or contingent profits, is settled in England, and has received repeated and elaborate confirmation. They are likewise, in this country, held to be an insurable interest. The consignee of goods consigned to him for sale, has an insurable interest therein to their full value, and he may insure them in his own name.c Insurances on freights, profits and commissions, are required by the course and interests of trade, and have been found to be greatly conducive to its prosperity. But the doctrine that pervades the case is, that the insured must have a real interest in the subject matter from which the profits are expected. There must be a substantial basis for the hope or expectation of profits, in order to prevent the policy from being considered a wager. Commissions are a species of profit expected to arise from the

demnity, 57, says, that the practice of insuring ship and freight separately, is attended with many difficulties, and that the best, if not the only way to obviate them, and to put the owner, under all circumstances, in the same situation in which he would have been in case of a safe arrival, would be, to insure the ship and freight jointly, as one indivisible risk, in the same policy. In Adams v. Pennsylvania Ins. Company, 1 Rawle, 97, in the case of a valued policy on freight, there was specie on board belonging to the owner of the ship, and the ship was lost before any cargo was purchased, or contracted for, or procured; and it was held, that there was no claim upon the insurer, for there was only a reasonable expectation of profit upon a cargo expected to be procured and shipped. The contingency of expected freight

was too remote.

Grant v. Parkinson, cited in Park on Insurance, 354, 6th edition. Le Cras v. Hughes, ibid. 358. Craufurd v. Hunter, 8 Term Rep. 13. Barclay v. Cousins, 2 East's Rep. 544. Hendrickson v. Margetson, ibid. 549, note. Profits must be insured as profits. 3 Neville & Manning, 819. An insu. rance on outfits in a whaling voyage does not terminate pro tanto with their consumption or distribution, but attaches to the proceeds of the adventure. Hancox v. Fishing Ins. Co., 3 Sumner's R. 132.

b Loomis v. Shaw, 2 Johns. Cas. 36. Tom v. Smith, 3 Caines' Rep. 245. Abbot v. Sebor, 3 Johns. Cas. 39. Fosdick v. Norwich Marine Ins. Com. pany, 3 Day's Rep. 108.

De Forest v. Fulton Ins. Company, 1 Hall's Rep. 84. Brisban v. Boyd, 4 Paige, 17. Pouverin v. Loui. F. & M. Ins. Co. 4 Rob. Loui. R. 234.

sale of property consigned to an agent or supercargo, and they are an insurable interest in England, and other countries, where insurances on profits are legal."

In France, assurances on profits are unlawful, and

contrary to the code, as they were also to the or*272 dinances of the marine, and for the same reason that insurances on freight are not allowed. The subject insured must have a physical existence, and be a substance capable of being exposed to the hazards of the sea. And yet there seems to be no more objection to the insurance of a thing having only a potential existence, than to the sale of it; and it is admitted, that the sale of the proceeds of a future vintage, or of the next cast of the net by a fisherman, is a good and valid sale. The hope or expectation of profit, in these cases, is, says Pothier, a moral entity susceptible of value, and of being sold. But in Italy, Portugal and the Hanse Towns, they are held lawful; and Santerna, and after him Straccha, and then Roccus, all show that the profits of goods may lawfully be estimated in an insurance on goods. The English cases have required the insured to show, in an insurance on profits, that some profit would have been produced upon the adventure, if the peril to the property from which the profits were to arise had not intervened. I should apprehend that was the proper course, though the cases in this country have not explicitly declared, that the party must show affirmatively that the goods, if they had arrived safe, would have come to a profitable market, or that the state of the

• Benecke on Indemnity, 35.

Traité du Con. de Vente, n. 5, 6.

• Roccus, n. 31.96. Santerna, de Ass. et Spons. Merc. Tract. part 3. n. 40, 41. Straccha, de Ass. Gloss. 6. n. 1. Ord. of Hamburg, 2 Magens, 213. Benecke, 35.

d Hodgson v. Glover, 6 East's Rep. 316.

Vida Suith's Il. I. for

the form of afte

foreign market was such as to have afforded, as in Grant v. Parkinson, a very strong expectation of profits. Such an expectation seems to have been assumed in the American cases.

(5.) Of open and valued policies.

An open policy is one in which the amount of interest is not fixed by the policy, but is left to be ascertained by the insured, in case a loss should happen. A valued policy is where a value has been set on the ship

or goods insured, *and inserted in the policy in the *273 nature of liquidated damages.

If a policy on profits be an open one, there must be proof given of the amount of the profits that would probably have been made, if the loss had not happened; there would not otherwise be any guide to the jury, in the computation of the loss. In Mumford v. Hallett,a it was supposed that every policy on profits must, of necessity, be a valued one, because without the valuation it would be extremely difficult to ascertain the amount to be recovered. A loss on the profits must be regulated by the loss of the property from which the profits were to arise. Where the ship and cargo were lost on the voyage, the whole amount of the valued profits was held recoverable, without showing that there would have been any ultimate profit if the loss had not happened.c

The value in the policy is, or ought to be, the real value of the ship, or the prime cost of the goods, including the incidental expenses of them previous to the shipment, and the premium of insurance. It means the

1 Johns. Rep. 433.

Abbot v. Sebor, 3 Johns. Cas. 39.

