was brought against the subscribing directors, it was held, on a declaration which averred the sufficiency of the funds (an averment which appears to have been necessary), that the defendants were personally and jointly liable (a). If the members of such a co-partnership who sign the policy have power to bind their co-partners, it is not necessary to sue the members who signed; the other shareholders may be sued, and are liable to the extent of their shares (b). It was held, indeed, where a judgment was recovered against a company completely registered under the 7 & 8 Vict. c. 110, upon a policy containing a stipulation that the proprietors should not be liable beyond the amount of their shares, but that the company's capital stock alone should be liable, that the plaintiff was not entitled to issue execution against an individual shareholder who had not signed the policy (c). Where such a policy was granted by a joint stock company which was not registered under the Joint Stock Companies' Act, it was held, that, although the funds of the company were sufficient to pay the amount of the loss, shareholders who had not signed the policy were not liable to be sued jointly on it. It would seem, however, that if the directors who sign the policy have authority to do so, the shareholders who do not sign are liable to be sued severally, each to the amount of his unpaid up capital in the company; and that the liability of the directors, and in particular of those who sign the policy, may be more extensive, since they have the funds of the company in their hands, and therefore they may be considered to promise jointly to apply them towards the payment of the losses. It is, however, difficult to see how the contract of the directors, or of those who sign the policy, can be different from that of the other Hallett v. Dowdall, ubi supra. (c) Halkett v. The Merchant Traders' Ship Loan and Insurance Association, 3 Q. B. 960; Hassell v. The Merchant Traders' Ship Loan and Insurance Association, 4 Ex. 525; In re the Athenæum Life Assurance Company, 4 K. & J. 517; 25 L. J., Ch. 829. It is difficult to reconcile these cases with the rule laid down in Dawson v. Wrench, and Hallett v. Dowdall, ubi supra, unless a distinction can be made as to the meaning of these contracts when entered into by registered and unregistered joint stock companies. shareholders, if the policy has been issued under the authority of all the shareholders (d). assurance Where policies are effected by means of mutual assurance Payment of associations or clubs, as they are commonly called, special rules claims by are provided for the payment of claims, such payments being clubs. usually effected by the managers drawing bills on the members, and when this is so, the members cannot be sued individually on the policy (e). PREMIUM. Where risk mences. As the premium is the consideration paid to the underwriter RETURN OF for assuring a risk, it must, where that risk never commences, be returned. Thus, if the policy be on goods, and none are never comshipped, the premium must be returned, for the risk never commenced (f). So, if a ship be insured for a particular voyage, and she sails on that voyage in an unseaworthy state, but without fraud on the part of the assured (g), or if a policy be effected on an enemy's goods before the commencement of hostilities is known (h), or if at the time of insuring a ship on her voyage she has arrived, and the underwriter knows it (i), in all these cases, as the policy never attaches, and no risk is incurred, the premium must be returned. So where before the risk commences, there is a breach of warranty by the assured which prevents the liability of the underwriters from attaching, as where the ship is warranted to sail with convoy, and does (d) Hallett v. Dowdall, 18 Q. B. 2; see also In re the Professional Life Assurance Company, L. R., 3 Eq. 668. There was in this case considerable difference of opinion among the judges as to the construction and effect of the contract. As far as the decisions have gone in cases of this description, the Courts appear to have decided (1), that in contracts by corporations these restricting clauses have no effect; (2), that in contracts by joint stock companies not registered, they limit the contract, so that shareholders who have not executed the policy cannot be sued jointly on it; and (3), that where they occur