THE

CONTRACT OF MARINE INSURANCE.

INTRODUCTION.

THE primitive form of contract for sea insurance, which, though it has been somewhat modified by marine insurance companies, is still in general use among private underwriters, commonly called Lloyd's Policy, lays claim to considerable antiquity. It is reputed to be in the main identical with the instrument used by the Lombards (a), who are generally accredited with the introduction of marine insurance into this country. The policy unquestionably bears traces of an Italian origin in its phraseology (b), as well as in the very name which it bears (c); and, these indications are in conformity with such historical evidence as exists with respect to the origin of insurance.

Much learning and ingenuity have been displayed by writers

(a) The earliest English policy extant bears date 1613, and is very similar in its wording to Lloyd's form. See "The History of Lloyd's," by F. Martin, p. 46; Weskett's "Digest of Insurance," p. 401; and Molloy "De Jur. Marit.," b. 2, c. 7.

(b) Until recently, the policy began with the words, 66 In the name of God, Amen!" corresponding with the old Italian formula, "Dio la salvi, Amen!" The clause "And it is agreed by us the insurers, that this writing or policy of assurance shall be of as much force and

effect as the surest writing or policy of assurance heretofore made in Lombard Street, &c.," is indicative of the quarter from which such contracts first emanated.

(c) Policy, from Polizza (Italian), which signifies any note or memorandum in writing, creating or furnishing evidence of a legal obligation. See Duer on Insurance, p. 29. Assurance, from Assecuratio, not a true Latin word, but a barbarism adopted in Italy in the twelfth or thirteenth century (Marshall).

upon maritime law in the endeavour to trace the origin of the contract to Roman sources; but the evidence adduced goes no further than to show that usages akin to insurance, such as bottomry, were resorted to in furtherance of the maritime commerce of antiquity. It is most probable, and all the evidence obtainable tends to prove, that marine insurance sprang up as an adjunct to that great revival of commerce which took place in the twelfth and thirteenth centuries, especially amongst the flourishing Italian republics which had arisen from the ruins of the Roman Empire (d). At that time, the carrying trade of Christendom was almost wholly engrossed by the merchants of the north of Italy, then generally known by the name of Lombards, who had established agencies or trading companies in almost every country in Europe (e). According to Malyne, the Lombards introduced insurance into England somewhat earlier than into the neighbouring countries on the Continent; and, in proof of this assertion, he states that even Antwerp, in the height of its commercial greatness, must have borrowed the practice of insurance from England, as there was in every policy in that city down to the time in which he wrote (1622) a clause providing that it should in all things be the same as policies made in Lombard Street, in the city of London, where the Lombards and other London merchants were accustomed to meet for the transaction of business, before the Royal Exchange was built (ƒ).

Marine insurance, having thus been adopted by the most influential traders of the time, was carried wherever the latter had dealings; and, as its utility was obvious, it appears to have

(d) The French jurist Cleirac, asserts, on the authority of Villani, a Florentine historian of the thirteenth century, that insurance was invented by the Jews, who had been expelled from France and found a refuge in Italy, and who resorted to this expedient as a means of securing themselves against the losses to which the removal of their property and effects was liable. It is said that the merchants of the north of Italy, who were cognizant of this device,

being impressed with its utility, imported it into their dealings. While there appears no good reason for rejecting this statement, it cannot be regarded as a certain account of the first beginning of insurance, which is involved in the obscurity which attaches to the origin of most other inventions. See Duer on Insurance, Vol. I., pp. 2931.

(e) Marshall on Insurance, p. 10. (f) Ibid., p. 11.

quickly gained a footing in most of the great European centres of maritime commerce. In this, the initial stage of its existence, the contract of insurance was regulated by mercantile custom, which accordingly became the foundation of all laws subsequently enacted upon the subject. The next stage in the development of the system was marked by the establishment of public offices (g) for the effecting of insurances and the settlement of disputes arising under such contracts. Subsequently, as the business of underwriting attained still greater dimensions, ordinances were promulgated in many of the states of Europe to regulate the practice of insurance, and obviate the abuses to which it was liable (h).

It follows from the preceding observations that the law of marine insurance, as administered by the courts of this and other countries, originated in the common law of the sea and of merchants, which has been adapted by particular states to suit the ideas and requirements of their subjects, though fundamentally the same throughout. "The law of merchants," observes Marshall (i), “not being founded in the institutions, or local customs of any particular country, but consisting of certain principles which general convenience has established, to regulate the dealings of merchants with each other in all countries, may be considered as a branch of public law." "The law merchant," said Lord Denman (in delivering the judgment of the Exchequer Chamber in Barnett v. Brandao (k)), "forms a branch of the law of England; and those customs which have been universally and notoriously prevalent among merchants, and have been found by experience to be of public use, have been adopted as a part of it, upon a principle of convenience and for the benefit of trade and commerce."

The law of marine insurance was for a long time after the introduction of the contract into England, unknown to the

(g) One of the earliest formed of these was the Chamber of Assurance established at Bruges, the centre of communication between the Lombards and the merchants of the Hanseatic League. See Martin's History of Lloyd's, and

Marine Insurance, p. 6.

(h) One of the earliest of these was the Ordinance of Barcelona, enacted about 1436.

(i) Marshall on Insurance, p. 19. (k) 6 M. & Cr. 630.

Courts of Westminster, as insurance disputes were settled by the arbitration of mercantile men. The first case upon insurance, which is to be found in any book of reports, occurred in the year 1589, and is mentioned by Sir Edward Coke (l). The unformed state of the law on the subject at that time is shown by the fact that the point in dispute was the elementary one as to where an action upon a policy of insurance should be tried, the policy having been executed in London, and the vessel having been arrested in France (m). About that time, lawsuits in such matters appear to have become frequent; and to check the growing practice of resorting to the common law courts for satisfaction, a statute was passed in the fortythird year of Elizabeth, establishing a special court for the trial of marine insurance causes. This tribunal consisted of the Judge of the Admiralty, the Recorder of London, two doctors of the civil law, two common lawyers, and eight "grave and discreet" merchants, or any five of them, who were empowered to determine all such cases in a brief and summary way, without formalities of pleading. An appeal from the decrees of the court was allowed to the Lord Chancellor.

The preamble to the statute establishing the Court of Policies of Assurance recited, among other things, that contracts of marine insurance had been effected, both in this and other countries, from time immemorial, from which statement it is at least to be inferred, that the practice had existed so long prior to 1601, that the occasion of its introduction was not then remembered (n).

This tribunal, which was probably erected in imitation of similar institutions on the Continent, never firmly established itself in England; and, after maintaining a lingering existence

(7) 6 Coke Rep. 47 b.

(m) See Park on Insurance, Intro. xxxvi. ; also Marshall on Insurance, p. 24.

as

(n) The words referred to are follows:-"Whereas it hath been tyme out of mynde an usage amongst merchantes, both of this realme and of forraine nacyons, when they make any

greate adventure (speciallie into remote partes) to give some consideracion of money to other persons (which commonlie are in no small number), to have from them assurance made of their goodes, merchandizes, ships, and things adventured, or some part thereof, &c.' 43 Eliz. c. 12.