(2.) The nature of the interest of the assured in the SECT. 27. subject-matter insured need not be specified in the policy, [unless it be of such a character as to materially affect

the risk].1

Provided that where an insurance is effected by a lender on bottomry or respondentia, the nature of his interest must be specified.

(3.) A policy effected by way of re-insurance need not specify that it is a re-insurance.2

(4.) Where the policy designates the subject-matter insured in general terms, it must be construed to apply to the interest intended by the assured to be covered.3

(5.) In the application of this section regard must be had to any usage regulating the designation of the subject-matter insured.1

NOTE.-In Mackenzie v. Whitworth, cited below, a policy of reinsurance was effected simply as a policy "on cotton." It was held to be sufficient, and that it was unnecessary to specify that it was a reinsurance. This decision is opposed to the ordinary understanding and practice, and the Lords Select Committee proposed to alter the rule there laid down.

The quantum of the assured's interest need not be specified in the policy. Thus it is not necessary to specify whether the assured insures for himself or as trustee for another, as full owner, or as mortgagor or mortgagee. The subject-matter is usually very briefly described as being "on ship," "on goods," on freight," "on advances on coolies," on emigrant money," and so on; but the description must not be misleading, thus a policy on "piece goods" will not

99 66

1 Mackenzie v. Whitworth (1875), 1 Ex. D. at p. 41; and as to bottomry,

ibid. at p. 43, citing Glover v. Black (1765), 3 Burr. 1394.

2 Mackenzie v. Whitworth (1875), 1 Ex. D. 36, C. A.

3 Allison v. Bristol Mar. Ins. Co. (1876), 1 App. Cas. at pp. 216, 235; but cf. McSwinney v. Royal Exchange (1850), 14 Q. B. 634, where "profits on rice" was under the circumstances held an insufficient description. Mackenzie v. Whitworth (1875), 1 Ex. D. at p. 40.

D

SECT. 27. cover a loss on hats;1 so, too, a policy "on freight" will not cover passage money.2

Valued policy.

"In some cases," says Blackburn, J., "the nature of the interest in the thing insured is such as to vary the nature of the risk, and then it should be stated... in all cases when the peculiar nature of the interest alters the risk, it may properly be said that such interest is the subject-matter of the insurance," and he then goes on to instance a case of profits dependent on various contingencies.3

§ 28.-(1.) A policy may be either valued or unvalued.4

(2.) A valued policy is a policy which specifies the agreed value of the subject-matter insured.5

(3.) Subject to the provisions of this Digest, and in the absence of fraud, the value fixed by the policy is, as between the insurer and assured, conclusive for the purposes of the particular policy, whether the loss be total or partial.6

(4.) Unless the policy otherwise provides, the value fixed by the policy is not conclusive for the purpose of determining whether there has been a constructive total loss.7

1 Mackenzie v. Whitworth (1875), 1 Ex. D. at p. 40.

2 Denoon v. Home and Colonial Ass. Co. (1872), L. R. 7 C. P. 351. As to what is covered by the wide term "disbursements," see Buchanan v. Faber (1899), Times L. R. 684; 4 Com. Cas. 223; and as to what is, or is not, covered by "goods," see Sched. I., Rule 18, post.

3 Mackenzie v. Whitworth (1875), 1 Ex. D. at p. 41; cf. Wilson v. Jones (1867), L. R. 2 Ex. at p. 151 (submarine cable).

4 Arnould, Ed. 6, pp. 301-309; McArthur, Ed. 2, p. 71; Irving v. Manning (1847), 1 H. of L. Cas. at pp. 305, 307.

5 Ibid.; and as to distinctly specifying the valuation, see Wilson v. Nelson (1864), 33 L. J. Q. B. 220. As to reforming a defective valuation, see Rankin v. Potter (1873), L. R. 6 H. L. at p. 114.

• Arnould, Ed. 6, p. 301; Barker v. Janson (1868), L. R. 3 C. P. 303 ; The Main (1894), P. at p. 325. As to concealment of over-valuation, see § 18 and notes.

7 Arnould, Ed. 2, p. 309; Irving v. Manning (1847), 1 H. of L. Cas. at p. 305.

Illustrations.

1. A ship is insured with one company for £1700, and with another company for £2000. In both policies she is valued at £3000. The assured, in case of total loss, is not entitled to recover more than £3000 in all.1

2. Ship and freight valued at £3000, with running-down clause under which insurers were to pay such proportion of three-fourths of any damages paid by the assured as the sum insured bore to the value of the ship insured and freight. The assured had to pay £2110 damages for running down another ship. His ship was sold under a decree of the Admiralty Court to satisfy these damages. Held, that an underwriter for £100 must pay £52 15s.2

3. Ship valued at £9000 is insured for £2000. By another policy the same ship is valued at £8000, and insured for £8000. The insurer on the second policy pays for total loss. The insurer on the first policy is liable to pay £1000.3

4. A ship at sea is insured by time policy for £6000, and valued at £8000. At the time the policy is effected, the ship has been seadamaged to the extent of £5000, but the assured is not aware of the fact. Afterwards, during the currency of the policy, she is totally lost. The assured can recover the full £6000.4

Her real value is
The insurers pay

5. A ship valued at £6000 is insured for £6000. £9000. She is run down by another ship and lost. for a total loss. Afterwards the assured recovers £5000 damages from the owners of the ship in fault. The insurers are entitled to the whole of this sum as salvage.5

6. Ship insured by same insurer in two successive valued policies. The first policy covers her to Calcutta and for thirty days after arrival. The second policy covers her at and from Calcutta to London. On the voyage out she is damaged by storms. While she is being repaired at Calcutta, and before the thirty days have expired, she is destroyed by fire. The insurer must pay on the first policy for the

1 Irving v. Richardson (1831), 2 B. & Ad. 193.

2 Thompson v. Reynolds (1857), 26 L. J. Q. B. 93; cf. Xenos v. Fox (1868), L. R. 3 C. P. at p. 636 to like effect.

3 Bruce v. Jones (1863), 32 L. J. Ex. 132; discussed McArthur, Ed. 2, p. 73.

Barker v. Janson (1868), L. R. 3 C. P. 303; cf. The Main (1894), P. 320 (freight).

