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INSURANCE. 



There was a kind of insurance In use, among the 

 lireeks aud Romans, called bottomry or respondent in, 

 whirh is, where the owner of a vessel or goods, 

 borrows money upon bottomry (q. v.) upon the ves- 

 sel, or upon respondentia on the goods, for a certain 

 voyage, agreeing, that if the ship or goods arrive at 

 a certain port, the money shall be repaid, and also 

 interest, exceeding the legal rate; but if lost by the 

 risks specified in (lie boiui, before arriving at the port 

 named, the lender is to lose the money loaned. This 

 risk of losing the whole capital, is the cause of the 

 excess of interest allowed in case of the arrival of 

 the ship or goods ; and it is called marine interest, 

 which ought to be equal to the common rate of 

 interest, added to the rate of premium, for insuring 

 the ship or goods for the same voyage against the 

 same risks. This sort of contract was anciently in 

 use, and, as the laws then gave less security, or, at 

 least, as credit and confidence were not so widely 

 ilitl'u>eil, and correspondence was less extensive 

 among merchants, it was usual for the lender to send 

 some person with the property, to receive repayment 

 of the money loaned and the marine interest, at the 

 port where the risk terminated. In modern times, 

 it is not usual to send any person with the property, 

 who would be of no service during the voyage ; and, 

 at its termination, some agent of the lender, at the 

 port of arrival, if he is not there himself, looks after 

 his interest. The wide extension of correspondence, 

 among merchants of all parts of the world, in modern 

 times, gives a facility for this purpose, and renders 

 the execution of this, as well as other commercial 

 contracts, more economical, and, at the same tune, 

 more secure. 



Contracts of insurance, strictly so called, are of 

 modern invention ; and their importance, in relation 

 to commerce, is scarcely inferior to that of bills of 

 excliange. Every merchant is liable to losses and 

 reverses, by the change of the markets. The risks 

 of this description may, however, be calculated upon 

 with some degree of probability ; but those of fire, 

 the perils of the seas, or capture, cannot be so well 

 estimated ; and, when they come, they would, in 

 many cases, bring ruin upon the merchant, if it were 

 not for the system of insurance, the object of which 

 is, to apportion the losses from these disasters among 

 all those whose property is exposed to the same 

 hazards. If, for instance, all persons engaged in 

 trading were to enter into a general agreement to 

 contribute for the losses of each other, occasioned by 

 those casualties, in the proportions of the amounts 

 that they should respectively have at risk, every 

 individual would then only run the risk of the pro- 

 portion of losses occurring upon the general aggre- 

 gate of property at risk. But as such a general com- 

 bination would be complicated, and practically incon- 

 venient, a very simple system is devised, by means 

 of insurance, for effecting the same object ; for one 

 person the underwriter agrees to take upon him- 

 self those risks, for a hundred merchants, more or 

 less, for a certain premium on each risk, calculating 

 that the premiums on the fortunate adventures will 

 compensate him for the losses he may incur on those 

 which are unfortunate, and leave him some surplus, 

 as a compensation for his time and trouble ; and a 

 little experience will enable him to calculate the 

 chances with very considerable accuracy. The resull 

 accordingly is, that all the persons who procure their 

 property to be insured by him, in effect, mutually 

 contribute for each other's losses, by the bargain of 

 of each with the common receiver of the contributions 

 of all. 



This contract was subjected to a system of definite 

 rules, much earlier in Italy and France than in 

 England ; and as the contract is the same in prin- 



ciple, and very similur in form in dill'm-nt countries, 

 the rules of construction adapted to it in one country, 

 are equally applicable in another. The system of 

 rules collected in the French ordinance of the marine 

 in the year 1681, and which had already, in general, 

 become established in France, Italy, and the Nether- 

 lands, is still in force, and daily applied throughout 

 the commercial world, not only in Europe, but also 

 in America. But it was late before these principles 

 of insurance were intimately incorporated into the 

 law of England. Until the time of lord Mansfield's 

 becoming chief-justice of the court of king's bench in 

 England, about the middle of the eighteenth century 

 the law of insurance was in a very rude state. 

 It was, before that time, the more general practice 

 to make what were called wagering policies, in 

 which one party .agreed, for a certain premium, to 

 pay the other a certain sum, in case a particular 

 vessel should not arrive at a certain port of destina- 

 tion, on account of certain perils ; without any 

 question being made whether the party insured had 

 any interest in the ship or cargo ; so that, in addition 

 to the contracts of insurance against real loss, many 

 contracts of the above sort were made by persons 

 who had no interest whatever in the property to 

 which the contract related. These contracts of 

 insurance, in the case of persons really interested in the 

 property, were a very imperfect indemnity, since 

 they only extended to the case of a defeat of the 

 voyage; whereas, great damage is often sustained 

 by the ship or cargo, notwithstanding they may 

 both arrive at the port of destination. But, at about 

 the period already mentioned, Magens, a merchant, 

 who had removed from Hamburg to London, pub- 

 lished his very elaborate work on insurance, in the 

 latter place, containing all the laws and regulations 

 of the different commercial countries of the continent, 

 on this subject, and presenting its leading doctrines, 

 hi relation to partial losses and general averages, 

 and giving a great number of examples of adjust- 

 ments of losses, of both descriptions. Lord Mans- 

 field, at about the same time, expelled from the ad- 

 ministration of this branch of law the narrow, quib- 

 bling, and technical doctrines with which it had been 

 previously too much infested. The foundation was 

 then laid for that magnificent and truly scientific 

 superstructure of legal principles and practical rules, 

 which lias been the work of the joint labours of the 

 English and American jurists, from that period down 

 to the present day. The courts of the United States 

 have contributed their full share towards the forma- 

 tion of the admirable system by which the commerce 

 of the world is now protected and promoted ; and 

 instances might readily be referred to, of discussions 

 and opinions on this subject in the American courts, 

 which, in learned research, liberality of views, 

 scientific principles, and logical precision, will not 

 suffer by a comparison with those of any other 

 country. 



This contract, considered as one of indemnity, 

 and as such only it ought always to be regarded, and 

 by no means confounded with gambling, requires, 

 in the first place, a subject ; something must be at 

 risk, and the thing so at risk must be described in 

 the contract; and no party can be injured, unless 

 he has an interest in the subject which he is liable to 

 lose, or in respect to which he is liable to suffer by the 

 perils insured against ; and the contract must specify 

 against what perils or risks the underwriter under- 

 takes to make indemnity; and the party insured 

 must, at the time of making the contract, state, 

 fairly and honestly, all the material circumstances 

 within his own private knowledge, which may enable 

 the underwriter to form an estimate of the risk. 

 This is peculiarly a contract, in which the assured is 



