become a subject of legal investigation. And seeing that this was the general tenor of our law, it would be difficult to say, that a contract of insurance, in which the parties dispensed with the proof of interest, and which was not shewn to have been intended as a cover for an illegal design, could before the passing of the statute have been deemed invalid. Nor does it appear that insurers, who subscribed policies, dispensing with the existence of interest, before the passing of the statute of 19 Geo. 2. had any better ground for relief in equity than they had at law. In the Court of Chancery, in one of the earliest cases in which the validity of an insurance without interest is to be found discussed, it was disclosed among the grounds of objection to a life insurance that the person insured had no estate or interest depending upon the life in question. The court decreed the policy of insurance to be delivered up to be cancelled, and a perpetual injunction against the verdict that had been obtained at law, observing that if such ill practices were used they would turn to the ruin of trade instead of advancing it. It should be remarked however, that in this case other grounds of objection existed upon which, as well as upon the point just mentioned, the decree *was founded. (u) In a subsequent case a policy on a ship for 450l. was ordered to be delivered up, where the insured had lent 300%. on a bottomry bond, but possessed no other interest in the ship or cargo and the law was taken as settled, that if a man has no interest, and insures, the insurance is void, although the expression interested or not interested be inserted in the policy. (x) The reason was said to be, that insurances were made for the benefit of trade, and not that persons unconcerned therein should take profit by them; and that if a person would have the benefit of the insurance he must renounce all interest in the ship. It was said that the reason why the law allowed a man having some interest in the ship or cargo to insure five times as much, was that a merchant could not tell how much or how little his factor might have in readiness to load on board a vessel. This decision took place in the year 1692. In another case upon a policy of insurance on goods valued by agreement at 6007. it having been stipulated that the insured should not be obliged to prove his interest, the Lord Chancellor ordered the defendant to discover what goods he had on board; and although the defendant offered to renounce all interest to the insurers, yet it was referred to the master to ascertain the value of the goods saved, and deduct it from the sum of 600l. at which the goods were valued by the agreement. (y) But the principles upon which the courts of equity proceeded in affording relief in these cases do not appear to be clearly ascertained. The ground could not have been that a contract was invalid in equity which was recognized as binding in a court of law. If indeed at the time these deci sions passed, the clause interest or no interest was considered as dispensing only with the proof of interest; and the underwriters, after a policy had been effected, discovered that the insured had in truth no interest at all, but that the contract was merely a gambling transaction on his part; or if any circumstances of fraud existed, in any such case, the jurisdiction of the court of Chancery may be accounted for on the ground of the *surprize or fraud. But the clause interest or no interest for whatever purpose it may have been originally introduced, seems, when admitted, to be of the very essence of the contract, against which, if legal, relief could not be had; and the decisions in the courts of equity seem therefore, only to be supportable, by presuming them to have been made on the ground of fraud, or of some other extrinsic circumstances, in consideration of which, that court is sometimes induced to relieve against the rigour of the law. (z) In another case which occurred in the court of Chancery in the year 1716, where a person who had lent money on a bottomry bond made insurance on the ship, the insurance being larger as to the voyage than what was contained in the bond, and affording a liberty to go to other ports and places, and after the vessel had been lost, recovered the money on the policy, and also put the bottomry bond in suit; on a bill being brought insisting that the defendant had no interest in the ship or cargo, except in respect of the money lent on bottomry, and that he ought not to reap the benefit both of the bond and of the policy, the Lord Chancellor held, that the defendant having paid the premium of insurance was entitled to the benefit of both securities. (a) This decision seems to be at variance with the cases before mentioned in which relief was afforded on the ground of insufficiency of interest. 