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the exact point at which excessive valuation becomes fraudulent. Indeed it is questionable whether it is ever from figures alone that one arrives at conclusions respecting fraud;1 but figures read in the light of the facts preceding, accompanying and succeeding the insurance, may help to establish conclusively a charge of fraud. In the case of Haigh v. De La Cour, 1812,2 it was found that goods on board the Maria were insured for £5000, invoices for that amount being shown to the underwriters. Claim was made against the underwriters. It was discovered that the goods were worth only £1400, and it was contended that up to that amount at least the underwriters were liable. But the invoices proved to be fictitious, and the bills of lading interpolated, and when something like barratrous handling of the ship was proved, the insured value became evidently fraudulent. Chief Justice Sir J. Mansfield said, "If the plaintiffs intended from the beginning to cheat the underwriters, the assignees can recover nothing. The fraud entirely vitiates the contract.” Cases have occurred in the history of commerce in which the insurance of four times the amount of invoice would be quite justifiable; for instance, that of shipments of silver to Japan, made for the purpose of obtaining in exchange gold at the Japanese ratio of 4 to 1, when the prevailing ratio in the rest of the world was about 15 to 1 (H. Cernuschi, Monetary Diplomacy in 1878, p. 16). Similarly, in such insurances as those of contraband cargoes, or cargoes destined to run a blockade, one can imagine a very high valuation put on goods whose value would be enormously enhanced by their mere arrival at their intended destination.

The case of Irving v. Manning (House of Lords, 18473) referred to the policy value of the General Kidd, £17,500. The vessel was so damaged that after an expenditure of £10,500 in repairs she would be worth only £9000. This was held to constitute a total loss, and to justify a claim for

1 Mr. Justice Willes in Lidgett v. Secretan, 1870 (L. R. 6 C.P.), speaks of a value 'so outrageously large as to make it plain that the assured intended a fraud on their underwriters."

2 3 Camp. 319.

31 H. of L. Cas. 287.

the full valuation insured, £17,500. In the course of the case it was brought out that the words of the policy in the valuation clause do not amount to an agreement "that for all purposes connected with the voyage, at least for the purpose of ascertaining whether the ship is a total loss or not, the ship should be taken to be of that value "; 1 but they " mean only that, for the purpose of ascertaining the amount of compensation to be paid to the assured when the loss has happened, the value shall be taken to be the sum fixed, in order to avoid disputes as to the quantum of the assured's interest." Dealing with the point raised that by this means the assured would under a contract of mere indemnity obtain more than a compensation for his loss, the judges replied that it was so, that "a policy of insurance is not a perfect contract of indemnity. It must be taken with this qualification, that the parties may agree beforehand in estimating the value of the subject assured by way of liquidated damages."

In Barker v. Janson, 1868,2 another important judgment was given. The ship Sir William Eyre was much damaged on her outward voyage from Glasgow to New Zealand, and was sent for repairs to Calcutta. She was insured for £8000 at and from Calcutta for three months, commencing thirty days after her arrival there. On reaching Calcutta she was dry-docked, and found to be not worth repair, the underwriters on the outward policy paying £7000. While the vessel was still in dry dock, and before expiry of the three months, for which the second policies covered her, she was totally destroyed by a cyclone. Claim was made for the full amount insured, £8000; against this it was contended that the policy value being enormously above the true worth of the vessel should be reopened. Chief Justice Bovill held that the transaction was made in good faith; he said "an exorbitant valuation may be evidence of fraud, but when the transaction is bona fide the

1 "So that when a question arises whether it would be worth while to repair, it must be assumed that the vessel would be worth that sum when repaired."

2 L. R. 3 C. P. 300.

valuation agreed upon is binding." Mr. Justice Willes remarked in his judgment, "Here there was no wager, the insurance having been bonâ fide; and it having been settled by Irving v. Manning that valued policies are valid if there be no fraud or wagering, I think it would be wrong to make any doubt in this case." Earlier he remarked, "It is said that there was a mistake as to the state of the ship; but a mistake, to entitle the parties to reopen a contract of valuation, must be such as would entitle the parties to proceed in equity for relief. It must have been a mistake

of both parties in respect of something which was material to the contract."

