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whether it be the act of the assured, or his agent. Thus, where an agent, whose duty it was, in the ordinary course of business, to communicate information of the state of a ship and cargo to his principal by telegraph, on hearing of the loss omitted to telegraph, in order that his principal might not be precluded from insuring, but sent the news by letter, it was held that the insurance, which was effected in ignorance of the loss, was void by reason of the concealment to which that ignorance was due (m).
The withholding of a material fact from ignorance, negligence, or inadvertence will be as fatal to the validity of the contract as it is where the concealment is the result of design (n); but the innocent non-communication of a fact which is material to a part of the risk without going to the root of the contract will only vitiate the policy to the extent of the part so affected; as where the master of a ship having omitted to inform his owners of damage sustained, and a policy of insurance being effected by the latter in ignorance of that fact, it was held that the policy was not wholly void, though it would not avail for the recovery of the partial loss which had been concealed (0). The materiality of the fact concealed, as in the case of a fact misrepresented, will depend upon whether the effect of its non-communication was either to induce the underwriter more readily to assume the risk than he would otherwise have done, or to reduce his estimate of the premium ; and, as the effect of non-communication upon the judgment of a prudent underwriter, and not any actual enhancement of the risk by the information suppressed, is the crucial test of materiality, the concealment of facts calculated to arouse suspicion may be fatal to the validity of the contract; as in the case of an over-valuation of goods, so great that, in the opinion of underwriters, it converted the risk from an ordinary into a speculative one (p). If a report which is calculated to enhance
(m) Proudfoot v. Montefiore, L. R. 2 Q. B. D. 511.
(n) For the cases, see Marshall on Insurance, 2nd ed., p. 465, and Arnould on Insurance, 4th ed., pp. 481, 482.
(0) Gladstone v. King, 1 M. & S. 35; and see Stribley v. Imperial Marine Insurance Co., L. R. 1 Q. B. D. 507.
(p) Ionides v. Pender, L. R. 9 Q. B. 531.
the underwriter's estimate of the risk be withheld at the time of effecting the insurance, the policy will be avoided by the concealment, though the report should prove erroneous, or the vessel be lost from a cause irrespective of it (q). The obligation to communicate any fact bearing upon the risk rests upon the underwriter equally with the assured; and therefore, if, at the time of effecting the insurance, the underwriter were privately cognizant of the fact that the ship had arrived in safety, the policy would be void as to him, and an action would lie against him for the recovery of the premium (r).
It has already been intimated that there are limits to the . extent to which each party is bound to disclose to the other the information which he possesses respecting the risk. According to the ruling of Lord Mansfield in a celebrated case (s), the assured need not mention what the underwriter knows, ought to know, or waives being informed of. As to what particulars will fall within this limitation, is matter for inquiry in each case; but, it may be affirmed generally, that the underwriter is bound to know facts comprised in the general usages of trade, as well as matters of common notoriety, but that he is not bound to know everything which has appeared in the public press with respect to a risk tendered to him for insurance (t). It is, moreover, unnecessary that the assured should communicate anything which lessens the risk agreed to be run (u), or that he should tender information which is rendered superfluous by the terms of an express or implied warranty. Thus, as there is a warranty of seaworthiness implied at the inception of every voyage policy, it is not incumbent upon a party effecting an insurance from a foreign port to state the fact that repairs are requisite to fit the vessel for the voyage about to be undertaken, for the need for some such repairs is presumable, and the obligation to execute them is
691 Seaman v. Fonnercare, and Lynch v. Humilton ; Arnould on lusurance, 4th ed., p. 512.
(v.) Per Lord Mansfield, in Carter v. Boehm ; Marshall on Insurance, 2nd cd., p. 463.
(s) Certer v. Bo 1., 3 Burr. 1909; cf. Tales v. Houilt, 2 Mar. L. C. 432.
(t) I'rinid foot v. Montefiore, L. R. 2 Q. B. 511.
(u) See Marshall on In urance, 2ud ed., l. 473.
implied in the policy (w). At the same time, similar iufurniation might have to be communicated by the assured, if effecting a time policy of insurance, at the inception of which no warranty of seaworthiness is implied (y).
