they may have the option of continuing the policy, or annulling it, cannot be received to alter the legal effect or operation of the contract. A policy of insurance against fire upon a vessel building in the port of Baltimore, and for a specified period, is not controlled in its operation by proof of usage in other parts of the United States.2

§ 27. The premium is usually paid in advance, and without the intervention of a broker. In marine insurance a broker is employed either directly by the owner of the ship or goods designed to be protected, or by a third person acting mediately as agent for the person beneficially interested, and invested with express or implied authority. In respect to fire insurance, and in mercantile transactions, one of the most important duties which the safety of merchandise requires in agents or assignees, is that of protecting it by insurance; 4 and where the course of dealing between the principal and agent is such that the latter has been used to effect insurances, by directions of the former, the agent is bound to comply with an order to insure, although he has no effects in hand at the time of receiving the order.5

§ 28. The insurers, after reciting the receipt of the premium, usually covenant and agree, or undertake, that from the day named in the policy unto and inclusive of another day named in the policy, and so long as the assured shall pay the premium agreed upon, and the insurers shall accept the same, the stock and funds (of the company) shall be liable to make good any such loss or damage as shall happen

1 Stebbins v. Globe Ins. Co. 2 Hall, (N. Y.) R. 632.

2 Mason v. Franklin Fire Ins. Co. 12 G. & Johns. (Md.) R. 468.

3 Hughes on Ins. 92.

4 Smith v. Lascelles, 2 T. R. 187; De Forest v. Fulton Fire Ins. Co. 1 Hall, (N. Y.) R. 110.

5 Paley on Agency, 18; Story on Agency, § 190. See post, Chap. XXIII.

by fire; with the exception of loss or damage by fire happening by any foreign enemy, civil commotion, or riot, or any military or usurped power, to the property specified.1 By the general principles of insurance, whenever the risk to be run is entire, there is no return of premium, though the contract should cease and determine the next day after its commencement.2 This rule applies to insurances against fire, which generally are made for one entire and connected portion of time, which cannot be severed; and, therefore, if the property insured should be destroyed by fire, arising from the act of a foreign enemy, the very day after the commencement of the policy, though the underwriters would be discharged, yet there can be no apportionment or return of premium.3

§ 29. Where there is fraud on the part of the insurers, who privately know circumstances which render the contract a nullity, as where in marine insurance, the underwriters know of the arrival in port of the ship which it is proposed to insure, the premium can be recovered from them.4 Lord Mansfield has observed, "The underwriter receives a premium for running the risk of indemnifying the insured, and, whatever cause it be owing to, if he does not run the risk, the consideration, for which the premium or money, was put into his hands, fails, and, therefore, he ought to return it."5 But where the right is equal, the claim of the party in actual possession shall prevail—melior est conditio possidentis; and

6

1 Ellis on Ins. 1.

2 2 Marsh. on Ins. 652; 3 Kent, Comm. 341.

3 Ellis on Ins. 23. See post, Chap. XX.

4 Beaumont on Ins. 32; Carter v. Boehm, 3 Burr. R. 1909.

5 Stevenson v. Snow, 3 Burr. R. 1237.

6 Plowd. 296; Lowry v. Bourdieu, Doug. R. 468. The holder of a policy of insurance, with whom it has been deposited as security, has a lien on it at law; and if he receives the proceeds, has the right to retain them against one whose equity is not better than his own. Wells v. Archer, 10 S. & Rawle, (Penn.) R. 412.

hence, when the contract is void for illegality, the premium cannot be recovered back.1

§ 30. It is very important to the assured, that they should have a clear right of action against the parties subscribing or executing the policy, to the extent of the funds of the society. That right should not be confined to a mere order for payment to be made by the subscribing directors upon the general body of the directors of the company; for an action in such case will not lie against the parties executing or the directors generally. In a case which came before the Court of King's Bench,2 on an issue directed by the Lord Chancellor, it was decided, that no contract could be enforced by action at common law where the policy ran as follows: "We the trustees and directors of the said society, whose names are hereunto subscribed, do order, direct, and appoint the directors for the time being of the society to raise and pay by and out of the moneys, securities, and effects of the said contributionship, pursuant and according to certain deeds, &c." It will be observed, that here the subscribing parties to the policy do not promise to pay, but their successors shall pay; and this, therefore, is a void contract as to the subscribing parties. And, on the principle, that if the ancestor is not bound, the heir, though named, is not bound; and also because the future directors were not parties to the instrument, they are not bound. This case was cited as an authority in

1 Hanson v. Hancock, 8 T. R. 575, (a case of bets on a horse-race); Browning v. Morris, Cowp. R. 790, (a case of insurance on lotteries.)

2 Alchorne v. Saville, 6 Moore, R. 202, n.

3 If a man bind his heir to pay 201. every year, but do not bind himself, he shall not be bound. See Barber v. Cox, 2 Saund. R. 37; A.- Coke, Litt. 384.

4 "Perhaps," says Beaumont, (on Ins. p. 10, note u.) "it might have been contended, that the word 'direct' has a technical meaning, which would give effect to the intention of the instrument. The parties being 'directors' do 'direct;' that is, do undertake all which by their office they are empowered

another case,1 which was an action of covenant on a policy of insurance, executed by the defendants under seal, to indemnify the plaintiffs against a loss by fire. The directors, subscribing the policy, "declared" that the sum should be paid out of the funds of the society; and this was held sufficient to support an action on the assumpsit. This case is mainly distinguishable from the former one as in that case the defendants were not parties to it, they having only ordered the directors of the society for the time being to do particular things, namely, to raise and pay out of the moneys and secu rities of the contributionship according to certain deeds and settlements; and the Court of King's Bench decided, that they were not personally liable, as it was not their deed, and as they merely appointed other persons to pay a loss in case it should happen, out of the funds of the society. In the last case, the defendant covenanted to pay, if the funds of the society would be adequate.2

to do respecting the insurance or payment of money in case of loss; such an implied assumpsit seems warranted. But if there is no ground of action in the policy against the subscribing directors, then perhaps the assumpsit would lie against the succeeding directors who had accepted the premiums in succeeding years, as each renewal of the policy might for this purpose be considered a separate assumpsit."

1 Andrews v. Ellison, 6 Moore, R. 199.

2 See Ellis, p. 2-10.

CHAPTER III.

OF THE CONSUMMATION AND DURATION OF THE CONTRACT OF FIRE INSURANCE.

§ 31. WHEN a policy of fire insurance has in fact been executed, and notice of the execution has been given to the assured, its actual delivery is not essential to the completion of the contract. The insurer, whether an individual, or an incorporated company, would not be allowed to retract a consent thus confessed to have been given; but would be considered as holding the policy for the benefit of the insured, and bound to deliver it at his request. Should a loss. occur and the policy then be withheld from the assured, it would not be necessary for him to seek the aid of a Court of Equity, as he would have a complete remedy in an action at Law. A policy, under such circumstances, becomes in fact the property of the assured, and if withheld, an action of trover will lie against the insurer.2

§ 32. But the question may arise, in a given case, whether the policy has been executed, or whether the agreement for the insurance is inchoate only. Such a question has arisen in a case in which the action was an action of trover for the recovery of a policy of insurance. It appeared in evidence, that the plaintiff had directed his agent to effect an insurance on goods on board a ship. The agent applied to the president of the insurance company, on the 12th of October, and settled with him the terms of the insurance, but left the

1 The doctrine is thus clearly and correctly stated in the exact words of Mr. Duer. 1 Duer on Ins. p. 66, § 10.

2 Park on Ins. 4; Marsh. on Ins. 303.