2. The distinguishing characteristics of insurance with or without interest may be next considered. A wagering insurance and an insurance on interest are contracts which differ from one another in form as well as in incidents. Regularly, the policy of insurance will disclose of which of these two species the contract is; and the criterion is to be found in the insertion or the omission of the clause interest or no interest, or other words to the like effect. For every policy, whether effected on behalf of a foreigner or a British subject, must be taken to be a policy on interest, unless something is stated shewing the contrary; to support an action on a wagering policy, something must appear in the contract to shew that it is such. Before the passing of the statute 19 Geo. 2. c. 37., it was usual, as is strongly proved by the language of that act, to insert in the *policy the words interest or no interest, or some other stipulation expressly dispensing with the proof of interest; (b) and indeed underwriters would labour under a great disadvantage if this precaution were not adopted to distinguish a wagering insurance; (z) Vide 3 Taunt 517. (a) 2 Vern 717. (b) By Chambre, J 3 Bos & Pul 101, 102. on a wagering policy, the insured can recover only in the event of a total loss: (b) there can neither be salvage nor abandonment, (c) nor return of premium for short interest; the destruction of the property is in this case a benefit to the insured: on the contrary, when the insurance is effected on a real interest, the insured is entitled to recover according to the loss actually sustained, whether total or partial; there is a right of salvage, there is a capacity to abandon, and a return of premium is due for short interest in this case it is usually for the benefit of the insured to labour for the safety of the vessel. Where an insurance is made "interest or no interest," the premium cannot be recovered back on account of the want of interest, for the question of interest is precluded by the terms of the stipulation: but on the other hand, when the policy purports to have been made on interest and no interest appears to have existed, the policy by the custom of merchants is void and the premium must be recovered back. (d) These differences, therefore, existing by the law and practice of insurances, between the two contracts, it is absolutely necessary, in order to give the underwriter a fair advantage, that whenever the insurance is not intended to be confined to an actual interest, the policy should inform him of that circumstance. But it appears to have been decided that although the policy contains a clause providing that in case of loss no further proof of interest shall be required than the policy, yet this clause will not of itself make the contract invalid under the statute, or preclude the insured from recovering, where a bona fide interest appears to have existed. In a case where this point occurred, Mr. Justice Lawrence said, that the stipulation as to the proof of interest was an independent part of the agreement which might be void, and yet the other part as to the contract itself of *insurance might be good. Here the parties first agreed that the profit of the adventure should be insured at a certain premium, and they have also agreed that less proof of the interest of the assured should be accepted than the law requires to be given. The latter stipulation is, therefore, void, because it is not competent to parties to make an agreement which will bind a court of justice not to call for that proof which the law has made necessary; but still the contract of insurance itself may be good if proved by legal evidence. The plaintiff in this action was eventually nonsuited on another point. (e) When the insurance is effected to protect an existing interest, it is incumbent on the plaintiff to state in his declaration, with precision and accuracy, the actual interest which he possesses, and afterwards to establish it in evidence: he must then recover according to the interest which he is proved to have, and according to the loss he has sustained. Where the declaration states that the policy (b) Goss v Withers, 2 Burr 695. Cases. 4 Bro S C 450, note. Dean v Dicker, 2 Stra 1250. (c) Kulen Kemp v Vigue, 1 T R 308, 310. 2 New Rep 312. (d) Cousins v Nantes, 3 Taunt 516, 517 by Sir J Mansfield, LC J. (e) Hodgson v Glover, 6 East, 316. Vide Cousins v Nantes, 3 Taunt 513. was effected to protect an actual interest, the plaintiff will not be allowed to desert that averment at the trial, and to recover as if the contract had had a different object. (f) The averment of interest, it is observable, was in use before the passing of the statute 10 Geo. 2. c. 37. 