A Treatise on the Law of Insurance

East, 432.

(1) Routh v. Thompson, 11 But see S. C. 13 East, 274.

part; nor of any given part, because it must have been uncertain what part, if any, would have been granted.'(1) The interest of captors and prize agents, and the subject of insurable interest in general, were very elaborately and learnedly discussed in the different courts of England, in some cases arising under policies upon Dutch ships and cargoes, seized under an act of parliament (2) in contemplation of the declaration (2) 3 B. & P. of war against Holland in 1795. The king appointed commis- 13. n. sioners, who were authorized to take such ships and cargoes, as might be detained or brought into Great Britain under that act, into their possession, to be managed and disposed of according to such instructions as they should receive. Some ships being seized and carried into St. Helena, the commissioners effected insurance upon them in their own names, for whom it might con

T. R. 13.

A loss occurred, and the insurers resisted payment on the ground that neither the commissioners, nor the king, nor the captors, nor any others in whose behalf the commissioners had authority to insure, had an insurable interest. The first arguments were made in 1798 in the court of King's Bench, where it was adjudged that the commissioners themselves had an insurable interest, as trustees.(3) The question was argued in the (3) Craufurd Exchequer Chamber three times, in 1800, 1801, and 1802, be- . Hunter, 8 fore the twelve judges, who were divided in opinion; but a majority concurring with the King's Bench, the former judgment was affirmed.(4) It was then carried to the House of Lords, (4) Lucena v. where the judges of the different courts gave their opinions Craufurd, 3 severally at great length. Seven of them were of opinion that B. & P. 75. the commissioners, as such, had an insurable interest in the property to its full value. They say this case is not like insurances on profits or commissions, since the assured profess to be interested only as commissioners, and not personally, and therefore the rules as to the certainty of profits or commissions, to make them insurable, do not apply. They were consignees, agents, or trustees for others, and it is to be understood that the insurance was made for the benefit of those, for whom they were to manage the property, that is, in this case, for the king. They say the intention of parliament was to give the commissioners the same control of this property that an owner has, and therefore to give them a power to insure. They were accordingly of opinion that the commissioners might allege an insurable interest in themselves. As to the objection that the interest might have been granted away by the crown before the ships arrived, and therefore was contingent, they made the same reply that was made by Lord Kenyon and the other judges of the King's Bench originally, namely, that a vested indefeasible interest is not necessary to constitute an insurable interest, for a consignee of goods purchased by him on credit has only a contingent interest, since the vender has a right to stop them in transitu, in case of the consignee's insolvency; yet such a consignee unquestionably has an insurable interest.

Thompson B. concurred in this opinion generally. But Judges Chambre and Lawrence thought that the commissioners had not an insurable interest until the ships had arrived in England. Their opinion on this point turns wholly upon the construction of the commission. Lord Eldon agreed with them on this point. Considering it as an expectation of an interest, he says, I have in vain endeavoured to find a fit definition of that which is between a certainty and an expectation; nor am I able to point out what is an interest, unless it be a right in the property, or a right derivable out of some contract about the property. I cannot accede to the doctrine that unascertained profits, which may or may not be made, may be insured.' Speaking of the Omoa case, where the captors had not an interest in the prizes under any act of parliament, but only an expectation of a grant, he said, the captors not only had the possession coupled with the liability to pay costs and charges, if they had taken possession improperly; there was also a liability to render back property which should turn out to be neutral, and a liability as agents to act for the king as their principal, and he should be disposed to say that the king had an insurable interest, as the person who had the right of possession.' He was accordingly of opinion that the commissioners in this case, though they had not themselves an insurable interest, and could not allege their own interest, might yet avail themselves of the policy, as agents for the king. Lord Ellenborough and Lord Erskine concurred in this opinion, and the decision of the court was in conformity with (1) Lucena r. it.(1) Craufurd, 2 N. R. 269.