Although the assured, in offering a risk for acceptance, is entitled to presume that the underwriter is acquainted with the general usages of trade, so as to be under no obligation to communicate information relative to such usages, he is not justified in presuming a similar acquaintance on the part of the underwriter with practices in a trade, which, though occasional, or even frequent, are not universal. Thus, in an action upon a policy of insurance for the loss of goods in craft, it appeared that the lighter was employed by the plaintiff under an agreement whereby the lighterman was only to be liable for loss arising from his own negligence. This fact had not been communicated by the assured to the underwriters, and the latter accordingly resisted the claim on the ground of the concealment of a material fact. Upon the trial it appeared that, prior to 1882, the liability of lightermen in the Thames was that of common carriers, but that, in consequence of the results of certain litigation, it was resolved by the Association of Lightermen that they would only carry goods on special terms, restricting their liability to the extent above stated. The practice to carry on these special conditions was not, however, at the time when the case in question arose, an invariable one, as some lightermen continued to carry on the old terms. The jury found that the arrangement which the assured had made for the lighterage of their goods was material to the risk, that is to say, it was a fact which a prudent and experienced underwriter would have taken into consideration in estimating the premium; but they also found that the underwriters were not reasonably justified under the circumstances of the case in assuming without inquiry that there would be recourse against the lighterman with the liability of a common carrier ; and, upon these findings, judgment was entered for the plaintiffs.
The Divisional Court set aside the verdict, and gaye judgment for the defendants, whereupon the plaintiffs appealed; but the appeal was dismissed. The Court of Appeal, in giving judgment, held that there was no evidence of a general usage. of lightermen to carry on the terms of limited liability, and that the arrangement made by the plaintiffs for the landing of their goods was one which it was material for the underwriter to know, so that the non-disclosure of that arrangement constituted a concealment of a material fact which vitiated the policy (z).
V.-IMPLIED WARRANTIES. An implied warranty is a condition which, though unexpressed in the policy, is understood with respect to it, and the breach of which is subversive of the contract. The term “ warranty," as applied to the several conditions about to be specified, is significant of their definiteness and stringency, so that, although only implied, they are as efficacious as though they were written upon the face of the policy.
The necessity for a definite and binding understanding between the parties will be evident when it is remembered that, however comprehensive the terms of the policy may be, a great deal must be taken for granted with respect to every risk. For instance, the underwriter is entitled to presume, in the absence of any clear statement to the contrary, that the vessel by which the insurance is made will be fit for the service in which she is to be engaged, that the voyage will be performed in the usual manner, and that the adventure as a whole will be conducted in conformity with legal requirements. The assured is accordingly understood to "warrant” these conditions; and, the three implied warranties thus arising may be stated as follows:
1st. In every voyage policy, it is a condition precedent that the vessel shall be seaworthy on sailing.
2nd. The voyage must be pursued in the accustomed manner
(2) Tate & Sons v. Hyslop, Weekly Notes, 20th June, 1885.
without undue delay, or deviation from any of the established usages of trade or navigation.
3rd. The adventure must be a legal one, both as regards its nature and the mode in which it is prosecuted.
1. Seaworthiness has been concisely defined (a) in the following terms :-" The assured undertakes, in a voyage policy, that his vessel shall start upon the voyage in all respects fit to encounter the ordinary perils incident to such a voyage." In accordance with this definition, it is necessary that the vessel should, on sailing, be tight and staunch in hull, properly rigged, stored and equipped, provided with a competent master and crew, as well as with a pilot when required by law or custom, and supplied with all other things necessary for the intended voyage. Her cargo must also be properly stowed, and the weight of it not in excess of the vessel's safe carrying capacity. In the case of an insurance being effected on cargo which is of such a nature, or so stowed, as to render the vessel unseaworthy, it will be no extenuation to show that, in case of need, the cargo can readily be jettisoned, for the warranty of seaworthiness is to be construed in relation to the subject-matter insured, and cannot be taken to contemplate the destruction of that very cargo which it is designed to protect (6).
Neither the ignorance nor the innocence of the assured will avail to relieve him from the consequence of a breach of the warranty, though all reasonable precautions were taken to insure the seaworthiness of the vessel on sailing, and her unseaworthy condition arose from a latent defect (c), for an actual fulfilment of the implied condition is indispensable. Upon the same principle, an insurance on cargo is invalidated if the vessel sail unseaworthy, though the assured be ignorant of her state, or powerless to alter it (d).
It is settled law, that a warranty of seaworthiness is to be implied in every voyage policy, unless the condition be clearly
(a) Per Lush, J., in The Merchants Trading Co. v. The Universal Marine Insurance Co., Liverpool Assizes ; confirmed in banco (not reported), but see L. R. 9 Q. B. 596.
(6) Daniells v. Harris, 2 Asp. Mar L. C. 413.
(c) Lee v. Beach, Marshall on Insurance, 2nd ed., p. 160.
(d) Oliver v. Cowley, ibid.