the risk of, and therefore insurable by, the charterer (s). In another case, where there was no clause of that nature, but it was agreed that the captain should be supplied with cash for the ship's use, the Court held that the charterer had no insurable interest in the advance, which was not a prepayment of freight, but only a loan (t). Upon the same principle, it has been decided that consignees of cargo, who have a mere right to take possession, without a lien upon the property for advances, or authority to sell on commission, have no insurable interest (u).

A liability in respect of property exposed to marine risks may, as already stated, be covered by insurance, whether arising under common or statute law; as, for example, the obligation of a lighterman to make good loss or damage to goods entrusted to him for carriage (x), or the liability of shipowners for damages resulting from improper navigation.

Profit may be insured on the following conditions (y) :

A. The assured must be legally interested in the goods in respect of which the profit is anticipated.

B. He must at the time when the insurance is effected possess a reasonable expectation of realising a profit from the disposal of the goods on their arrival.

Subject to these conditions, insurances on profit are valid; and the assured will recover, in case of accident, on proving that some profit would actually have been realised by the disposal of the goods on arrival, and that the earning of such profit has been prevented by the operation of a peril insured against.

If the assured were not legally interested in the goods at the time of loss, but expected to acquire such interest, his interest would not be insurable, for it would be the mere "expectation of an expectation."

(s) De Silvale v. Kendall, 4 M. & S. 37; Watson v. Shankland, L. T. Rep. v. 29, p. 349.

(t) Mansfield v. Maitland, 4 B. & A., 582.

(u) For the cases, see Arnould, 4th ed., p. 71.

(x) Joyce v. Kennard, L. R. 7 Q. B. 78.

(y) Arnould, 4th ed., pp. 36, 37, 65.

IV. THE VALUATION-OPEN POLICIES.

How should an insurable interest be valued? The obvious answer to this question, from a purely theoretical standpoint is that, insurable interest should be valued at the smallest sum which will suffice to indemnify the assured in case of loss; for, the recovery of more than that would convert the policy into an instrument of profit, while the recovery of less would fail to attain the true end of insurance. If, however, we proceed to inquire at what stage of a marine adventure the indemnity should be computed, the answer is not so obvious. It was long ago observed by Benecke, in treating upon the subject, that the word indemnity, as applied to the contract of marine insurance, admits of a twofold construction. In the first place, it may signify that the assured is to be placed in the same pecuniary position as if the adventure had never been undertaken; or secondly, that he is to be placed in the same position as if it had been completed.

Which of these two principles of indemnity is to be preferred? In favour of the first, it may be said that it is more easy of application, and of the second that it more fully answers the true end of insurance which, as stated by Benecke, is "to relieve the merchant from the consequences of a loss by sea, and not to annul a speculation once entered into” (yy)

According to the law of England (≈), the amount which can be recovered upon an open-i.e., unvalued-policy in respect of each of the principal subjects of insurance is as follows (a):— Ship. Her worth to the owner at the outset of the voyage, including outfit, stores, and provisions, also money advanced on account of seamen's wages, with the charges of insurance upon the whole.

Freight. The gross amount at risk as per charter-party or bills of lading, with the addition of the charges of insurance.

5.

(yy) Principles of Indemnity, p. (*) In this respect, our law is in unison with that of other countries.

(a) For the decisions, see Arnould, 4th ed., p. 304.

Goods. The invoice value or prime cost, including all shipping expenses and charges of insurance.

Of this rule, it is to be observed that it is not entirely in accordance with either of the principles of indemnity above stated, though it approximates to that which fixes the value of the property at the outset of the risk. Indeed, as regards the cargo, the amount insurable under an open policy is precisely that which it is needful for the assured to recover in case of loss, in order that he may be replaced in the position which he occupied before entering upon the adventure, irrespective of loss of interest. As regards the ship and freight, however, the owner, who is insured to the full extent which the law allows under an open policy, recovers, in case of loss, an aggregate amount which is in excess of an indemnity, on account of there being a double insurance of several of the component parts of his insurable interest (b).

