Generally, if the risk is divided into parts so as to cover successive periods, the value may rise or fall in those periods. Where it is not controlled by special circumstances, the value of goods is their invoice price. To that, however, all fair, usual,

was afterwards wrecked. At the time the vessel sailed, the value of the flour on board amounted to more than $16,000; at the time of the loss it was worth over $12,000. The question arose whether, at the time of the loss, the policy covered the cargo then on board to the whole amount underwritten, or only twelve sixteenths of it, that is the portion covered at the commencement of the risk. It was held, that the policy covered $10,000 during the whole voyage out and home, so long as the insured had that amount on board. And that the loss must be apportioned between the parties in the proportion which the sum insured bore to the amount of the value at the time of the loss. See also, Crowley v. Cohen, 3 B. & Ad. 478.

1 Stevens & Benecke on Average, Phillips ed., 32; Usher v. Noble, 12 East, 639; Gahn v. Broome, 1 Johns. Cas. 120. In this country it has been made a matter of doubt whether, in the adjustment of a loss under an open policy, the value of goods is to be taken to be their prime cost, their invoice price, or their actual market value at the commencement of the risk. The decisions are contradictory. In Le Roy v. United Ins. Co., 7 Johns. 343, hides, the prime cost of which was ten cents per pound, were invoiced at twelve cents per pound, the value at the time of shipment and of effecting insurance. Held, that in ascertaining the amount of loss, the hides should be reckoned at ten cents per pound. The court, however, disclaimed any intention of laying down a general rule. Thompson, J., admitted that "the prime cost of the goods might not, in many cases, be a just rule of computation, as where they were not purchased with a view to an immediate exportation, and had remained on hand for a considerable length of time. But in matters of commerce the plainest and simplest rules are always the best. And I should incline to think, that, generally speaking, the prime cost would be the best rule by which to test the value of the subject. The prime cost is commonly the market price of the article." In Coffin v. Newburyport Mar. Ins. Co., 9 Mass. 436, goods, invoiced at their real value at the time and place of shipment, which was greater than their prime cost, were reckoned at the invoice price. See Emerigon, ch. 9, scc. 4, Meredith's ed., 217. It is ably contended, by Mr. Justice Washington, in Carson v. Marine Ins. Co., 2 Wash. C. C. 468, that the true rule is to value the goods at their actual market value at the commencement of the risk. "Suppose," says he, "the property to be destroyed within an hour after the risk has commenced (and the time makes no difference in the principle), what does the owner lose? Precisely as much as it was worth, or would have commanded in the market at the time and place it was shipped, including expenses, and no more. If the property cost him less than it was worth when shipped, he loses as well the first cost as the increased value, for which he is entitled to claim an indemnity from the insurer. If it cost him more, he loses the difference between the first cost and the diminished value when the property was shipped; but for this difference, he can have no claim for indemnity under the contract, because the loss did not result from any of the perils against which an indemnity was stipulated, but from an unprofitable speculation, anterior to, and unconnected with, the contract. . . . . It is impossible that the first cost can ever furnish a just rule of indemnity, where it exceeds or falls short of the actual value of the property when it is put at risk. The invoice price, which was contended for on behalf of the plaintiffs, is liable to all the objections that exist against the prime cost, and to an

and reasonable charges are to be added; as commissions, expense of transport and storage, wages of labor, etc.1 But the expenses to be incurred during the risk, as for freight, or other causes, are not to be added.2 On the other hand, the drawback is not to be deducted from the value of exported goods.3 And if the rate of exchange enters as an element into their cost or value, the rate at the beginning of the risk should, as we think, generally, be taken.1