5 North of England Ins. Assn. v. Armstrong (1870), L. R. 5 Q. B. 244; but Lord Blackburn has thrown doubts on this case in Burnand v. Rodocanachi (1882), 7 App. Cas. at p. 342, and see at p. 335.

SECT. 28.

SECT. 28. partial loss, and on the second policy for the total loss, without deducting what was paid on the first policy.1

7. A policy for £1000 is effected on freight valued at £2000. Only half the intended cargo is put on board, the rest of the ship being used for emigrants. The ship is lost. The insurer is only liable for

£500.2

8. Policy on freight valued at £5500. The ship is detained by an accident, and, during this delay, there is a great fall in freights. When a full cargo is loaded, the freight comes to £3250, of which £925 is paid in advance. The ship is lost. The valuation stands, and the assured is entitled to receive £5500, less £1611, which is the proportion of the prepaid freight to the gross freight.3

9. Policy for £1000 on ship valued at £3750, with warranty that one-fifth shall remain uninsured. The real value of the ship is £5000. For the purpose of determining whether the warranty has been broken by a subsequent insurance, regard must be had to the policy value, and not to the real value.4

10. A ship is insured against fire by a valued time policy. While the policy is running, she is so injured by stranding that the cost of repairing her would exceed her repaired value. After this she is destroyed by fire. The insurer must pay the full amount insured.5

11. Policy on ship valued at £33,000. Her real value is £40,000. The ship incurs certain general average and salvage expenses, which are adjusted abroad on her real value. The assured can only recover 33-40ths of the adjustment from the insurer."

NOTE. An unvalued policy is commonly spoken of by lawyers as an "open policy," but as that term is applied in mercantile language to a floating policy, it seems better to adhere to the term "unvalued policy."

In 1761 the validity of valued policies was contested on the ground that in substance they were wagering policies. Lord Mansfield disposed of this contention, and the validity of valued policies has never since been questioned. He pointed out that the effect of the valuation was merely to fix the insurable value of the goods or other

1 Lidgett v. Secretan (1871), L. R. 6 C. P. 616.

2 Denoon v. Home and Colonial Ass. Co. (1872), L. R. 7 C. P. 341.
3 The Main (1894), P. 320. The assured must, of course, also deduct

any sum which he has received on any other policy.

4 Muirhead v. Forth Mutual Ins. Assn. (1894), A. C. 72 H. L.

Woodside v. Globe Ins. Co. (1896), 1 Q. B. 105.

6

Steamship "Balmoral" v. Marten (1900), 2 Q. B. 748.

subject-matter insured, "just as if the parties admitted it at the SECT. 28. trial." 1

Speaking of a total loss, the judges in Irving v. Manning say, "In an open policy the compensation must be ascertained by evidence; in a valued policy the agreed total value is conclusive." 2 It is commonly said that the valuation is conclusive "for the purposes of the policy." It would probably be more correct to say that it is conclusive for all purposes relating to the insurable value of the subjectmatter insured by a given policy.3 For other purposes it is not conclusive, and in some cases not even relevant. Notwithstanding the valuation, the interest of the assured may be disproved, or short interest may be shown, or it may be shown that the whole or part of the subject-matter insured was not at risk.1

In Ionides v. Pender 5 it was held that non-disclosure of an excessive valuation was ground for avoiding a policy; but that was a gross case of fraud. Non-disclosure of an over-valuation made in good faith would presumably be immaterial. But grossly excessive valuation, if not disclosed, would, of course, always be evidence of fraud. As to mistake, see § 91, post.

For a useful discussion of the English law of valuation, see Report of Commission on Unseaworthy Ships, 1874, vol. 2, p. xvi., and a memorandum by Mr. Justice Willes, p. 426. Under the Continental Codes the policy valuation is only primâ facie evidence of the real value.

§ 29. An unvalued policy is a policy which does not Unvalued policy. specify the value of the subject-matter insured, but subject to the limit of the sum insured, leaves the

1 Lewis v. Rucker (1761), 2 Burr. 1167, see at p. 1171 (partial loss); cf. Lidgett v. Secretan (1871), L. R. 6 C. P. at p. 627, per Willes, J.

2 Irving v. Manning (1847), 1 H. of L. Cas. at p. 307.

3 Cf. Burnand v. Rodocanachi (1882), 7 App. Cas. at p. 335, per Lord Selborne.

As to disproving interest entirely, see Seagrave v. Union Ins. Co. (1866), L. R. 1 C. P. 316–320; as to short interest, see Denom v. Home and Colonial Ass. Co. (1872), L. R. 7 C. P. 351; Williams v. North China Ins. Co. (1876), 1 C. P. D. 757, C. A.; and as to part of the subject-matter not being at risk, see Tobin v. Harford (1865), 34 L. J. C. P. 57, Ex. Ch.; The Main (1894), P. 320.

5 Ionides v. Pender (1874), L. R. 9 Q. B. 531.

See The Main (1894), P. 320, 325, where the unreported case, Company of South African Merchants v. Harper, is discussed.