The Lombards appear to have carried the practice of marine insurance wherever they had mercantile dealings, and thus to have gained for it a footing in most of the great European centers of maritime trade. The name of the insurance contract, called a "policy," is of Italian derivation. It is said that 66 a chamber of assurance" was established in the city of Bruges as early as A. D. 1310, with various regulations for the government of the insurers and the insured. A form of policy, supposed to be the oldest extant, is given in the note, the original of which is in the Italian language, and was established by the statute of Florence, January 28, 1523.1 or howsoever named, commanded by We begin the said insurance from the time when the said goods shall be, or shall have been, laden on board the said ship in [such a place], to continue until the said merchandise shall be discharged on land or in safety at [such a place], with liberty for the ship to touch at any other place, and to navigate forwards or backwards, to the right hand or the left, at the pleasure of the captain, and as he may require: The said assurers taking upon themselves in respect of the said goods the risk of all perils of the seas, fire, jettison, reprisals, robbery by friend or foe, and every other chance, peril, misfortune, disaster, hindrance, misadventure, though such as could not be imagined or supposed to have occurred, or be likely to occur, to the said goods, and barratry by the master, except as to stowage or customhouse. All the said risks the said insurers are to run and take on themselves until the said goods shall be safely discharged on shore at [such a place]; and if they are not laden, the insurers are entitled to retain one and a half per cent. "And if the said goods shall sustain, or have sustained, any disaster (which God forbid), the insurers shall pay to the said the sum insured, within two months from the news reaching the city. "And if within six months there shall have been no true news, the insurers shall pay to the said the sum insured; and in case of subsequent arrival and safe discharge at the said place, the aforesaid shall pay back to each the sum he has received. In the event of shipwreck, it is allowed to make recovery without authority from the insurers, it being stipulated that the said insurers are not responsible for theft by the captain of the said ship. The provision of this policy, that, if the insurers wished to contest the question of their liability, they must pay first and litigate afterwards, is worthy of notice. At the initial stage of its existence, the contract of insurance was underwritten by individuals and was regulated by mercantile custom, which became the foundation of all the laws and codes subsequently enacted upon the subject. A recorded mention of insurance in England in 1548 indicates that the practice of insuring had been in vogue there for some time, and somewhat later, on opening Queen Elizabeth's first parliament, Lord Bacon said: "Doth not the wise merchant in every adventure of danger give part to have the rest assured?" But for many years after its introduction into that country, the law of insurance was unknown to the courts of Westminster, and insurance disputes were as a rule settled by the arbitration of mercantile men. The first reported insurance case belongs to the year 1589, and is mentioned by Sir Edward Coke,1 in which it was held, "where as well the contract as the performance of it is wholly made or to be done beyond sea, it is not triable by our law, but if the promise be made in England it shall be tried." In 1601, to provide for the growing practice of resorting to litigation, a special tribunal for the trial of marine insurance cases was established in England,' of which the recital was as follows: "Whereas it ever hathe bene the policie of this realme by all good means to comforte and encourage the merchante, therebie to advance and increase the generall wealth of the realme, her Majestie's customes, and the Strength of Shippinge, which Consideracion is nowe the more requisite because trade and traffique is not at this present soe open as at other tymes it hathe bene. And, whereas it hathe bene tyme out of mynde an usage among the merchantes, both of this realme and of forraine nacyons, when they make any the insurers for proving is eighteen months. "To the observance of this the insurers bind themselves to the said themselves, their heirs, and goods present and future, submitting themselves to the office aforesaid, and to every other judgment and court, 1 Dowdale's case, Coke's Reports, part 6, p. 476. * 43 Eliz. c. 12. great adventure (especiallie into remote parts), to give some Consideracion of money to other persons (which commonlie are in no small number), to have from them assurance made for their goodes, merchandize, ships and things adventured, or some parts thereof, at such rates and in such sorte as the parties assurers and the parties assured can agree, which course of dealinge is commonlie termed a policie of assurance, &c." This informal tribunal-which consisted of the Judge of the Admiralty, the Recorder of London, two doctors of the civil law, two common lawyers, and eight grave and discreet merchants, or any five of them-died a natural death within a century after its organization, and by degrees insurance disputes began to come within the jurisdiction of the common law courts of England. In 1756 Lord Mansfield was appointed Chief Justice of the Court of Queen's Bench, and during his illustrious career he was conspicuous in making the policy of insurance the subject of careful study. From the old sea laws, the foreign ordinances, the writings of jurists, and the usages of trade, he drew and shaped those principles which formed the nucleus of the present system of insurance law. § 6. Lloyd's and Lloyd's Usages.