In a subsequent case, a Spanish prize had been captured at Monte Video by the land and naval forces jointly. A Mr. Blacker was appointed by the naval and military commanders to act on behalf of all interested in the capture, who gave orders to insure the prizes. Blacker had no authority from the king. The officers were entitled to a share in the prizes under an act of parliament. But it was objected to their interest, that the crown might grant away the prizes before they were condemned; Lord Ellenborough said, that the right of stopping in transitu did not defeat the insurable interest of a consignee. The indefeasibility of the property is not therefore the criterion of an insurable interest. What is the case of an executor? Probate (2) Stirling . is necessary to complete his title, yet before probate he has a Vaughan, 11, title sufficient to enable him to insure. He accordingly was of opinion that the captors had an insurable interest, and this was the judgment of the court.(2)

East, 619; 2
Camp. 225.
(3) 1 Gal.

558, The Jo-
seph.

(4) 5 Rob. 181, The

see Routh v.

An insurable interest in prizes can be acquired only by a grant from the government. Mr. Justice Story says, "The sole and exclusive right, as to all prizes, rests in the government, Elsebe; and and no individual can acquire any interest therein, unless under their grant and commission, and all captures, made without such grant and commission, enure to the use of the government.'(3) Sir William Scott said the same; 6 no man has or can have any interest but what he takes, as the mere gift of the crown; beyond the interest of that gift, he has nothing.'(4)

Thompson, 11
East, 428;

and 13 East,
274; Nicol v.

Goodall, 10
Ves. 157.

Section 10. Interest of the Charterer of a ship.

As far as a charterer of a ship is liable to damage by its loss, he has an insurable interest. The owner of one half of a schooner hired the other half, with an agreement that in case of its being lost within the term of the charterparty, the charterer, Oliver, should pay Mayberry, the other part-owner, the value of his moiety. He then insured the schooner to its full value on his own account. The schooner being lost, the question of insurable interest was made. In giving the opinion of the court, Chief Justice Parsons said, by virtue of this contract, Oliver had a special property in Mayberry's moiety, which was at his risk, and he might indemnify himself against loss by causing himself to be insured."(1)

(1) Oliver r.

Greene, 3

Mass. Rep.

133.

According to Lord Ellenborough's instruction to the jury in one case, Mayberry might, in the preceding case, still have insured his half of the schooner on his own account. Hobbs the owner of a ship had chartered her to Woodman, who covenanted that if the ship should be lost, he would pay Hobbs 3,6001. Hobbs insured the ship on his own account, and it was lost. It was objected that as Woodman was to pay for the ship in case of loss, Hobbs had no insurable interest. Lord Ellenborough said, he was not bound to trust exclusively to the credit of Woodman, but might likewise protect himself by insurance."(2) If the (2) Hobbs v. agreement with Woodman extended to the loss of the ship by Hannam, 3 the perils insured against in the policy, this was plainly a double Camp. 93. insurance; but under the form of policy used in England, this would raise no objection to the claim of the assured.

An agreement by the charterer to insure the ship, has been held to give him an insurable interest, in the same manner as an agreement to pay for her if lost. The court said, 'the assured must have a bona fide interest, but that interest may exist without a legal title to the property."(3)

Section 11. Interest in Freight.

(3) Bartlett & al. v. Walter,

13 Mass. Rep. 267.

The owner of a ship, navigated on his account, has an insurable interest in the freight. In regard to the commencement of this interest, it is a general rule that it commences not only by the vessel's sailing with the cargo on board, but also when the owner, having goods ready to ship, or a contract with another person for freight, has commenced the voyage, or incurred expenses and taken steps towards earning the freight. But if the ship is not ready to proceed on the voyage, and expenses have not been incurred towards earning the freight, as where the ship is lost while careening, and before she is ready to take the cargo on board,(4) the interest in the freight has not commenced. (4) Tonge v. Mr. Justice Hosmer says, 'Freight sometimes denotes the Watts, 2 Str. compensation for the use of a ship, and sometimes a compensation for the transportation of merchandize. When the vessel is

1251.

