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for about one hundred years, it died a natural death. There is evidence to show that, by the year 1720, the Court of Policies of Assurance had fallen into disuse, or at all events into disrepute; yet, although the business of marine insurance became gradually subordinated to the common law jurisdiction, the transition was a slow one, for it is stated by Park (o), that in the century and a half which followed the passing of the statute of Elizabeth, not more than sixty decisions in insurance cases are reported, and these were of an experimental character. The practice of the Courts, in relation to marine insurance, continued more or less desultory until the year 1756, when Lord Mansfield became Chief Justice of the Queen's Bench. That illustrious judye made the policy his special study, and drew from the old sea laws, the foreign ordinances, the writings of jurists, and the usages of trade, those principles which, under bis arrangement, were to form the nucleus of a system of insurance law (p). When Lord Mansfield addressed himself to this task, he found that a body of rules for the conduct of the business had grown up, not conspicuous for logical consistency or scientific precision, but calculated to do rough and ready justice between the parties to the contract. These rules were known as the usages of Lloyd's—an institution the origin and growth of which must now be briefly noticed (9).
Among the coffee houses, which, in the latter part of the seventeenth century, sprang up so numerously in London as centres for mercantile, literary, or social intercourse, was one which bore the name of “ Lloyd's." The first notice of this place of resort' which is to be met with in any public paper, appears in the London Gazette of 18th to 21st February, 1688, which contains an advertisement, the replies to which were directed to be addressed “to Mr. Edward Lloyd, at his Coffee House in Tower Street.” About three or four years subsequent to the date last mentioned, Mr. Lloyd's establishment was removed from Tower Street to the corner of Abchurch
(0) Introduction, xl.
p) Marshall on Insurance, r. 29. (9) For the materials for the follow
ing epitome, I am indebted to Martin's
History of Lloyd's.”
Lane and Lombard Street, in which situation it became a place of meeting for merchants, and a mart for the sale of ships and merchandise. In 1996, the enterprising proprietor started a shipping and commercial newspaper, called “ Lloyd's News,” the issue of which was suspended in the following year, but revived in 1726, in a greatly improved form, under the name of “Lloyd's List.” These circumstances are indicative of the extending connection of Lloyd's Coffee House with mercantile circles; and thus it came about, that in process of time that establishment became one of the chief places of resort for shipowners and merchants, and in particular the recognized centre for the business of marine insurance.
It is needless to trace the gradual development of Lloyd's from a private concern into a corporation established by Act of Parliament; but probably the most important change in its constitution occurred about the year 1769, when, in order to put a stop to the illegitimate and nefarious transactions which occasionally took place within their circle, the principal merchants and underwriters frequenting the coffee house formed themselves into a society under fixed rules.
In 1779 the members of Lloyd's took common action to obviate the inconvenience which had arisen from the diversity which prevailed among the forms of policy in use; and, on the recommendation of the committee, it was agreed to adopt for exclusive use a definite form, thenceforward known as “Lloyd's Policy.” At the meeting when this decision was arrived at the following resolutions were passed :—First, “That no Policy be subscribed from this time knowingly that may be printed in words different froin a Form now produced ;” and secondly, “That we will not underwrite to any Person or Persons who may hereafter tender any policy otherwise printed.” The only alteration which has been made in the wording of Lloyd's Policy from the above date to the present time consists in the substitution of the words—"Be it known that,” for the asseveration “In the name of God, Amen,” with which the terms of the Policy formerly commenced, this modification being effected in the year 1850.
In the early stage of the development of the law of marine insurance, the practical rules followed by the underwriters of Lloyd's in the transaction of their business constituted the chief authority in matters of marine insurance. These rules had been derived from various sources, amongst which may be specified the old sea-laws, the general custom of merchants, the usages of particular trades, and the opinions of writers upon marine insurance. As Lloyd's Coffee House had by that time become the recognised centre of underwriting and the fountain head of influence and information in matters of shipping and insurance, the usage prevailing among the underwriters who transacted business there entered largely into the decisions of the Courts. Indeed it is not too much to say that, at that time, usage was allowed to make the law, almost without qualification.
