called upon in justice to open the whole account. (r) So an underwriter, who had a secret partner participating in the benefit of his insurances, could not recover the premiums from the insured. (s) However, although a partnership in underwriting, whether secret or ostensible, was illegal under the statute, yet this doctrine applied only as against persons engaged in or cognizant of the partnership; it did not extend to defeat the bona fide claims of an innocent person on an insurance, apparently effected by a single underwriter; and therefore an underwriter who subscribed a policy in his own name, and professed to engage only his individual capital, was held answerable to the insured, although he had a secret partner. (t) It is reported to have been holden, that a broker who insured ships with an underwriter who had secret partners, might prove against the separate estate of the underwriter, although his account had been always kept with the partnership. (u)

The privilege granted to the Royal Exchange and London Assurance Companies, of effecting marine insurances and lending money upon bottomry, in exclusion of all other societies or bodies of persons, was taken away by the statute 5 Geo. 4. c. 114. This statute however declared, that it should not affect the rights and privileges of the two corporations, otherwise than by making it lawful for other corporations and bodies politic, and persons acting in society or partnership, to grant and make policies of insurance and contracts of bottomry. It may be observed also, that the two corporations must be regarded as private companies; and the Court of King's Bench will not grant a writ of mandamus to compel them to allow a transfer of stock to be made in their books. This was established even whilst their exclusive privileges existed. For, although the companies enjoyed great privileges, the right of a member or his representatives to a transfer *of stock, was merely a private right; whereas the writ of mandamus is a high prerogative writ, and is confined to cases of a public nature. (x) The internal constitution and management of these companies must be governed by the statute, and the charters to which they owe their origin. As in any case of a private partnership in underwriting, whether consisting of a greater or less number of persons, the conduct of the partners inter se must be regulated in conformity to the provisions of the deed, or instrument by which the partnership is created. The mode of redress is in general in the Court of Chancery; and in the case of a private partnership may be attended with facility or difficulty, according to the extent of the partnership, and the complication of the affairs of the company. The following observations were made on a recent occasion by the Lord Chancellor : (y) "It may "be taken, that the principle which would apply to a partnership

J.

(r) Bos & Pul 374, per Lord Eldon, C Watts v Brooks, 3 Ves Jun 612.

(s) Branton v Taddy, I Taunt 6. (t) Booth v Hodgson, 6 T R 409, 410. Mitchell v Cockburn, 2 Hen Bla 379, 382. Watts Brooks, 3 Ves jun 613.

Sullivan v Greaves, Park 8.

(u) Ex parte Angerstein, 1 Bro Chan Cas 399. Ex parte Lee, 400, sed quære. (x) The King v Lond Ass Comp 5 B & A 899.

(y) Per Lord Eldon, C.

"of six, will apply to this partnership of 600 or 700; 340 have "executed in respect of not quite half the number of shares ; "there probably may be, therefore, 600 or 700 members. To "those who have not had occasion to observe the boldness of "speculation, it may seem astonishing that persons, and so many "in number, should have engaged themselves in a speculation so "little explained, and undertake to execute deeds, of the contents "of which they had so little information. To those who know "the difficulty of applying the rules of law and equity to socie"ties constituted of such numbers of persons not incorporated, it "is not matter of surprize that persons ignorant of those difficul"ties should become members of such societies: it may be matter "of surprize to them, that persons who know the difficulty of "applying those rules should become members, even where the "nature of the speculation is clearly explained, and full informa"tion is given of the contents of the deeds to be executed. Much "has been done with respect to the difficulty alluded to by provi"sions, how those who have demands upon such societies are to 66 sue, and how such societies are to be sued: much remains to be "done, and particularly as to rendering simple and effectual the "remedies of the members of such societies against each other. "It is to be observed, that the members of this society underwrit"ing will be each liable to the bankrupt laws: shares may devolve "to feme coverts, infants, &c. But whatever are the difficulties, "courts must struggle to remedy them, and to prevent particular "members of those bodies from engaging other members in projects "in which they have not consented to be engaged, or the engaging "in which they have not encouraged, assented to, empowered, or "acquiesced in, expressly or tacitly, so as to make it not equitable "that they should seek to restrain them. The principles which a "Court would act upon in the case of a partnership of six, must, as "far as the nature of things will admit, be applied to a partnership of ❝ 600."