additional one, which, in the opinion of the court, cannot be surmounted. It furnishes no rule of indemnity, in any case where it exceeds, or is less than the market value of the article; if the former, the insured is more than indemnified, by receiving more than it was worth; if the latter, which it is presumed will seldom, if ever, happen, his indemnity would be in part only. But the strong ground of objection to this rule for appreciating the value of the property at risk, is, that it substantially destroys all distinction between valued and open policies, and this, too, in the face of one of the best established rules of evidence. It makes a private document, created by one party to the contract, evidence against the other, as to a fact which it is essential for the former to prove in the ordinary way. In the case of a valued policy, the insured is relieved from the necessity of proving the amount of his loss, because both parties have agreed that the property at risk was worth so much. But, to bind the insurer by the arbitrary value fixed in the invoice, is to subject him to ex parte evidence, furnished by his opponent in the cause, without his agreement, and even without his knowledge of its contents when the contract was entered into. And as it rarely happens, if ever, that an invoice does not accompany the cargo, it would follow that all policies would in fact be valued; with this difference only, that what has hitherto been understood as valued policies, means nothing more than such as are valued by both parties, whereas open policies would be valued by one of the parties only." See also, Snell v. Delaware Ins. Co., 4 Dall. 430. The difficulties in the way of adopting the market value as the insured value in an open policy, are in bringing forward proof of such value. The invoice price should, without doubt, be taken to be primâ facie proof of the real insurable value. It cannot, however, be regarded as conclusive proof. Nor should the assured be prevented from invoicing the goods at their real, that is, market value, where they have risen in price since a purchase.

1 Stevens & Benecke on Average, Phillips' ed., 32; Fontaine v. Columbian Ins. Co., 9 Johns. 29.

2 Gibson v. Philadelphia Ins. Co., 1 Binn. 405. Nor can the insured, in making up the account of their loss on an open policy, charge both the price of the goods and a commission for the purchase of them by themselves. Anonymous, 1 Johns. 312.

3 Gahn v. Broome, 1 Johns. Cas. 120; Minturn v. Columbian Ins. Co., 10 Johns. 75.

* In Thelluson v. Bewick, 1 Esp. 77, where goods were invoiced in the currency of France, Lord Kenyon held, that the rate of exchange at the time of the adjustment of the loss should govern; but this decision cannot be sustained upon principle, and is generally questioned by the text-writers. The question now seems to be, whether the current rate of exchange, at the time the risk commenced, or the legal par value is to be taken. Mr. Arnould, vol. 1, p. 330, citing an earlier edition of Mr. Phillips' work on Insurance, considers it the better rule to take the par value. But the rule of the VOL. II. 7

SECTION III.

WHAT KIND OF INTEREST MAY BE INSURED.

It may be said, generally, that any interest may be insured if the peril against which insurance is made would bring upon the

text is sustained by Mr. Phillips in his last edition. 2 Phillips' Ins. § 1231. This precise question does not appear to have arisen in any late insurance case, but a similar question has been discussed in cases where a party is sued in one country for money which was to be paid in another country. Mr. Justice Washington, in Smith v. Shaw, 2 Wash. C. C. 167, held, that the current rate of exchange was to be taken into consideration. And Mr. Justice Story expressed a strong opinion to the same effect in Grant v. Healey, 3 Sumner, 523. But in Martin v. Franklin, 4 Johns. 124; Scofield v. Day, 20 Johns. 102; and Adams v. Cordis, 8 Pick. 260, it was held, that the debt was to be paid at the par of exchange. The reason for the rule, as given in Martin v. Franklin, is, that "the courts are not to inquire into the disposition of the debt, after it reaches the party." In Lodge v. Spooner, Sup. Jud. Ct., Mass., March T. 1857, 20 Law Reporter, 289, a certain sum of money was to be paid in China on the performance of an agreement entered into between the parties. The plaintiff performed his part of the contract and claimed to recover, in addition to the original sum and interest, the rate of exchange between this country and China, at the time when the money should have been paid. But the court held, that he was not entitled to the exchange, and evidence that there was no tribunal in China, in which one foreigner could recover of another, and that these funds were to be invested in China, was held to be inadmissible.

