Insurance. Trading with the enemy being, unless specially licensed (u), illegal, contracts entered into with a view to support such trading are also illegal and void. And a policy, though legal in its inception, may become invalid by what is tantamount to a declaration of hostilities between the government of the assured and that of the assurer (v). But in the case of an insurance, the parties to which are subjects of the same state, it would appear that the policy would not be ipso facto voided by declaration of war, after sailing of the ship, between the government to which such parties owe allegiance and the country to which the vessel has sailed on the voyage insured. For in The Abby (x), bound from a British port to Demerara, war occurred a few days after the sailing of the vessel, which was captured by a British cruiser on arriving off the coast of Demerara. Sir W. Scott, in giving judgment against the captors, remarked that at the time of the ship's sailing Demerara could not be considered as the colony of the enemy. "It would be impossible for me," he declared, "to say, therefore, that it was an illegal trade at that time, as a trade to the colony of the enemy, because there was no state of hostilities. . Soon after the sailing of the vessel the declaration of hostilities took place; and if the ship had been taken on a voyage to a colony now become an enemy, the Court would have required it to be shown that due diligence had been used to alter the voyage, and to exonerate the claimant from the charge of an illegal trading with the enemy. Where a country is known to be hostile, the commencement of a voyage towards that country may be a sufficient act of illegality; but where the voyage is undertaken without that knowledge, the subsequent event of hostilities will have no such effect." Judgment was given for the claimant on the ground (1) that there was no intention to trade illegally (on the vessel's sailing; the destination then being neutral); and (2) that there was no illegal act (on arrival; the British having, in the meantime, occupied the colony). It was added that if the colony (u) Vide Kensington v. Inglis, p. 290, infra. (e) Arnould, 5th ed. p. 725, q. v. (x) Supra, p. 264. had remained hostile, the Court would have expected the claimant to have exonerated himself from the intention of trading with the enemy after the knowledge of hostilities; but as the colony had not remained hostile, such proof became unnecessary. The illegality of insurances to protect trade with the enemy was definitely decided in Potts v. Bell (y). In this case a British subject had shipped, by a neutral vessel from the enemy's country, goods purchased of the enemy during hostilities, and it was held that all insurances in protection of such trading are void. But as we have seen above (z), a British subject regularly domiciled abroad may lawfully trade with the enemies of Great Britain in permissive goods, and this decision consequently does not apply to insurances effected in this country by a person so situated (a). On the other hand, if a British subject be domiciled in a country with which Great Britain is at war, he will pro hac vice be regarded as an enemy subject (b), and insurances in protection of his property connected with such domicile will be ipso facto void. The principle that no insurances may be effected in support of trade with the national foe does not relate to neutral property. "It is nowhere laid down," said Lord Mansfield in Gist v. Mason (c), "that policies on neutral property, though bound to an enemy's port, are void." In Hagedorn v. Bazett (d), where goods, the property of various independent persons, had been shipped by an agent, and insured under one policy, and it turned out that one of such principals was an enemy, the insurance was held to be good, except so far as concerned the enemy property, in respect of which it was declared to be void. In Wright v. Welbie (e), where an insurance had been effected (y) 8 T. R. 548. (z) Vide p. 17, supra. (a) Arnould, 5th ed. p. 691. (b) Vide p. 19, supra. (c) 1 T. R. 88. (d) M. & S. 100. Conf. Parkin v. Dick, p. 309, infra. (e) 1 Chitt. 49. For further references to these cases, vide Arnould's Insce. 5th ed. 691-4. to "any port or ports in the Baltic," it was held that the insurance was legal until it was proved that the ship was destined for one of the ports which was hostile-a decision equally applicable in a case where the vessel had leave to touch at ports in a particular sea, some of them hostile and some not(ƒ). When Napoleon I. overran the Continent and occupied many of the ports, our Courts decided that all such ports should be regarded as neutral, so long as they continued to preserve the forms of an independent neutral government (g). On the same principle, Corfu was held to be neutral, though occupied by the Russians, so long as it continued to hoist the Ionian flag, appoint a port-admiral, &c. (h). And similarly, though in 1811 political relations had ceased to exist between this country and Prussia, Lord Ellenborough held that, in the absence of open hostility between the two states, an insurance from a British to a Prussian port was not to be considered illegal (i). Again, whilst Hamburg was occupied by the French, an insurance was effected in this country on the property of certain persons domiciled in Hamburg, and the question arose whether such persons could in the circumstances be