against by that corporation, and that almost all insurances in the United Kingdom are framed on Lloyd's policy.2

§ IVb. Marine insurance: summary.-We have traced, so far as the main facts enable us, the origin of marine insurance, as well as its adoption in .modern times down to the date of the earliest reported English case, also to that of the earliest English statute, mentioned, in addition, the statutes in England, down to the present time, relating to the subject, together with a brief statement of some other facts bearing upon its growth in that country, and have also considered the origin and history of Lloyds in England. From the dates which we have given the sources of the law are easier of access to those who wish to recur to principles, and will be referred to hereafter, as far as necessary in treating of the law governing the contract.

§ IVc. Lloyds associations in United States: American Lloyds.As we have before stated, a marine insurance office was established in the United States in 1754 in New York, which did underwriting under Lloyds system. A case was also decided in South Carolina in 1802, upon a policy issued in 1777 by the South Carolina Insurance Company, which was formed by several subscribers or members upon lines somewhat similar to the plan of some of the later Lloyds associations or underwriters in the United States. And in a case decided in New York, in 1806, the United Insurance Company were insurers on the cargo and freight, and S. and twenty-two others were separate underwriters on the ship under a policy issued in 1798.* It was not, however, until the latter part of the nineteenth century that associations designated as "American Lloyds" and also by various names using the word "Lloyds" as a part thereof, organized in any number in this country. But for a number of years thereafter they were before the courts principally, though not exclusively, upon the question of their right to do business which was opposed under state insurance laws. As long as they were not under supervision or control of the insurance departments they flourished, and this seems to have been especially true in New York, where they were expressly exempted for a time, and were so favored that they were in 1892 granted certain privileges.

217 Earl of Halsbury's Laws of England, pp. 340, 512; examine 14 Ency. Britannica (11th ed.) 661. 3 § IV., at end of section. United Ins. Co. v. Scott, 1 Johns. (N. Y.) 106.

5 The general provisions of the New York Insurance Laws of 1892 (Ins. Laws N. Y. 1892, e. 690, sec. 57. Approved May 18, 1892. In effect Oct. 1, 1892) were expressly made not applicable "to any individual or 23

A case was, however, determined in 1898 in that state, wherein. the protection afforded by the statute of 1892 was denied a Lloyds association. It was as follows: Certain individuals had, about six months prior to October 1, 1892, organized thirty different Lloyds associations identical in form, except that the names differed, with one attorney and a general manager for the whole. The original organization was not made for the bona fide purpose of conducting the insurance business through the thirty different organizations, but for the purposes of sale to purchasers to be found. Such original associators were not actually engaged in business, and were not within the protection of the statute, and an assignee or transferee, in 1894, of the rights of the original associators, said original associators having then resigned and so suspended business, was held to take no better right than the assignor, and so was unlawfully engaged in transacting the business of insurance, and was not within the statutory exception. This case was cited in a decision rendered in 1910, where four individuals

partnership or association of underwriters known as Lloyds, or as individual underwriters which, at the time of the passage of this chapter, is lawfully engaged in the business of insurance within this state, and not required by law to report to the superintendent of insurance or the insurance department, or subject to their supervision or examination, nor to any such association, notwithstanding any change hereafter made therein by the death, retirement, or withdrawal of any such underwriters, or by the admission of others to such association."

The N. Y. Laws of 1894, c. 684, sec. 57, changed the words in the law of 1892; "at the time of the passage of this chapter" is lawfully to the words: "on the first day of October, 1892 was" lawfully. This law went into effect May 12, 1894.

Lloyds associations were so favored in New York "that those which on October 1, 1892, were lawfully engaged in the business of insurance were granted certain privileges, and exempted from supervision by the insurance department, and not required to report thereto, 'notwithstanding any change made therein by

death, retirement, or withdrawal of any such underwriters, or by the admission of others to said association'" Laws 1892, c. 690, 57, Laws 1894, c. 684. The privileges conferred upon such Lloyds companies, and not before especially referred to, are described as consisting of an exemption from the conditions and prohibitions prescribed and provided by section 54 of said chapter 690, Laws 1892, whereby they may transact the business of fire insurance and issue policies in the state of New York without being possessed of the capital required of a fire insurance corporation doing business in this state, and invested in the same manner, and without a certificate to the effect that they have complied with all the provisions which a fire insurance corporation doing business in this state is required to observe, and that the business of insurance specified therein may be safely intrusted to them." Balli v. White (1897) 47 N. Y. Supp. 197, 203, 21 Misc. 285, 292, per McAdam, J.

6 People v. Loew, 52 N. Y. Supp. 799, 23 Misc. 574, 44 N. Y. Supp. 42, 19 Misc. 248, 26 Civ. Proc. 132.

claimed "to own a sort of charter or franchise to do business as individual underwriters, under the name" of the New York & New England Underwriters at Lloyds of New York City, "which they used as merchandise, granting rights to do business thereunder to successive individuals, preferably, apparently, those who are financially irresponsible. These four so-called owners do not underwrite themselves, and in the contract with or licenses to others carefully protect themselves against any liability upon insurance losses." 7

It is noteworthy, that Lloyds rapidly decreased in numbers in that state from one hundred and twenty-five companies in 1895 to seven companies in 1904 owing to their having been made subject, to a certain extent, to the insurance department.

