Of double and over-insurance. Case illustrating this posi tion. Godin v. London Ass. Co., 1 Bun. 489. The indorsee of the bill of lading, being in advance to the consignor; and also his factor or general agent, to whom he is indebted in the balance of his general account-may each of them insure the consignment, and each recover on the several po licies to the full amount of their respective claims. case now referred to is the insurance by two different persons of two different interests each to the whole value. The following case affords a good illustration of this principle. Meybohm, a Russian merchant, carrying on business in St. Petersburgh, was in debt for advances both to Amyand of London (his general agent and factor in this country) and also to Tamesz of Moscow. Under these circumstances, Meybohm wrote to Amyand, who was then in expectation of a consignment from him, to the effect that he should send him goods, as per invoice, and directing him to insure. Amyand, accordingly, who had already insured to a certain extent on the expected consignment, upon the receipt of this advice, effected a further insurance, thus making the aggregate sum insured by him more than sufficient to cover the full value of the consignment, but less than the amount of the balance then due to him from Meybohm in the general account between them. Meybohm shipped the goods as per invoice; but instead of indorsing the bill of lading to Amyand, he indorsed it to Tamesz, to whom at that time he was also indebted to a greater amount than the value of the goods shipped. Tamesz, through his London agents, procured a policy to be effected with the London Assurance Company, to the full value of the goods, but to a less amount than his balance against Meybohm. This policy was subsequent to any of those effected by Amyand; and the broker informed the Company, at the time, that a prior insurance had been effected on them by a prior consignee, and that both parties wished to be safe. The ship and goods having been lost, the question made was, whether Tamesz, under the circumstances above detailed, had a right to recover against the company the whole amount of his insurance; and the Court (the judgment of which was delivered by Lord Mansfield) were clearly of opinion that he had. (x) (x) Godin v. London Ass. Comp., 1 Burr. 489. 1 W. Bl. Rep. 103. Park on Ins. 603. seq. 8th ed. Marshall on Ins. 143. over-insurance. Remarks on this case. Tamesz, indeed, as indorsee of the bill of lading and in Of double and advance to Meybohm to a greater amount than the sum insured in the policy, had a clear insurable interest to the full extent of his claim, and therefore might recover the whole sum insured. So Amyand, as the factor of Meybohm, and also his creditor on the balance of account between them, had a right to insure on his own account, or, at all events, if the insurance effected by him, was to be regarded as originally effected on account of Meybohm; still Amyand, having the policy in his possession, had, as such factor and creditor, a lien upon it, in respect of which he too might recover on the policy to the full extent of his claim. Mr. Marshall, indeed, dissents from this latter position, on the ground, that as Meybohm, after he had indorsed the bill of lading to Tamesz, had no insurable interest in the goods, 80 Amyand could recover nothing on the policy, which could not possess a greater validity in his hands than in those of Meybohm (y): but it appears to me clear that Amyand, as consignee of the goods and as a factor in advance to Meybohm on the general balance of account, had a distinct insurable interest in the goods on his own account, up to the amount of his claim, which, as it did not require the indorsement of the bill of lading to perfect it, could not be devested by the indorsement of that instrument over to a third party. To enable the defendant to discover whether there be in any case a double or over-insurance, he may, by the 19 G. 2. c. 37. s. 6., call upon the plaintiff to declare in writing within fifteen days what sum he has insured on the whole, and how much he has borrowed on bottomry and respondentia for the voyage in question, or any part of it. No means are provided in the act of compelling the delivery of this declaration, though Mr. Marshall thinks the court would probably, after the expiration of the fifteen days, stay the proceedings in the action, till a satisfactory declaration were delivered: no case, however, of the kind has ever occurred in practice. (2) Clause of 19 G. 2. c. 37. s. 6., in order to enable the de fendant, in an action on the policy, to discover whether there be an over-insurance. () Marshall on Ins. 145. (*) Marshall on Ins. 702. of insurable interest, and its valuation as be tween the as CHAP. XI. OF THE AMOUNT OF INSURABLE INTEREST, AND ITS VALUATION AS BETWEEN THE ASSURED AND THE UNDER- Of the amount] THE next point to be considered is the mode of estimating the insurable value of the interest at risk, with a view to procuring indemnity for the assured in case of loss, and of fixing that value as between the assured and the underwriter, by specifying in the policy some fixed sum which is to be taken as its agreed value between them. sured and the underwriter. Theoretical principle of valuation for insurance. We will consider in their order, Sect. 1. The Principles and Practice of Valuation for the Purpose of Insurance. Sect. 2. Valued Policies, and herein, Art 1. Effects of Valuation in the Policy. Art. 2. Valued Policies on Ship, and on Ship and Freight. Art. 3. Valued Policies on Freight. Art. 4. Valued Policies on Goods. Sect. 3. Open Policies. SECT. I. Principles