in contracts by joint stock companies completely registered, they limit the execution, by depriving the assured of the right of issuing execution against individual shareholders, which he otherwise would have had under the 7 & 8 Vict. c. 110. The difficulties which have arisen in these cases have resulted from an attempt to create a partnership contract with a limited (e) Redway v. Sweeting, L. R., 2 Ex. (f) Martin v. Sitwell, Show. 156. (g) Penson v. Lee, 2 B. & P. 330; and see the judgment of Buller, J., in Lowry v. Bourdieu, 2 Doug. 471. (h) Oom v. Bruce, 12 East, 225. (i) See the judgment of Lord Mansfield in Carter v. Boehm, 3 Burr. 1909. This amounts to a fraud on the part of the underwriter. It has been doubted whether, if both parties are ignorant of the ship's arrival, and the policy is "lost or not lost," the premium could be recovered. See 2 Park on Ins. 562. Or is appor tionable. Where there is no interest. not (k), or the policy is avoided by a misrepresentation made by the assured without fraud, and the risk never attaches, the premium is returnable (7). Although the premium paid be entire, the assured will still be entitled to receive back a portion of it, if the risk for which it is paid can be apportioned. Thus, where a ship insured from London to Halifax, to depart with convoy from Portsmouth, was unable to proceed beyond the latter place, as when she reached it the convoy had sailed, and an usage was proved to return part of the premium in such a case, the Court held that the premium might be divided into two distinct parts, relatively, as it were, to two voyages, and that that proportion of it which covered the risk not run, ought to be returned (m). If, however, the risk is entire, and has once commenced, there can be no apportionment or return of the premium; although it be estimated, and the risk depends upon, the nature and length of the voyage (n). Thus, where a ship was insured "at and from London to any port or ports for twelve months, at £9 per cent., warranted free from capture," and the ship was taken within two months from her sailing, the Court held that the assured were not entitled to a return of any part of the premium (o). So, if the insurance is "at and from" a port, and the ship is seaworthy for lying in harbour, but when she sails on the voyage is unseaworthy for the voyage, the assured is not entitled to a return of the premium, for the risk has attached (p). For the same reason the premium is not returnable where a deviation takes place after the commencement of the voyage (4), even where the insurance is on freight as well as ship, and the deviation occurs before the goods are taken on board (r). Where the assured has no interest in the property insured, and (k) Stevenson v. Snow, 3 Burr. 1237; Long v. Allan, 4 Doug. 276. See also the judgment of Lawrence, J., in Christi v. Secretan, S T. R. 198; Colby v. Hunter, Moo. & M. 81. (1) Feise v. Parkinson, 4 Taunt. 640; Anderson v. Thornton, 8 Ex. 425. (m) Stevenson v. Snow, 3 Burr. 1237. See also Meyer v. Gregson, 2 Park on Ins. 588; Rothwell v. Cooke, 1 B. & P. 172. (n) See the judgment of Lord Mansfield in Tyrie v. Fletcher, 2 Cowp. 668, and Boehm v. Bell, 8 T. R. 154. (0) Tyrie v. Fletcher, 2 Cowp. 666. See also Loraine v. Tomlinson, 2 Doug. 585. In the latter case the premium was reckoned at so much per month, but that circumstance was held to make no difference. See also Bermon v. Woodbridge, 2 Doug. 781; and Hoskins v. Holland, 44 L. J., Ch. 273. (p) Annen v. Woodman, 3 Taunt. 299. See also Moses v. Pratt, 4 Camp. 297. (a) Tait v. Levi, 14 East, 481. (r) Moses v. Pratt, ubi supra. The policy was a valued one. effects the insurance without fraud, the premium is returnable, for the underwriters could not have been called upon to pay in case a loss had happened. Thus, where captors acting bonâ fide insured a prize in which, as it afterwards appeared, the Crown alone was interested, it was held that the premium must be returned (s). Where, however, the risk has been run, and the ship has arrived in safety, the premium cannot be recovered back by reason of a mere defect in the title of the assured. Thus, where, on an insurance of a ship and freight, the vessel, after her safe return and the earning of the freight, was seized under an Admiralty warrant issued at the suit of a person who claimed her and the freight, as the registered owner in