-The body of rules or trade customs under which the business of insurance had grown up was known as "the usages of Lloyd's." To these usages and the earlier maritime customs we must look to find an origin for such far-reaching and significant principles of insurance law as the following: namely, that the contract is one uberrimæ fidei, demanding a disclosure of all material facts affecting the risk; that personal acts of the insured himself which materially change and enhance the risk during the pendency of the policy will avoid the contract; that there must be no deviation under a marine policy from the usual voyage as prescribed by custom; that the vessel must be seaworthy at the commencement of the risk in a voyage policy; that goods stowed on deck are not protected by the policy in the absence of a general trade usage to the contrary; and that expenditures and, if successful, intentional sacrifices of ship or cargo, made by the master of the ship for the benefit of all 9 interests exposed to some extreme and impending peril, must be made the subject of general average or contribution from all such interests, whether ship, cargo, or freight. Lloyd's was originally a coffee-house in London, a celebrated resort for seafaring men and those who were engaged in maritime business. It was started in the latter part of the seventeenth century, at a time when the coffee-houses of that metropolis were the fashionable centers for mercantile or social intercourse. An advertisement in the London "Gazette" of February 18 to 21, 1688, concerning a supposed theft "by a middle-sized man with pockholes in his face," indicates that Lloyd's coffee-house was then located in Tower Street. But within three or four years from that date, the establishment was removed from Tower Street to the corner of Lombard Street and Abchurch Lane, where it became the world-renowned center for commercial intelligence and for the business of marine underwriting. After several other removals, it ultimately took possession of its apartments in the new Royal Exchange. In 1696 the proprietor started a shipping and commercial newspaper, called "Lloyd's News;" the issue of which was afterwards suspended because the editor was guilty of printing some very harmless information about the proceedings in the House of Lords, but it was revived in 1726 in a greatly improved form under the name of "Lloyd's Lists." In 1769, in order to put a stop to the illegitimate transactions which occasionally took place within their circle, the principal merchants and underwriters frequenting the coffeehouses formed themselves into a society under fixed rules. In 1779 the society adopted for exclusive use a definite form of policy thenceforward known as "Lloyd's Policy," which is the basis of the policies now in use in the United States, and which corresponds with the present Lloyd's policy, except that the words "Be it known that " have been substituted for the opening asseveration "In the Name of God, Amen," which appeared in the earlier form, this change having been effected in the year 1850. Though Mr. Justice Buller characterized the instrument as "absurd and incoherent," 1 it possesses the merit of having had all its clauses explained by 'Brough v. Whitmore, 4 T. R. 206. many legal decisions.1 In its stability it is in striking contrast with the fire policy, which during its history has exhibited a series of shifting forms, which have given rise to much confusion and uncertainty both in the business and in the law of insurance. As the courts from time to time have adjudicated away by a strict construction the restrictions and exemptions from liability named in the fire policy, its phraseology has been altered by the insertion of a more and more explicit wording in favor of the insurers, until in many instances the legislatures of the several States have been provoked to interference by sweeping statutory enactments which govern the contents and legal effect of the fire insurance contract within those States.2 Classified references to these statutes are given in the appendix. One of the clauses of Lloyd's policy is as follows: “And it is agreed by us the insurers that this writing or policy of assurance shall be of as much force and effect as the surest writing or policy of assurance heretofore made in Lombard Street, or in the Royal Exchange, or elsewhere in London," which shows that, although at the time when this form was drafted, the connection between Lloyd's and Lombard Street had long been severed, the memory was still preserved. It was from early times the custom at Lloyd's rooms to pass around the proposed policy of the applicant among the members, and each member underwrote or subscribed his name for such portion of the required amount as he wished to undertake, together with the date of subscription, until in this way, by successive subscriptions by different persons on the same policy, the desired amount was covered. In 1871 the Society of Lloyd's was incorporated by special act of Parliament (34 Vict. c. xxi.), one of the express objects of incorporation being the "collection, publication, and diffusion of intelligence and information with respect to shipping." In the accomplishment of this object it has attained an unrivaled standard of perfection. Lloyd's members have developed a system of agency radiating every where throughout the maritime world, by which they are enabled to receive the promptest and most reliable information of all departures from and arrivals at their ports, as well as of losses, casualties, and other useful shipping news. 1 Simond v. Boydell, Doug. 268. 2 Reilly v. Ins. Co., 43 Wis. 456. 19 |