Upon the same principle as governs the cases considered in the preceding section, premiums paid on a policy of marine insurance by one who in reality had no goods on board, or for a voyage that was never begun, have been held recoverable. The existence of a risk is assumed by both parties, whereas in fact there is no risk and consequently nothing to which the contract of insurance can attach:2
Martin v. Sitwett, 1692,1 Shower 156: Indebitatus assumpsit to recover a premium paid for the plaintiff on a policy of marine insurance, the plaintiff having had no goods on board. Holt, C.J. (p. 157): "And as to our case the money is not only to be returned by the custom, but the policy is made originally void, the party for whose use it was made having no goods on board; so that by this discovery the money was received without any reason, occasion, or consideration, and consequently it was originally received to the plaintiff's use." 1
(void bonds). And see Tucker v. Denton, 1907, 106 S. W. 280 (Ky.), where it was held that money paid for the cancellation of a contract for the purchase of land, supposed by both parties to be enforceable but in reality unenforceable under the Statute of Frauds, might be recovered.
1 1849, 21 Vt. 191, 195.
2 The same is true, of course, where property insured has perished or has been destroyed before the making of the contract. In such a case the contract of insurance is not valid unless it is antedated and both parties are ignorant of the loss. See Hallock v. Ins. Co., 1857, 26 N. J. L. 268; Hughes v. Ins. Co., 1873, 44 How. Pr. (N. Y.), 351.
Stevenson v. Snow, 1761, 3 Burr. 1237: Action for money had and received to recover part of a marine insurance premium. The voyage was to be from London to Halifax, with convoy from Portsmouth to Halifax, but when the vessel reached Portsmouth, the convoy had gone. Wilmot, J. (p. 1241): "If the risque was once begun, the insured shall not deviate or return back, and then say 'I will go no farther under this contract, but will have my premium returned.' But upon this policy, there are two distinct points of time, in effect two voyages, which were clearly in the contemplation of the parties: and only one of the two voyages was made; the other, not at all entered upon. It was a conditional contract; and the second voyage was not begun. Therefore the premium must be returned : for upon this second part of the voyage, the risque never took place at all." 2
In McCulloch v. Royal Exchange Assurance Co.3 it was held that one who had insured a vessel under the mistaken supposition that he was the owner, could not, in an action commenced after the completion of the voyage, recover the premiums paid for such insurance. The court conceded that if the mistake had been discovered and the return of the premium demanded before the commencement of the voyage, the plaintiff would have succeeded; but declared that to enforce a demand made after the arrival of the vessel "would place underwriters in a very awkward situation." If it had in fact appeared that the defendant had so altered its position that to return the premium would involve it in a loss, restitution would properly have been denied. But in the absence of such evidence, the delay in making a demand would seem to be immaterial, aside from the running of the statute of limitations.1
1 Accord: Toppan v. Atkinson, 1807, 2 Mass. 365; Steinback v. Rhinelander, 1803, 3 Johns. Cas. (N. Y.) 269.
2 See Steinback v. Rhinelander, 1803, 3 Johns. Cas. (N. Y.) 269.
3 1813, 3 Camp. 406, 410.