this country, it was held that no return of the premium could be claimed (†). It follows, from an application of the same principle, that in cases of short interest, or of over insurance, or double insurance, the underwriters are bound, to the extent of the over insurance, to return the premium; for no risk is incurred by them beyond the value of the property which is actually hazarded. Thus, where part only of the goods insured is shipped, the interest is said to be short, and a proportionate part of the premium is returnable (u). So, if profits on a certain amount of goods are insured, and only a part of them is shipped, a proportionate part of the premium must be restored for short profits (x). In cases of double insurance, a rateable return of the premium must be made (a). Five policies of insurance were effected on the 12th of April, on a cargo of cotton then at sea, and on the 13th six policies more were bonâ fide effected at a lower premium. The amount insured by the two sets of policies together exceeded the value of the cotton, but the amount of the first five did not. It was held, that the assured were entitled to a return of the premium to the extent of the over insurance, but that it must be made rateably on the policies effected on the 13th, and on these only, since the underwriters of those effected on the 12th had incurred, although only for a short time, a risk to the extent of the whole amount insured by them (b). Routh v. Tompson, 11 East, 428. (x) Eyre v. Glover, 16 East, 218. (a) Stevens on Average, 204; 2 Arnould on Ins. 1226 (2nd edit.). See also Morgan v. Stockdale, 4 Ex. 615. (b) Fisk v. Masterman, 8 M. & W. 165. In cases of short interest, double insur ance, &c. Where there is fraud or illegality. Where the insurance, however, is by a valued policy, the underwriters are not bound, if the goods intended to be covered by the policy are shipped, to return any part of the premium on the ground that the specified value exceeds the real value of the cargo (b). The premium is not returnable, even although the risk never commences, where the assured is guilty of fraud; as where, at the time of effecting the insurance, he knows, or the agent whom he employs to effect it knows, that the property insured is lost (c). If, however, the underwriter is guilty of fraud, as if, for instance, he knows when he underwrites the policy that the ship has performed safely the voyage insured, he is bound to return the premium (d). When the contract of insurance is illegal, and the voyage has been performed, there is no return of the premium; for in these cases the rule applies in pari delicto melior est conditio possidentis (e). Mere ignorance of the law will not prevent the operation of this rule (ƒ); but it is otherwise if the facts which constitute the illegality are not known to the parties at the time when the premium is paid, so that they contemplate a legal, not an illegal, voyage (g). Where the risk has not commenced, and the contract is still open, so that the assured, by withdrawing from it, may restore the underwriter to his original position the premium may, it seems, be recovered back, even although the contract is illegal (). It appears clear, however, that to enable the assured to recover the premium in this case, he must give notice to the underwriter before bringing the action of his intention to (b) Macnair v. Coulter, 4 Brown's P. C. 450; 2 Arnould on Ins. 1225 (2nd edit.). (c) Tyler v. Horne, 1 Park on Ins. 329; Chapman v. Fraser, ib. See also Wilson v. Duckett, 3 Burr. 1361. As to proceedings to cancel policies in cases of fraud, see The London and Provincial Insurance Company v. Seymour, L. R., 17 Eq. 85, and cases there cited. (d) See the judgment of Lord Mansfield in Carter v. Boehm, 3 Burr. 1909. (e) See Lowry v. Bourdieu, 2 Doug. 468; 2 Park on Ins. 569, 575; Andree v. Fletcher, 3 T. R. 266; Cowie v. Bar ber, 4 M. & S. 16; Wilson v. The Royal Exchange Assurance Company, 2 Camp. 626; Vandyck v. Hewitt, 1 East, 96; the cases cited below; and Allkins v. Jupe, 2 C. P. D. 375, the case of a wager policy prohibited under 19 Geo. 2, c. 37. (f) Morck v. Abel, 3 B. & P. 35; and the judgment of Buller, J., in Lowry v. Bourdieu, 2 Doug. 471. (g) Oom v. Bruce, 12 East, 225; Hentig v. Staniforth, 5 M. & S. 122. (h) See the judgment of Buller, J., in Lowry v. Bourdieu, ubi supra; Tappenden v. Randall, 2 B. & P. 467. |