We cannot but think that the American decisions, which hold that money to be paid abroad is to be paid here at the legal par, rest upon a great mistake of the courts, or rather upon their entire disregard of a great mistake made by our statutory provisions on this subject. In the Statute of 1799, ch. 22, sect. 61, 1 U. S. Stats. at Large, 673, it was provided that "each pound sterling of Great Britain shall be estimated at four dollars and forty-four cents." But this rate was about nine per cent. too low. That is, the gold or silver in, or represented by, one pound sterling in England, is equal to about four dollars and eighty-eight cents of our money. Or, in other words, the statute puts our dollar about nine per cent. too high, in comparison with the pound sterling. The consequence was at once a rise in our exchange on England of about nine per cent. to make the actual par; and so it has continued. The proof of this is, that when exchange is worth a little more than about nine per cent., it is worth more than the actual par, and gold goes from this country to England; and when the exchange is a little lower than this actual par, of about nine per cent., gold comes from England here. Thus, if a man owes a merchant in London one thousand pounds sterling, he will send him a bill for the amount, if he can buy it for what the law says it is worth and about nine per cent. more, for this is the best thing he can do. But if he cannot buy that bill for less than ten or twelve per cent., he will send the gold instead.

insured, by its immediate and direct effect, a pecuniary loss.1 Thus, if a vessel is attached, it has been held, that a person who gives a bond to have her forthcoming, according to certain stipulations, has an inşurable interest in the vessel.2

A purchaser may insure his property, although his title is

But if A here, sues B for one thousand pounds to be paid in England, and recovers, our courts have said, that B must pay him $4,440.00. But when B gets this in gold and ships this to England, he finds that he wants nearly four hundred dollars more, to give him there a thousand pounds sterling, because the law has rated the pound sterling too low and the dollar too high by that difference. We infer from remarks often made in books, which relate to our trade, etc., that the constant rate of about nine per cent. advance on exchange on England, is understood, even now, by some merchants and writers as arising from the state of our commerce. That this is not so is proved not only by the flow and reflux of gold turning on a point about nine per cent. advance, but by a later statute of the United States. It was found that when a duty (say twenty per cent.) was paid on the value of goods imported from England, and this value was taken by estimating the pound sterling at the legal par, the revenue lost twenty per eent. or one fifth, of about one eleventh part of all the value of English goods subject to ad valorem duties. Accordingly, in the Statute of 1842, c. 66, sect. 1, 5 U. S. Stats. at Large, 496, it was provided that "In all payments by or to the treasury, whether made here or in foreign countries, where it becomes necessary to compute the value of the pound sterling, it shall be deemed equal to four dollars and eighty-four cents, and the same rule shall be applied in appraising merchandise imported, where the value is by the invoice in pounds sterling." But while congress has thus acknowledged and rectified its mistake for revenue purposes, the legal par value remains as before between individuals, and they rectify it by the rate of exchange. And if courts see fit to adopt a fixed rate instead of the changing rate of commerce, it is obvious that great injustice is done, unless the revenue rate is adopted, instead of the general legal rate.

1 "Interest does not necessarily imply a right to the whole, or a part of a thing, nor necessarily or exclusively that which may be the subject of privation, but the having some relation to, or concern in, the subject of insurance, which relation or concern, by the happening of the perils insured against, may be so affected as to produce a damage, detriment, or prejudice to the person insuring; and where a man is so circumstanced with respect to matters exposed to certain risks or dangers, as to have a moral certainty of advantage or benefit, but for those risks or dangers, he may be said to be interested in the safety of the thing. To be interested in the preservation of a thing, is to be so circumstanced with respect to it as to have benefit from its existence, prejudice from its destruction. The property of a thing, and the interest derivable from it may be very different; of the first, the price is generally the measure, but by interest in a thing every benefit and advantage, arising out of, or depending on such thing, may be considered as being comprehended." Per Lawrence, J., Lucena v. Craufurd, 5 B. & P. 269, 302. See s. c. 3 B. & P. 75; Craufurd v. Hunter, 8 T. R. 13; Stirling v. Vaughan, 11 East, 619. And Mr. Justice Story, in Hancox v. Fishing Ins. Co., 3 Sumner, 132, 140, said: “An insurable interest is sui generis, and peculiar in its texture and operation. It sometimes exists where there is not any present property, or jus in re, or jus ad rem. Inchoate rights, founded on subsisting titles, unless prohibited by the policy of the law, are insurable."