regarded as neutrals. It was held that, inasmuch as the city still possessed the forms of its own government, it must be regarded as a neutral port, although in hostile occupation (k). It is for the government of the country to determine in what relation any other country stands towards it. If, therefore, during war, the official orders recognise the non-hostility of certain ports, trading with such ports must be regarded as legal, and insurances to protect the trading will consequently be valid (7). Although illegal trading operates as a voidance of insurance, yet if the trading be entered upon by the master without the knowledge or permission of his owners, and the vessel be con (f) Muller v. Thompson, 2 Camp. 610. (g) Vide Hagedorn v. Bell, 1 M. & S. 459-60. (h) Donaldson v. Thompson, 1 Camp. 429, an. 1808. (k) Hagedorn v. Bell, 1 M. & S. 450. (7) Arnould, 5th ed. pp. 694-5. demned for the illegal trading, the loss will be attributable to barratry, and the underwriters will become liable accordingly. This was decided by Lord Ellenborough in Earle v. Rowcroft (m), a leading case on barratry. The vessel had sailed from Liverpool to the west coast of Africa, there to trade, and thence to the West Indies. After being two days at the British settlement of Cape Coast Castle, the master, hearing that profitable trade could be transacted at the neighbouring Dutch port of D'Elmina, proceeded there and traded. The Dutch flag was flying at D'Elmina, and the master, having a letter of marque on board against the French and Dutch, well knew that he was trading with the enemy. On being informed that an English frigate was in sight, he made sail back to Cape Coast Castle in order, as he said, "to prevent mischief." The vessel was, however, captured: and hence these proceedings. On the facts the Court found that the confiscation of the ship was due to barratry of the master. Insurances on enemy property, and against the risk of British capture, are also void as being opposed to the national war policy. "The question is," said Lord Alvanley in Furtado v. Rogers (n), "whether it be competent to an English underwriter to indemnify persons who are engaged in war with his own sovereign from the consequences of that war; and we are all of opinion that on the principles of the English law it is not competent to any subject to enter into a contract to do anything which may be detrimental to the interests of his own country; and that such contract is as much prohibited as if it had been expressly forbidden by Act of Parliament." In this case it was decisively laid down that "insurances effected on behalf of an alien enemy, though made previously to the commencement of hostilities, and therefore legal in their inception, could not cover a loss by British capture after war had broken out; and that no action could be brought upon them in our Courts, even after the restoration of peace" (o). Two important cases illustrating the illegality of insurances to protect enemy property are Bristow v. (m) 8 East, 126. (n) 3 B. & P. 191, 198. And see cases cited in Arnould's Insce., 5th ed. p. 131, note. (0) Arnould's Inscc., 5th ed. p. 131. Towers (p), in which it was decided that no action can be maintained on a policy on an alien enemy's property, though of British manufacture and exported from this country; and Brandon v. Nesbitt (q), in which it was held that an insurance effected on behalf of an alien enemy is void, though the goods be shipped before the war commenced. In another case (r), where goods were shipped by a neutral vessel on French account, and exported after the outbreak of war, it was held that the insurance was void, and therefore did not avail to protect against their capture by a co-belligerent. All such insurances, said Lord Ellenborough, should be considered as having engrafted upon them such a proviso as the following, viz. :-"Provided that this insurance shall not extend to cover any loss happening during the existence of hostilities between the respective countries of the assured and assurer." Where war breaks out after the occurrence of a loss insured against, the rights of the assured under the policy are postponed till the resumption of peaceful relations between the countries, and the plea that the assured is an alien enemy will serve only as a temporary bar to the proceedings (s). Whether it is also illegal to insure against British capture of a British merchant ship has not been decided; but it may be concluded from the opinion expressed in Lubbock v. Potts (t), that the illegality exists only in the case of insurances on foreign vessels (u). Broadly stated, however, the offence which would justify the condemnation of a British ship in the British Courts would no doubt invalidate any relative insurance. The next subject for consideration is the granting of special licences, and the conditions and consequences of their use and misuse respectively. The remarks sub Insurance in relation to Special Licences are in some measure apposite in connexion with the subject Trading with the Enemy, above. (p) 6 T. R. 35. (1) Ibid. 23. () Brandon v. Curling, 4 East, 410. (s) Flindt v. Waters, 15 East, 260, 266. T'ide also "Effect of War on Contract," p. 412, infra. (t) 7 East, 449; also Glaser v. Cowie, 1 M. & S. 52. Thompson, 8th ed. Park's Insce. 175. l'ide also Page r. (u) Vide Owen's Mar. Insce. Notes and Clauses, 2nd ed. p. 21, for clauses in connexion with British capture. |