Nevertheless, the Courts early drew a marked distinction between general trade customs and usages which appertained exclusively to a particular trade, place, or class of persons. The former, as we have already seen, are judicially recognised as forming part of the law of England; but the latter have to be proved, and are only held to be binding as between those parties who are cognizant of them. Hence, as stated by Taylor (r), “ whenever evidence of usage is alleged, the party against whom it is adduced is at liberty to prove either—1st, the non-existence of the usage; 2nd, its illegality or unreasonableness ; or, 3rd, that, in fact, it formed no part of the agreement between the parties.” Upon one or other of these grounds, many alleged usages of Lloyd's have from time to time been disapproved; and, as the system of the law of marine insurance has become more complete, usage has been subjected to a keener criticism. Subject to this process of revision, however, the authority of the usages of Lloyd's, in relation to marine insurance, has been fully recognised by the Courts.
The only other feature in the history of marine insurance
(r) Taylor on Evidence, p. 992.
to which it is necessary to advert in this outline is the extension of the facilities for underwriting afforded by the establishment of marine insurance companies. The two companies first formed, namely, the “London Assurance Corporation,” and the “Royal Exchange Assurance Corporation,” were constituted by charter, in 1720, under the 6 Geo. I. c. 18, which gave to these two bodies the exclusive right of carrying on, as joint-stock companies, the business of marine insurance. This Act, so far as it conveyed a monopoly to the two corporations named in it, was repealed in 1824; and the removal of the restrictions placed upon the extension of joint-stock enterprise within the sphere of marine insurance was followed by the formation of a large number of companies constituted upon that principle. Since then, the business of marine insurance has to an increasing extent been carried on through the mediumn of companies and mutual associations. The policies issued by these offices, though for the most part based upon Lloyd's form, differ from the latter as well as from one another in many particulars. The diversity in the form of policies is productive of inconvenience; and it would tend to simplify the business of marine insurance and obviate misunderstanding, if a common form of policy were agreed upon to constitute the basis of the contract in every case, subject to modification by special agreement.
1.--DEFINITION OF TERMS USED IN MARINE
INSURANCE. MARINE INSURANCE is a contract whereby one party, for a specified consideration, agrees to indemnify another, who is interested in property exposed to marine risks, against loss incidental thereto (a).
The instrument by which the contract is made and reduced to form is called a policy (b). The party who undertakes to indemnify the other is called the insurer, or underwriter (c); and the consideration which the insurer receives as the price of bis undertaking, the premium. The protected party is called the insured, or assured ; the thing covered by insurance, the subject; and the substantial concern which the insured person has, in the preservation of the subject, his interest. The obligation assumed by the underwriter, regarded as a whole, is termed the risk (d); and the specified dangers, the perils insured against.
(a) By the Stamp Acts, the term “sea insurance” is applied to “any insurance (including reinsurance) made upon any ship or vessel, or upon the machinery, tackle, or furniture of any ship or vessel, or upon any goods, merchandise, or property of any de scription whatever, on board of any ship or vessel, or upon the freight of, or any other interest which may be lawfully insured in or relating to any ship or vessel.” 30 Vict. cap. 23.
) Derived from the Latin, pollicitatio - a promise, through the Italian polizza. A policy of marine insurance is “a contract of indemnity against all
losses accruing to the subject-matter of the policy from certain perils during the adventure ;" Lloyd v. Fleming, Q. B. L. T. Rep., Vol. xxv., p. 824. By the Stamp Acts, the term policy is applied to “every writing whereby any contract of insurance is made, or agreed to be made, or is evidenced ;' 33 & 34 Vict. cap. 97, sect. 117.
(c) So called, because he writes his name at the foot of the policy.
(d) In the plural this word is used synonymously with perils, to signify the dangers against which the subject is insured.