3. The next consideration is to what forms of contract the rule of interest will be applicable. A contract which is substantially within the prohibition of the statute as an insurance "without interest, &c." is invalid, into whatever form it may have been reduced by the parties. An agreement made between the surgeon of an East Indiaman and a passenger on board the vessel, by which the passenger, in consideration of the sum of 201., undertook that the ship should save her passage to China that season, and in case she did not, that then he would pay the surgeon the sum of 1,000l., at the end of one month after the arrival of the ship in the river Thames, was holden void by virtue of the statute. (g) If such an agreement were allowed to be valid, all wagering policies would be turned into this form, and the act would be entirely defeated. It seems indeed to have been the opinion of some judges of high authority, that the statute 14 Geo. 3. c. 48., which prohibited insurances on lives or any other event, "in which persons for whose benefit the policies were made had no interest, or by way of gaming or wagering," (not however affecting insurance on ships or goods), (h) extended to prohibit all wagers whatsoever between persons not interested in the subject matter. (i) It was said that the word policy, which was derived from the French, meant nothing more than a promise, and that the courts must either restrain that act of parliament to cases in which policies were made in the regular form, which restriction would entirely repeal the statute, or that they must, in pursuing the spirit of the act, extend it to every sort of wager. It is now however established, that a wager between two persons upon an indifferent subject, is not within the prohibition of the 14th Geo. 3. c. 48., (k) nor is a wager in general illegal, unless, as has been already observed, it contravenes in some manner or other the policy of the law. (1) The 19 Geo. 2. c. 37., like the 14 Geo. 3., prohibits only wagering insurances, and not contracts that are merely wagers. 4. The fourth consideration is, to what species of property the rules of interest are applicable. Although the statute 19 Geo. 2. c. 37. sec. 1., in its terms, only prohibits insurances without interest on ships belonging to his Majesty or his subjects, or goods, merchandizes, or effects laden on board of such ships, yet it has been considered, that insurances effected on profits or freight, or other interest connected with the things enumerated, must be made in conformity with this enact (f) Lucena v Crawford, 2 New Rep Per Buller, J, and Lord Mansfield. 308. (g) Kent v Bird, Cowp 583. (h) 14 Geo 3 c 48 s 4. (i) Good v Elliott, 3 T K 701, 702. Atherfold v Beard, 2 T R 616. Foster ment. (m) If, for instance, the subject of insurance be profit, the risk is in fact incurred by the ships or goods upon which the profit is dependant, and the preservation or destruction of which will occasion the profit or the loss. An insurance upon the profits of any ship or goods, by way of wager, would be a mere evasion of the statute, and must be taken to be within the spirit of the act, although not within its letter. But foreign ships and merchandize *may be insured without interest, for the prohibition is only extended to insurances upon property belonging to his Majesty, or to his subjects. On a judgment by default, therefore, in an action on a valued policy upon a foreign ship, when there is a stipulation that the policy shall be sufficient proof of interest, the jury empannelled on the writ of inquiry may assess damages to the amount of the subscription, without any evidence being given of interest, or any proof whatever, except of the defendant's handwriting to the policy. In the case in which this point was decided, the policy was effected on all goods laden on board three vessels, all or any of them; and the first count in the declaration stated, that goods to a great amount, being the property of certain foreigners, had been shipped on board of one of the vessels, and that she had been lost. The second count averred that the goods were shipped on board the three vessels, or some or one of them, to the amount of the sum insured, and that two of them had been captured, and the other lost. The only difficulty was considered to arise from the circumstance of the manner in which the three ships were insured; but the second count was so framed as to make the case the same as if the three had been but one. By suffering judgment to pass by default, the defendant confessed the plaintiff's title to recover, and the amount of the damages was fixed by the stipulation in the policy. As foreign ships and merchandize may be insured without interest, so it seems clear that insurances may be effected in the same manner upon profits, or other insurable matters, arising out of ships or goods which are the property of foreigners. (n) Foreign property was excluded from the operation of the statute, on account of the difficulty which it was feared might be experienced in obtaining witnesses from abroad, in order to prove the interest. (0) It may be observed, however, that an insurance on foreign property, effected in the usual form, and not containing the clause interest or no interest," or the like, does not give the insured a right to treat the policy as a wagering policy, and to recover without proving an interest; nor will any thing constitute an interest in the case of an insurance on foreign property, which will not be *sufficient for that purpose, in cases within the statute 19 Geo. 2. c. 37. (p) Insurances on private ships of war, fitted out by any of his Majesty's subjects, solely to cruize against his Majesty's enemies, may be made by or for the owners thereof, interest or (m) 2 New Rep 278, 314. Hodgson v Glover, 6 East 316, 320. But see 2 New Rep 314 per Graham, B and Rooke, J. (n) Lucena v Crawford, 2 New Rep |