In fact, the measure of insurable interest, as fixed by law in respect of the ship and freight together, exceeds the standard of a fair indemnity, whether that be set up at the outset or at the end of the adventure (c).

(b) The cause of this double insurance, stated in brief, is, that the expenditure in outfit, stores, provisions, and advances on account of crew's wages, which the law allows to form part of the value of the ship, is also included in the gross freight, so that it is insured twice over. The gross freight also includes the other working expenses of the ship, such as the crew's wages earned on the voyage, and the inward charges at the port of destination, which, in the event of total loss, are avoided by the shipowner in whole or in part.

(c) The question as to the extent to which insurable interest should be valued so as to limit the amount recoverable to a fair indemnity having recently been the subject of much controversy, it may not be devoid of interest or utility to attempt to answer the question upon each of the two principles referred to in the text.

Let us first assume that the end of the adventure theory is to be adopted,

and ask how ship, freight, and cargo, respectively, ought to be valued, to conform to that standard. The question resolves into this :-What amount has each party at risk at the moment prior to the end of the adventure (i.e., the arrival of the vessel), supposing no accident to have happened previously? The shipowner has at risk, first, the estimated value of the ship on arrival at her port of destination, which, in the absence of any difference arising from change of market, will be the value of hull and materials as at the outset of the risk, less the deterioration resulting from the "wear and tear" of the voyage. The insurable value of the ship, computed upon the end of the adventure" principle, is therefore her value at the outset of the risk, less a deduction for the wear and tear" of the projected voyage, without the addition of the money expended in consumable stores, as such stores would be exhausted by the termination of the voyage, and also

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V. THE VALUATION-VALUED POLICIES.

In the great majority of cases, the law as regards open policies is inapplicable, because the parties agree between themselves as

to the value to be placed upon the subject insured; and, a valuation, when inserted in the policy, is conclusive for the purposes of the contract, so that it cannot be disturbed excepting in case of fraud (d). Accordingly, under a valued policy, it is not necessary that the assured should prove the value of the subject insured, as it is necessary under an open policy, but only that he should substantiate an interest therein, unless the circumstances are such as to raise a suspicion of fraud. The mere fact of over-valuation, even to a large extent, if bond fide, will not affect the validity of the policy, as will appear from the two following extreme cases. A policy of insurance was effected for twelve months to cover a trading adventure to Africa and back-on the ship, valued at £2,000, and on the cargo, valued at £11,000, or £13,000 in all. Cargoes shipped on the west coast of Africa vary so greatly in value according to circumstances, that it is difficult to fix the valuation with certainty beforehand. In the case under review, the vessel sailed on the homeward voyage with a full and complete cargo, the value of which did not exceed £3,500. The underwriters were nevertheless held liable for the full amount insured, a total loss having occurred (e). In another case, a ship was insured under a time policy, in which her value was stated to be £8,000. At the time the policy was made, but unknown to the parties, the ship had been injured in a storm to so great an extent that the cost of repairs would have exceeded her repaired value. In an action against the underwriters, (the ship having been totally lost during the currency of the policy), it was held that the policy had attached, notwithstanding the previous injury to the ship, and that, there being no fraud, the value of the ship as stated in the policy was conclusive between the parties (ƒ). Of course, if the evidence

on the completion of the adventure; while the outset of the risk theory involves an insurance of (1) the value of the ship as she stood before anything was done to fit her for the voyage, plus the expenditure incurred with that end in view, and (2) the prime cost of the cargo, plus shipping and

insurance charges.

(d) Barker v. Janson, L. R. 3 C. P. 303.

(e) The Company of African Merchants v. Harper, Ex. Ch., 30th Nov., 1872.

(f) Barker v. Janson, L. R. 3 C. P. 303.