• Patapsco Ins. Company v. Coulter, 3 Peters' U. S. Rep. 222. Pothier, des Ass. n. 43.

amount of the insurable interest; and if the insured has some interest at risk, and there be no fraud, the valuation in the policy is conclusive between the parties; for they have, by agreement, settled the value, and not left it open to future inquiry and dispute as between themselves. If the valuation should, however, be grossly enormous, as in the case put by Lord Mansfield, where cargo was valued at 2000l., and the insured had only the value of a cable on board, there is no doubt it would raise a strong presumption of fraud; and either the valuation or the policy would be set aside. A valuation, fraudulent in fact, as respects the insurer, or so excessive as to raise a necessary presumption of fraud, entirely vacates the policy, and discharges the insurer; and the English, American and French law of insurance contain the same general doctrine on the subject. *There are cases which suggest that the valuation is applicable only to cases of total loss, and

*274

Shawe v. Felton, 2 East's Rep. 109. Lord Abinger, in Young v. Turing, 2 Manning & Granger, 593.

Shawe v. Fel.

Haigh v. De Aspinall, 13

b Lord Mansfield, in Lewis v. Rucker, 2 Burr. Rep. 1171. ton, 2 East's Rep. 109. Feise. v. Aguilar, 3 Taunt. Rep. 506. la Cour, 3 Campb. Rep. 319. Lord Ellenborough, in Forbes v. East's Rep. 323. Aubert v. Jacobs, Wightwick's Rep. 118. Wolcott v. Eagle Ins. Company, 4 Pick. Rep. 429. Marine Ins. Company v. Hodgson, 6 Cranch's Rep. 206. Condy's Marshall, 290, 291. 1 Phillips on Insu rance, 305–313, 1st edit. Valin's Com. tome ii. 147. Pothier, des Ass. n. 151. 159. Boulay Paty, tome iii. 397, 398. M. Delvincourt, in his Institutes de Droit Com. tome ii. 345, 346, contends, that though the valuation be made without fraud, if there be palpable evidence of mistake in the valu. ation, the policy may be opened; and Valin, Pothier and Emerigon are of that opinion. But Boulay Paty thinks that the excess in the valuation, by mistake, is not sufficient to open the policy; and there must be proof of actual fraud going to the destruction of the contract. Cours de Droit Com. tome iii. 401. The Ordinance of the Marine, h. t. art. 8, and the Code de Commerce, art. 336, make fraud the basis of opening the valuation. Le Guidon, c. 2. art. 13, and Valin, Com. tome ii. 52, consider an over valuation of a moiety, or one third, or even of one fourth, to be evidence of fraud;

does not apply to average losses. But the better opinion of the text writers is, that in settling all losses, total or partial, the valuation of the property in the policy is to be considered as correct in the adjustment of the loss, and the true measure and basis of the valuation according to the contract of indemnity. The adjustment is to be the same as if the goods had actually cost, or the ship and freight were actually worth, the sum at which they were valued. Mr. Benecke concludes, from a consideration of the cases, that the opinion, that in a case of a partial loss the valuation ought to be disregarded, *is as destitute of authority, as it is void of jus- *275 tice and sound reason.

A valuation does not preclude the inquiry, whether the whole interest valued has been at risk. If the valua

but other text writers justly conclude that every case will depend upon its own circumstances, without being governed by any such rule. Mr. Benecke has referred to the various and discordant provisions of the principal commercial nations of Europe, concerning valuations, and they are generally held to be conclusive, unless shown to be fraudulent. Benecke on Indemnity, 151, 152.

Lord Mansfield, in Le Cras v. Hughes, cited in 2 East's Rep. 113. Sewall, J., 7 Mass. Rep. 370. Allegre v. Insurance Company, 6 Harr. § Johns. 408. The New-York Board of Underwriters, May 20, 1837, resolved, that in cases of a technical total loss of a vessel, the only basis of ascertaining her value, shall be her valuation in the policy, and if not so valued, her actual value at the time of the inception of the risk at the port of which she belonged.

Stevens & Benecke on Average and Adjustment of Losses in Marine Insurance, Boston, 1833, 48-53. Stevens on Average, part 2, 168. Phil. lips on Insurance, vol. i. 313. 315. Benecke on Indemnity, 152, 153. 157. In the case of Allegre v. Insurance Company, the court considered it to be an open and unsettled question, whether, in the case of a partial loss on a valued policy, the insured was to be indemnified according to the valuation, or the actual value of the subject at the port of shipment, and they omitted to express any opinion on the point, though it had been warmly contested in the argument. Mr. Benecke says that the question, whether a valuation should be opened in cases of partial loss, had never occurred in the English

courts.