and Practice of Valuation for the § 123. Insurance being a contract of indemnity, it should seem, à priori, that the true principle upon which the interest the purposes of professed to be protected by a policy of insurance ought to be valued, is that which in case of loss will give the assured, as nearly as possible, a complete indemnity against the consequences of such loss. The object, therefore, of such valuation ought, in theory, to be to place the assured, in case of loss, in exactly the same situation as he would have been in if no loss had taken place. To apply this principle to the case of ship, goods, and Principles and freight. The ship, as employed by the shipowner in the actual practice of modern commerce, is regarded by him, generally speaking, not as an instrument for carrying on his own traffic, but as in itself a source of emolument, either by being used as a general ship for the purpose of carrying the goods of several merchants for freight; or by being let out on hire for a certain voyage at a stipulated sum, under a contract of affreightment. practice of valuation. Applied to inand freight. surance on ship other deduc tions from the freight. Out of the freight so paid for the carriage of the goods, or Wear and tear the hire of the ship, the shipowner has to pay the seamen's of the ship, and wages, to furnish provisions, to defray the expenses of the voyage, and to make good that diminution in the value of the ship and her apparel, which necessarily takes place more or less in the course of every voyage, and which is familiarly called the wear and tear of the ship. What remains of the freight after deducting these charges and outgoings, is the net profit of the voyage; the profit which the shipowner. makes by the employment of his capital fixed in the ship. Now, on the principle of valuation just adverted to, it is plain, that the ship, for the purposes of insurance, ought to be estimated at her value after deducting the wear and tear of the voyage; for that is what the ship would have been worth to her owner on arrival, and if the loss had not occurred against which the insurance is intended to indemnify him. In the same way with regard to freight; the true mode of estimating its value for the purposes of insurance on the above principle would be to take it at that sum and no more, which the shipowner might calculate on receiving on the safe arrival of the ship: i. e. the net freight, deducting seamen's wages and the other expenses of earning it; because, in case the ship is lost, that is all the shipowner loses. So again with regard to goods; in order to put the merchant in the same situation as though no loss on his goods had taken place; i. e. in order, in case of loss, to procure him a complete indemnity, it is clear that the value of the goods should be estimated, for the purpose of insurance, at the price As applied to insurances on goods. Principles and which they would actually have produced, had they arrived practice of valuation. Principle on which valua tions are practically conducted the object sought undamaged at their port of destination, together with the freight, duty, and landing charges there payable upon them. Such, unquestionably, as has been very ably and unanswerably pointed out by Mr. Benecké, is the only mode of estimating the value of the interest at risk, by which complete and absolute indemnity can in all cases be procured for the assured (a); probably, however, from the supposed difficulty of thus calculating the insurable value, and from the reluctance felt by merchants and shipowners to pay the higher rate of premium which would thus be necessary, this is not the principle of valuation which has been generally adopted in the practice of this or any other country. Instead of the absolute indemnity sought to be attained by the mode of estimating the insurable value just pointed out; parties engaged in the business of marine insurance confine themselves to an indemnity of a more limited description; and the object sought to be attained by the mode of insurance generally adopted in practice, both in this and other countries, is well understood to be, not to put the assured in such a position as he would have been in if no loss had been incurred, but to place him in the same situation he was in at in at the outset the commencement of the risk. is not to put the assured in the same situation as if no loss had occurred, but to replace him in the same situation as he was of the adven ture. The value of the thing insured is estimated in all open policies at its worth to the owner at the outset of the risk, plus the premium and costs of insur ance. By this mode of estimating the insurable value, the assured on ship and freight generally rereceives more, and the assured It is upon this basis that the insurable value of the interest at risk is invariably calculated in all open policies effected in this country the worth of the thing insured to its owner at the outset of the risk covered with the expenses of the insurance is, in all open policies, as we shall see more at large in the Third Section of this chapter, its estimated value for the purposes of insurance. As the ship in the course of every voyage is more or less diminished in value by wear and tear before the loss takes place; and as the goods would, in most instances, but for the loss, have realised a higher sum at their port of destination than at their port of loading; it is very obvious, that, by (a) Principles of Indemnity, chap. i, on goods less, than an indem- ii. pp. 1-70., to which the reader is nity. referred for a full exposition of the application of this principle to practice. |