly before the Court, whether a communication to the first underwriter is virtually a notice to all, I shall not scruple to remark, that 1 Barber v. Fletcher, 1 Doug. 350. 3 Marsden v. Reid, 3 East, 572. stood first in order on the slip though not on the policy. 4 Per Blackburn, J., Ionides v. Pacific Fire & Mar. Ins. Co., L. R., 6 Q. B. 674, 684, 685. 5 Robertson v. Majoribanks, 2 Stark. N. P. 503; 2 Duer, Ins. 779. Brine v. Featherstone, 4 Taunt. 869. the proposition is to be received with great qualification: it may depend on the time and circumstances under which the communication was made; but on the mere naked, unaccompanied fact of one name standing first on the policy, I should not hold, that a communication made to him was virtually made to all the subsequent underwriters;" and his Lordship said, that the question was one of such magnitude, that if it should arise, he should direct it to be put on the record for the opinion of all the Judges.1 first under Of course, if the subscription of the first underwriter is Where the obtained under a secret agreement, or understanding, that it writer is a is not to be binding, and for the sole purpose of leading duck." mere "decoy others to insure, the exhibition of the policy or slip, thus subscribed, is justly regarded as a fraud on the subsequent underwriters, and on that ground as rendering the policy void. This rule, it is said, would apply to any prior underwriter, though his name may not be first in the policy.3 13. 1 In Forester v. Pigou, 1 M. & Sel. 2 Whittingham v. Thornburgh, 2 Vernon, 206; Wilson v. Ducket, 3 Burr. 1361; see also the observations of Lord Kenyon in Sibbald v. Hill, 2 Dow's P. C. 262. The first under writer in such cases is called in Eng- CHAPTER II. CONCEALMENT. Definition and general principles. Time of concealment. CONCEALMENT, in the law of insurance, takes place at the time of negotiating the contract, and is the suppression of, or neglect to communicate, a material fact within the knowledge of one of the parties which the other has not the means of knowing, or is not presumed to know. Defined in these terms, the law is equally applicable to the assured and the underwriter. A material fact in this connection is one which, if communicated to the other of the parties, would induce him either to refrain altogether from the contract, or not to enter into it on the same terms. Defined in relation to the assured as the party acting malá fide or negligently, concealment takes place at the time of negotiating the contract, and is the suppression of or neglect to communicate a material fact, which, if communicated, would affect the judgment of a fair and rational underwriter in considering whether he would enter into the contract at all, or enter into it at one rate of premium, or at another.1 In order that a concealment should have the effect of avoiding the policy, it must have taken place at the time of making the contract; and for the reasons already stated in respect of 1 Ionides v. Pender, L. R., 9 Q. B. 531; Rivaz v. Gerussi, 6 Q. B. D. 222; 1 Parsons, Ins. 495; 1 Phillips, no. 531. Representations,' the contract is now regarded by the Courts as complete when the slip is initialed by the underwriter. Consequently, anything coming to the knowledge of either party after that, however material it may be, need not be communicated to the other, notwithstanding a policy has not yet been executed in accordance with the slip.2 which con As we have seen in the preceding chapter, it is a condition Principles on of this contract, implied by law as a matter of public policy, cealment that the contract is free from misrepresentation or conceal- avoids the policy. ment; and if there is a breach of this condition, either by misrepresentation or concealment of a material fact, the contract is void. Fraud in its effect goes beyond the condition; for if fraud be present in either form, whether of misrepresentation or concealment, it avoids the policy, although the subject misrepresented or concealed be not a material fact. Each of the parties to this contract owes to the other all such relevant and necessary information as will enable both to enter into a contract of indemnity in respect of the subject to be insured. It is not enough that if either speaks, he must speak the truth substantially; it is required of him that if he know anything which is special and relevant to the contract, he should communicate it to the other. This obligation arises of necessity out of the nature and objects of the contract proposed to be made, and the inequality of information usually existing between the parties relevant to the circumstances of the risk and the subject to be insured. It is therefore received in law as eminently a contract uberrimæ fidei. It is characteristic of the assured more than of the insurer that all or nearly all the knowledge which he has of a kind available for the purposes contemplated in a contract of marine insurance, is derived from agents and correspondents, 1 Ante, p. 544. 2 Cory v. Paton, L. R., 7 Q. B. 304; Lishman v. Northern Marit. Ins. Co., L. R., 8 C. P. 216; 10 C. P. 179; Ionides v. Pacific Fire |