The consideration of mistake as affecting valuation came before the courts in Williams v. North China Company, 1876.1 The ship Queen of the Colonies was chartered from Batavia to the United Kingdom. The assignees in Java of the charter-party insured the estimated amount of the freight, valued £5941; and on the same day with the same office their advance against freight valued £513. Taking the terms of the charter-party into consideration, the Court of Appeal decided that the former insurance was intended for the protection of the shipowners, the charterers having protected themselves by the second insurance for the amount of the advances they had made in accordance with the charter-party. The shipowners were therefore interested in the freight less advances, not in the advances at all. In his judgment Chief Justice Cockburn said, "You cannot open the policy to inquire into the question whether or not there has been over-valuation, but you can do so to see if the claim of the assured is coextensive with the subject matter of the insurance. Here it is not." The Master of the Rolls (Jessel) added, "In a valued policy you cannot open the policy; but that does not touch the question of what it was that was valued." It is consequently only in a very limited sense that it can be said that mistake is a ground for opening the valuation of a valued policy.

In the United States of America the law respecting

1 35 L.T. N.S. 884; 3 Asp. Mar. L. Cases 342.

valuation is substantially the same as in England. Phillips (§ 1183) gives the following: "If the valuation is neither intended as a cover for a wager by both parties, nor fraudulently made, it is binding on the parties, in case it can be carried into effect, and will as between them determine the value of the property. And the circumstance of the property being valued very high has not in itself been held to be a sufficient proof of a wager, or of a fraudulent intention on the part of the assured." Mr. Justice Willes, in the memorandum already quoted, says: "Upon the general subject of valued policies the laws of the United States thus appear to be identical with those of England."

The French Code de Commerce is very meagre on the subject of valuation; § 339 provides that, "If the value of the goods is not fixed by the contract, it may be established by the invoices or by the books, in default (of these) the valuation of them is made in accordance with the price current at the time and place of loading, inclusive of all duties paid and expenses incurred until on board." The French policy on merchandise contains a special clause providing that in case of goods insured with a certain valuation, underwriters in case of loss or average demand proof of the real values, and in case the valuation is found to be excessive they may reduce it to cost price plus 10 per cent, unless they have expressly agreed to a higher increase and fixed its amount. This in effect forces merchants who desire to insure more than invoice and 10 per cent to declare the percentage they want added to invoiced prices.

The General German Commercial Code is very full in its provisions on the subject. For open policies the provisions of § 790 hold:

§ 790. The full value of the insured object is the value for insurance.

The sum insured may not exceed the value for insurance. In so far as the sum insured exceeds the value for insurance (over-insurance), the insurance has no legal effect.

In $$ 799, 801, and 803 provision is made for the

valuation of ship, freight, and cargo when no special contract exists respecting the values:

Ship.

Its actual value when the underwriter's risk began. Freight. The amount of freight as per the vessel's freight contracts, or if none exist or the cargo is on shipowner's account then the customary freight.

Goods.

Their value at time and place of shipment, plus all costs till on board and including insurance.

By § 797 it is provided that in case of valued policies when the parties have agreed on a value for insurance, that value is taken as binding between the parties. But the underwriter is entitled to demand a reduction of the valuation if he can prove that it is seriously excessive, and the words in §§ 799 and 803, "The definition in this article is applied also in case of the insured value being agreed,” seem to indicate that anything much exceeding the values named in these sections would be considered excessive. As regards freight, § 802 provides that when an insurance is done on freight without specifying whether gross or net freight is intended, it is taken to be done on gross freight.

The Dutch and Portuguese codes and the Belgian law are said by Victor Jacobs (Etude sur les assurances maritimes et les avaries, Brussels, 1885) to permit the underwriter in every case to reopen the valuation in the policy, unless it be fixed by arbitrators appointed by the two parties. The Italian code (§ 612) regards a valuation as exclusively the work of the assured, unless it has been preceded by a survey accepted by the underwriter. In that case the

underwriters cannot impugn the valuation, unless for fraud, dissimulation, or falsification (§ 435, pt. ii.). The new Spanish code of 1885 limits (§ 747) insurances on freight to the amount appearing in the contract of affreightment; and on ship (§ 751) to four-fifths of the vessel's value. In cases of evident over-valuation a distinction is drawn between over-valuation in error and by fraud; in the former the insurance is reduced to the genuine worth of the article insured, as fixed by common accord of the parties or by

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