(1) Riley v. Hartford

Ins. Co. 2

373.

hired, so soon as the voyage is entered on, the right to freight commences. So soon as the ship breaks ground, the hire of the ship is at risk, and constitutes a legal subject of insurance. If the freight be derivable from the transportation of merchandize, the right commences when the goods are put on board; or, at farthest, when a part have been received, and the rest are ready to be shipped."(1)

Insurance being effected on the freight of a ship chartered to Connect. Rep. go to Teneriffe, and there take a cargo for the West Indies, and the ship being lost on the voyage to Teneriffe, before the cargo was taken on board under the charterparty, it was objected that the insurable interest had not commenced at the time of the loss. It was however held that the interest had commenced, and Lord Kenyon said, 'it now seems admitted that if the contract had its inception, if any thing were done under it by the assured, his right to freight commenced.'(2)

(2) Thompson v. Taylor, 6 T. R. 478.

See also Mac

kenzie v. Shedden, 2 Camp. 431.

(3) Montgomery v. Eggington, 3 T. R. 362.

(4) Hart v.
Del. Ins.
Co. Condy's

Marsh. 281. n.

Wharton's

Dig. 337. h.

No. 186.

(5) Riley v.
Hartford
Ins. Co. 2
Connect.Rep.

368.

(6) Horn

castle r. Stuart, 7 East, 400.

It was again held in the same court, where the freight was valued at 1500l. and goods had been put on board, of which the freight would have been 500l. the rest of the cargo being ready to be shipped, when the vessel was driven from her moorings and lost, that the insurable interest in the whole freight had accrued, and the assured was entitled to the whole sum insured.(3)

In a case upon a policy on freight from New York to Wilmington, and thence to Barbadoes,' the assured had bought a cargo of staves, which were to be taken on board at Wilmington, had not the vessel been lost on the way thither. Mr. Justice Washington held that the interest in the whole freight commenced, at the time of the vessel's sailing from New York.(4)

The freight of goods laden or to be laden' being insured, a part of a cargo was taken on board at Gibraltar, and the ship was proceeding towards the Cape de Verd Islands, with funds on board to purchase salt there to make up the cargo, when she was lost. It was held that the insurable interest had commenced only in respect to the goods shipped at Gibraltar.(5)

An open policy was made on the freight of the ship Marquis of Lansdown, at and from Dominica to London, the owner of which had a charterparty for a full freight, outward and homeward, or for dead freight, if a cargo should not be supplied, and while the ship lay at Dominica ready to take on board the cargo, she was captured. Lord Ellenborough said, 'the exist ence of the charterparty, giving an entirety to the contract of freight, was decisive, the voyage having once commenced.'(6)

In the case of insurance on freight and passage money, from India to Europe, a contract for the freight of goods and the passages of 40 invalids had been made, and the ship had been altered for the accommodation of the passengers, and a greater part of the goods had been taken on board, when the ship was lost; it was held that the owner had an interest in the whole freight (7) Trascott and passage money, at the time of the loss.(7)

r. Christie, 2 Brod. & Bing. 320.

The freight of the ship Cheswick, at and from any ports in Hayti to Liverpool, being insured in a valued policy, the ship

was lost by the perils of the seas, when she had discharged a part of her outward cargo, and taken in 55 bales of cotton of her homeward cargo, at Jaquemel, and was proceeding thence to Aux Cayes, to discharge the rest of her outward, and take in the rest of her homeward cargo. Upon these facts, Lord Ellenborough said, 'In every action on such a policy, evidence is given, either that goods were put on board, from the carriage of which freight would result, or that there was some contract under which the owner, if the voyage were not stopped by the perils insured against, would have been entitled to freight.' The owner had no charterparty or other contract for freight, but goods were on board sufficient to purchase the remainder of the homeward cargo, that were saved and afterwards bartered for goods, which would have completed the homeward cargo. It was decided that the assured should recover only the freight of the 55 bales of cotton.(1)

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