and reasonable charges are to be added; as commissions, expense of transport and storage, wages of labor, etc. 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. 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.

75.

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

* 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 valuc. 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 stipu lations, has an insurable 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 cent. 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.

doubtful, if he bought and holds it bonâ fide; nor can the insurers defend against his claim by showing that his title was defeasible on account of some invalidity in the proceedings on which it rests.1 Nor because the vendor has a lien on goods for the price and retains the right of stopping them in transitu.2

So one about to buy goods may insure them before they are bought; but he cannot recover under such a policy, unless the property is in him when the loss happens. And any actual interest in a valid executory contract is insurable; so, perhaps, is the interest of another in the share of a seaman in expected profits or catchings;5 but this rule does not extend to a mere contingent probability or expectation. If one has agreed to

In Frierson v. Brenham, 5 La. Ann. 540, the insured had bought a steamboat at a sheriff's sale. The insurers were not allowed to set up the defence that the sale was void on account of fraud.

2 That stoppage in transitu proceeds upon the ground of an equitable lien, and does not rescind the contract, see ante, vol. 1.

8 Rhind v. Wilkinson, 2 Taunt. 237, 243; Col. Ins. Co. v. Lawrence, 2 Pet. 25; McGivney v. Phoenix Fire Ins. Co., 1 Wend. 85. It was decided in this case that a person, who was in possession of a house, and had agreed to purchase the same, and had made partial payments, and repaired the premises, had an insurable interest in the house. See also, Whitney v. Am. Ins. Co., 3 Cow. 210; Haven v. Gray, 12 Mass. 71, 74; M’Kim v. Phoenix Ins. Co., 2 Wash. C. C. 89.

.

* Lucena v. Craufurd, 5 B. & P. 269, 302, per Lawrence, J.; Rider v. Ocean Ins. Co., 20 Pick. 259; Col. Ins. Co. v. Lawrence, 2 Pet. 25, 10 Pet. 507.

6 Hancox v. Fishing Ins. Co., 3 Sumner, 132. This was an insurance on clothes, shipped on a South Sea voyage, to be sold to the crew, and on the proceeds of them, which gave a lien on the share of the seamen in the profits of the voyage. Mr. Justice Story said: "In regard to another suggestion, that the policy is void as against public policy, because it in effect amounts to an insurance on seamen's wages, a few words may suffice. Assuming, for the purposes of the argument, that an insurance by the seamen themselves on their shares of the proceeds of the adventure would not be good, because they are in the nature of wages, though given in lieu of wages, a point upon which I desire to be understood as giving no opinion, it is a sufficient answer to the argument to say that the present is not the case of such an insurance. The plaintiff has insured his own interest in the voyage, and not theirs. They may, indeed, in a possible case be benefited by this insurance, but the policy itself is not on wages, or on shares in lieu of wages."

6 Lucena v. Craufurd, 5 B. & P. 269, 294; Hancox v. Fishing Ins. Co., 3 Sumner, 132, 140. In Stockdale v. Dunlop, 6 M. & W. 224, the plaintiffs had made a verbal contract with H. & Co. for the purchase of one hundred tons of palm oil to arrive on board the Maria. "Oil to arrive," by mercantile usage, gives the vendee no right to it unless it arrive in the ship named. The plaintiffs had insured the goods and the profits on them; held, that they had no insurable interest. Parke, B., said: "I admit that profits may be insured, but that is on the ground that they form an additional part

bear and indemnify against certain risks, he may cause himself to be insured against the same risks. And if the policy does not express and define the kind and nature of the interest, a change in this respect, as from absolute ownership to a mere right as mortgagee, or a right in equity to redeem, would not defeat the policy. And if on a sale, the seller retains any actual interest, it may be insured. And if the owner of a vessel contracts to sell her for a certain sum, and to give the vendee a clear title to the vessel upon payment of the price, his insurable interest is not limited to the agreed price, but extends to the full value of the vessel. We know not why a seller may not insure his lien for the price, whether that can be enforced only by stoppage in transitu, or otherwise.

The policy by the usual words "lost or not lost" may be made retrospective, so as to operate during the period defined in it, if the property existed at the beginning of that period, although it had ceased to exist when the policy was made. It may, perhaps, be retrospective even without these words, if such be its general import.

A bailee, if he has a lien, or is responsible for any risk on the

of the value of the goods, in which the party has already an interest. Thus, the owner of goods on board a vessel, may insure the profits to arise from them. So may a consignee, or a factor in respect of his commission. So may captors, because they have a lawful possession, coupled with a well-founded expectation that their claim to retain the goods will be allowed. So may the owners of slaves, or a captain in respect of his commission. In these cases there is either an absolute or a special property in possession. There the profits are insured as an additional value upon the goods, in which the insurer has a present interest. Here, however, the assured are not interested at the time of the goods being put on board, but only upon their arrival." In Devaux v. Steele, 6 Bing. N. C. 358, it was shown that the French government sometimes granted a bounty to vessels, which performed a voyage similar to the one in that case. Held, that this did not constitute such a vested interest, as would entitle the owners to insure their expectation. See also, Brown v. Williams, 28 Maine, 252; Adamṣ v. Penn. Ins. Co., 1 Rawle, 97; Knox v. Wood, 1 Camp. 543; Warder v. Horton, 4 Binn. 529. 1 See post, title Reinsurance.

See ante, p. 45, n. 1.

3 Bell v. Firem. Ins. Co., 3 Rob. La. 423; Providence County Bank v. Benson, 24 Pick. 204.

30.

4 Stuart v. Columbian Ins. Co., 2 Cranch, C. C. 442.

Paddock v. Franklin Ins. Co., 11 Pick. 227; Hucks v. Thornton, 1 Holt, N. P.

6 Hammond v. Allen, 2 Sumner, 387, 396, per Story, J. See also, March v. Pigot, 5 Burr. 2802.