2 Fireman's Ins. Co. v. Powell, 13 B. Mon. 311.

property bailed, may insure it. And a consignee with power to sell has an insurable interest, and if the consignor afterwards assents, he will be liable for the premium and entitled to the benefit of the policy. A creditor, as such, has no insurable interest; thus, if his claim be for repairs on a ship, he has no insurable interest in the ship,3 unless he have a lien on it for his repairs. If the proceeds of goods shipped are to be paid to a creditor by express bargain, he may insure them.5

If the insured have a sufficient interest at the making of the policy, it may be defeated afterwards, only however by that which operates as a complete divesting of it. Thus, neither

attachment of goods, nor seizure on execution before sale, nor a contract to convey the subject insured at a future day, on payment of the purchase-money, nor an assignment of the amount secured by the policy, although the assignee be in possession of the insured property under a bond for a deed from the original insured, nor a stoppage in transitu by one who sold the goods

1 Crowley v. Cohen, 3 B. & Ad. 478; Waters v. Monarch F. & L. Ins. Co., 5 Ellis & B. 870, 34 Eng. L. & Eq. 116; Van Natta v. Mut. Security Ins. Co., 2 Sandf. 490. In this case, the plaintiff insured the cargo of a canal boat generally. Held, that he might recover on proving that he had a special interest in it as a common carrier. See also, Chase v. Wash. M. Ins. Co., 12 Barb. 595.

2 Pouverin v. La. State M. & F. Ins. Co., 4 Rob. La. 234.

3 Buchanan v. Ocean Ins. Co., 6 Cow. 318.

Tasker v. Scott, 6 Taunt. 234, 1 Marsh. 556; Seamans v. Loring, 1 Mason, 127; Protection Ins. Co. v. Hall, 15 B. Mon. 411. So if money is advanced to the owners of a ship, and the freight is pledged to the persons so advancing it, they may insure the freight. Wilson v. Martin, 11 Excht 684, 34 Eng. L. & Eq. 496. If the creditor has merely a common law lien, his interest is gone with the loss of possession. Folsom v. Merch. Mut. Mar. Ins. Co., 38 Maine, 414.

5 Aldrich v. Equitable Safety Ins. Co., 1 Woodb. & M. 272. So where they are assigned to him as collateral security. Wells v. Phil. Ins. Co., 9 S. & R. 103.

6 Hibbert v. Carter, 1 T. R. 745; Locke v. North American Ins. Co., 13 Mass. 61; Lazarus v. Comm. Ins. Co., 5 Pick. 76. Nothing short of a conveyance of the property insured amounts to an alienation. Masters v. Madison Co. Mut. Ins. Co., 11 Barb. 624. See also, ante, p. 44-47.

7 Clark v. New England Mut. F. Ins. Co., 6 Cush. 342; Rice v. Tower, 1 Gray, 426; Bell v. Western Mar. & F. Ins. Co., 5 Rob. La. 423; Franklin F. Ins. Co. v. Findlay, 6 Whart. 483.

8 Trumbull v. Portage Co. Mut. Ins. Co., 12 Ohio, 305; Perry Co. Ins. Co. v. Stewart, 19 Penn. State, 45; Masters v. Madison Co. Mut. Ins. Co., 11 Barb.

Phillips v. Merrimack Mut. F. Ins. Co., 10 Cush. 350.