(*91)

70

*CHAPTER V.

OF INSURANCE BROKERS.

INSURANCE brokers are the persons through whose intervention contracts of insurance are usually entered into. In ordinary cases, there is no direct communication between the insured and the underwriters; and the policy is effected on the part of the former through the interposition of an agent. In considering the laws affecting agents of this description, it will be convenient to examine them, in the relation which they stand 1st with regard to the insured, and 2dly the insurers. We shall proceed therefore to consider 1st of the employment of agents of this descriptionwhat persons have the power or are under an obligation to procure insurance to be effected-and of the duties, liabilities, and rights of brokers with regard to the insured. 2dly, The authority of an agent for the underwriter, the liability of the broker for premiums, and his right to set off losses and returns against a demand for premiums.

1. An insurance broker may be 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 an express or implied authority. An order given by a partner on account of the firm of which he is a member to make insurance on a vessel the property of the partnership is binding on the firm. (a) But a direction to insure given by one part-owner of a vessel, although he is the managing owner, will not bind the rest of the part-owners; nor can they be charged with a part of the premium unless they assent to *the insurance. (b) The husband of a vessel appointed by a deed executed by all the owners, with a power in the usual way to make advances and to retain in respect of payments, has no authority by virtue of such an appointment to procure an insurance to be effected for the benefit of the owners. (c) The husband has no right to insure for any part-owner without his particular direction, nor for all the owners in general without their general direction or something equivalent to it. Commissioners appointed for the management and disposal of ships detained at sea in the event of their arrival in this country, (d) and persons authorized to prosecute a claim upon a vessel in a prize court abroad, to

(a) Hooper v Lusly, 4 Campb 66.

(b) French v Backhouse, 5 Burr 2727 -2729. Ogle v Wrangham, Abb Shipp. 91 5th Ed 76. Bell v Humphries and Oth

ers, 2 Stark 346.

(c) French v Backhouse, 5 Burr 2727. (d) Lucena v Craufurd, 2 New Rep 297. 3 Bos and Pul 96.

forward the ship to London, (e) and pay all demands upon her, have been considered as clothed with power to effect insurance on the property entrusted to their management. It seems doubtful whether even a general agent to whom goods are consigned may not on account of the advance of the season, or other good cause, in the exercise of his discretion and without being expressly directed, procure an insurance to be made for the benefit of his principal, and charge him with the premium of the insurance. (ƒ) [A general agent for a merchant residing abroad who was in the habit of making shipments to New York, may cause an open policy for $-on goods laden or to be laden on board of any vessel from C. to N. Y. on account of his principal. The defendants having contracted with the agent for the express benefit of his principal, and received the premium, could not shew want of authority in the agent, and the principal having adopted the act of the agent, might enforce it in the name of the agent. 1 Hall's sup.

C. Rep. 247.]

In general an obligation to procure insurance, to be effected on behalf of another person cannot be imposed without the consent of the agent; but though no express consent has been given, it may be implied from the relation in which the parties stand to one another. There are three instances in which an order to insure must be obeyed. (g) First where a merchant abroad has effects in this country in the hands of his correspondent, he has a right, it is said, to expect that the latter will obey an order to insure, because he is entitled to dispose of the money in his correspondent's hands in what manner he pleases. (h) The second class of cases is where the merchant and his correspondent have been connected in a previous course of dealing, the one having been used to send orders for insurance which have been *complied with by the other: the former has then a right to expect that his orders for insurance will still be obeyed unless the latter give him notice to discontinue that course of dealing. (i) The third instance is, where a merchant abroad sends bills of lading to his correspondent in this country, and engrafts upon them an order to insure as the implied condition on which the bills of lading shall be accepted; the agent must then obey the order, if he accepts the goods for the transaction is entire. (k). And when a person, though without consideration, undretakes to procure an insurance to be effected, and is consequently not under a legal obligation to perform his promise, yet if he proceed to carry it into execution, he will be liable for an injury occasioned by his negligence or unskilfulness. (1) When a policy broker was directed to effect a policy for which he was to receive no remuneration and he employed another broker, but omit