In Alabama under the Civil Code of 1907, Lloyds are permitted to transact insurance business, other than life, upon the same terms and conditions as other companies regularly organized, but if they are without paid up cash capital they are required to make a deposit. In Louisiana, under the statute of 1902, a deposit, etc., is required of Lloyds associations.10 In Maine under the statute of

torneys in fact; and as to deposits and liability in reports. Sec. 303 specifies what other sections of the chapter are applicable.

ciation to file annually a verified (e) as to reserve fund; (f) as to instatement of its affairs with the su- vestment of assets; (g) requiring perintendent of insurance. Secs. 142, each underwriter to be worth in his 143, 162, are same as secs. 138, own right not less than $20,000 above 139, 162, of above Laws of 1905. all liabilities. Provisions were also N. Y. Laws 1910, c. 638 (in effect made as to change of location of June 24, 1910), amends c. 33, Laws principal office; as to change in un1909 (constituting Consol. Laws derwriters, inter-insurers, or at1909, c. 28), by adding new article (art. 10, Lloyds and Inter-insurers) which provides (sec. 300) that not withstanding sec. 54, c. 28, Consol. Laws, 1909, "persons, partnerships. N. Y. Laws 1911, c. 502 (in effect or associations which on Oct. 1, 1892, July 1, 1911) sec. 300, changed the were lawfully and actually engaged clause. in the Law of 1910 as to obin the business of insurers as Lloyds taining the certificate, under sec. 301 or inter-insurers or individual un- thereof, to obtaining a license under derwriters, may, after Jan. 1, 1911, secs. 304, 305, of Laws 1911, Laws continue to do the business of in- 1911 only amended sec. 302 of Laws surers in this state, provided" they of 1910, by adding the words then became authorized to engage in "licensed under the preceding section" the business of insurance as Lloyds to the headline. It also added the or inter-insurers. Agents, subagents, words, "who claim that they were and representatives of such persons, lawfully and actually doing the busietc., were included. Noncompliance ness of insurance in this state as with provisions of article constituted Lloyds or inter-insurers on October a misdemeanor. Sec. 301 required 1, 1892." Otherwise provisions of (a) an application for a certificate; Law of 1911, sec. 302, were same as (b) a verified statement of condi- Laws 1910, sec. 302. Laws 1911, c. tion; (c) an agreement providing for 502, added two new sections; sec. personal service of process; (d) 304 being general provisions affect"such other matters as the superin- ing Lloyds and inter-insurance astendent of insurance may prescribe." sociations organized after July 1, An examination of the financial con- 1911, and sec. 305 being providition of such persons, etc., and the sions for the admission of Lloyds and granting of a certificate of authority inter-insurers associations domiciled was also provided for. Sec. 302 in other states. Said Law of 1911 contained provisions (a) as to filing also provided for the forwarding of original verified certificate of articles process by the superintendent of inof association, copartnership agree- surance. ment, or inter-insurance contract, with amendments; (b) as to changing name; (c) as to establishing branches; (d) as to similar names;

92 Ala. Code (Civ.) 1907, sec. 4568 (2592) Id. 4563 (2587).

10 Wolff's Const. & Rev. Laws La. 1904, p. 884 (acts 112, 1902, p. 181.

1903, Lloyd's associations, for the purpose of transacting marine insurance business, were granted all rights, powers, privileges, etc., under the Massachusetts laws 12 these associations are authorized to transact insurance business, other than life. The Minnesota Statute also contains provisions as to Lloyd's associations.13 In Tennessee, in 1896, companies on Lloyd's plan, "whereby each as>sociate underwriter becomes liable for a proportionate part of the whole amount insured by policy," were authorized to do business, but were required to make deposit "where they have not an actual paid-up cash capital."

" 14

In Mississippi in 1910 a law was enacted entitled "An Act to Raise Revenue and to More Clearly Define what are Insurance Companies in This State and to Place a Tax and Bring a Class of Companies, Associations, and Organizations under Supervision of the Insurance Department, Heretofore Claiming Exemption," and it included within fire and marine insurance companies or corporations "all corporations, partnerships, individuals, associations, or organizations, known as Lloyds, engaged in placing, writing, or soliciting any and all kinds of fire and marine insurance." Said statute of 1910 authorized such corporations, etc., known as Lloyds, to solicit, sign, issue, deliver, and to execute policies of insurance, contracts, and guaranties against loss by fire, water, lightning, or tornado, etc. It also made it unlawful for any corporation, partnership, individual association, known as Lloyds, to solicit insurance, make such contracts and guarantee against loss by fire, water, lightning or tornado; rate or classify risks, etc., except upon authority of the commissioner and compliance with the law. 16

Another reason given for the early failure of so many of these associations was that it was not due to the practice of individual underwriting in itself, but that the ostensible reserve for the protection of the policy holders was usually of little or no value.17 And

11 P. 471, c. 49, sec. 1.

12 Rev. Laws 1902, 1908, p. 1211 (R. L. 118, sec. 86), sec. 91, cited in Opinion of the Justices, 196 Mass. 603, 85 N. E. 545, upon point of excise tax against "Individuals" and "a person" as well as corporations.

13 Minn. Rev. Stat. Suppl. 1909, Annot. p. 592, sec. (1647—) 1 (Minn. Laws 1913, c. 534, secs. 1-4, pp. 7723.)

14 Shannon's Annot. Code Laws 1896 (p. 766), sec. 3298.

"Inter-insurance contracts to be reported under oath once a year-Taxation of same."

16 See State v. Alley, 96 Miss. 720, 51 So. 462, 39 Ins. L. J. 629. In this case an organization of inter-insurers claimed that they were not doing insurance business in the state, and that they were not an "insurance company, corporation, partnership, association of individuals," within Code 1906, sec. 2559. See § 336a herein.

15 Chap. 103, Laws 1910, p. 76, 17 10 New Internat. Ency. (1908) amending Code 1906, chap. 69. p. 685.