(e) Robertson v Hamilton, 14 East, 522, 533 534.

(f) Wolf v Horncastle, 1 Bos & Pul 323 per Buller, J.

(g) Per Buller, J, 2 T R 189.

(h) Smith v Lascelles, 2 T R 189.
(Smith v Lascelles, 2 T R 190.

(k) Smith v Lascelles, 2 T R 190. Corbett v Gordon, 3 Campb 473.

(1) Williams v Coverdale, 1 Esp Rep 75. Wallace v Telford, 1 Esp Rep 76. Elsee v Gatward, 5 T R 143. Seller v Work, Marsh Ins 299. 1 Saund 312 bn 2.

ted to deliver to him with the other instructions a letter containing material information respecting the time of the ship's sailing; and in consequence the underwriters refused to pay, the policy broker, although he derived no profit, was held responsible for the loss occasioned by his omission. (m)

So although agents may be at liberty to renounce an order to insure, yet, if they think fit to accept it, they are bound to carry it into execution as far as by law they may, according to the directions of their principal. Merchants in this country, who are intrusted to insure goods, and include the premium, cannot set up as a defence to an action for not insuring the premium, that they were directed to insure against British capture, for assuming British capture to be an illegal risk, its being inserted would not entirely invalidate the policy. (n) But an agent is not bound to comply with an order to insure, if the order when effected would be unavailable in law, although underwriters may have been in the habit of paying losses on similar policies. (o) The order is not illegal, if the insurance is capable of being rendered lawful by licence, before the completion of the adventure. (p) It is also to be remembered, *that the authority of a broker, like that of any other agent, is capable of revocation. And Lord Ellenborough, C. J., held that it might be revoked after the signing of the slip, and before the execution of the policy, and consequently, that a broker procuring a policy to be effected under such circumstances, cannot charge his employer with the premiums or commission paid on the execution of the policy. (q)

duties of the agent or

It will next be proper to consider the broker, with regard to the insured. Duties to An agent cannot in general delegate his authority to insured. another. When merchants in this country received from a person abroad, with whom they had had no previous connection, a bill of lading, inclosed in a letter, requesting that an insurance might be effected on the goods, and the merchants declining to do business for the consignor, indorsed the bill of lading to a person who was his friend and creditor, who received the goods, but afterwards failed, with the proceeds in their hands ;the merchants, who had their election either to accept or reject the bill of lading, but were bound if they accepted it to pursue the terms of the consignment, and themselves insure and sell the goods, were held liable for the injury occasioned by their misconduct. (r) The agent is bound to do what is usual, in order to get the insurance effected, but is not obliged to procure an insurance at all events. Where merchants in this country, on receiving an order from their correspondent, sent their broker to Lloyd's coffee-house to get the insurance effected, but the underwriters refused to engage in the risk, on account of the ships not being registered, upon which the order was sent to Newcastle, where

(m) Seller v Work, 1 Marsh Ins 299.
(n) Glaser v Cowie, 1 M & S 53.
(0) Webster v De Tastet, 7 TR 157.
(p) Haines v Busk, 5 Taunt 521, 227.
(q) Warwick v Slade and Others, 3

Camp 127. The slip not being stamped, the Court could not recognize it. See on this subject, 54 Geo 3 c 144.

(r) Corlett v Gordon, 3 Campb 472.