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on freight (infra No. 25) led to the prohibition of insurance there on expected profit."

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"In Hamburg, in Holland, in Sweden, in Portugal, in Italy, in the United States and in England insurances on expected profits are lawful. The grounds on which they are so considered are expressed, with admirable force and clearness, in the following passage taken from the judgment of Lawrence Jr., in the case of Barclay v. Cousins. As insurance is a contract of indemnity, it cannot be said to be extended beyond what the design of such species of contract will embrace, if it be applied to protect men from those losses and disadvantages which, but for the perils insured against, the assured would not suffer; and in every maritime adventure, the adventurer is liable to be deprived, not only of the things immediately subjected to the perils insured against, but also of the advantages to be derived from the arrival of those things at their destined port. If they do not arrive, his loss is not merely that of his goods, but of the benefits which he might obtain, were his money employed in an undertaking not subject to the perils. If it be allowable for the merchant to protect capital, subject to the risk of maritime commerce, by insuring it, why may he not protect those advantages he is in danger of losing by their being exposed to the same risks? It is surely not an improper encouragement of trade to provide, that merchants, in case of adverse fortune, should not only not

*See EMERIGON I, Ch. VIII. § 9, pp. 236-239, and the commentary of Boulay-Paty. See also Ord. de la Marine. Liv. III. T. 6. Art. 15. Code de Commerce. Art. 347. Spain and Sardinia followed the French Code in entirely prohibiting insurance on profits. Such insurance is also illegal in Denmark. In Holland, insurance on profits has long been practised, and is now permitted by law, on condition that the expected profits are separately valued in the policy and the goods specified, out of which they are to be derived. Nolte's Benecke, I. 301 and 302.

Commission.

СНАРТ. Х. $62.

lose the principal adventure, but that the principal should not, in consequence of such bad fortune, be totally unproductive; and that men of small fortunes should be encouraged to engage in commerce, by their having the means of preserving their capitals entire."

"Such are the principles upon which insurances on expected profits are allowed in England. Profits may be insured equally by valued and by open policies. But, whether insured by one or the other, it is the law of this country, that the assured cannot recover unless he prove that, but for the intervention of the perils insured against, some profit would in fact have been realized by the sale of his goods on arrival. He must also prove that the goods, from the sale of which the profits were expected, have at one time or other, during the period covered by the policy, been actually exposed to the perils insured against, and also that he was legally interested in them at the time of the loss. The foundation of the insurance is not a bare expectation of interest in a subject with which, at the time of effecting the insurance, the assured was not connected, but an expectation of profits on goods, at that time his."

"A party may also insure the sums which he is to receive by way of commission on the sale of merchandise; and, if the merchandise, on which the commissions were to arise, was only prevented from arriving by the perils insured against, the assured may recover to the extent of his loss, provided it appear that the goods were actually on board at the time of the loss."

"Profits or commissions are not covered by a policy on goods or merchandise; they must be specifically named. This rule is absolute in

England. In the United States it appears to have been held, that a right to a certain percentage, proportion or share of a cargo as commissions on profits, is covered by a policy on property."

"Lloyd's form of policy is adapted, as usual, by insertion of the words profits or commissions in the margin; or in the valuation clause, adopting or adapting the language of the clause, according as the subject of the policy is valued or not.'

Expected Profits.

21°. Thus insurance on expected profits and Faluation of commission must be separately valued in the policy with special designation of the goods on which it is made. Where the general value of the things insured has been expressed in the policy, with the positive stipulation that any excess of the value of the goods shall be considered as expected profit, the insurance is valid for the value of the things insured; the remainder, however, shall be reduced to the provable extent of the profit expected, estimated according to the rule mentioned in sub-sections 22 and 23.

22°. Expected profits may be proved by acknowledged price-currents, or in the absence of these, by a valuation made by competent persons showing the profits which the insured goods could rationally have been expected to yield on their safe arrival at the place of destination after an ordinary voyage.

23°. If it appears by the price-currents or by the valuation made by competent persons, that, in case of safe arrival, the profit would have been less than the sum which the assured had stated in the policy, it may suffice that the underwriter should pay that reduced amount. Nothing is

*ARNOULD. Marine Insurance, Edit, Maclachlan, 1877. p. 38 et seq.

Insurance of
Freight.

due by him, if the things insured would not have yielded any profit at all.

24°. Freight may be insured for its full amount. In the event of the ship being lost or stranded, the insurance may be reduced as regards the amount of wages of the ship's crew and other charges, which the master or owner would have had to pay on her safe arrival and which are not or only partly due by him in consequence of the disaster.

The amount of freight may be proved by the charter-party or by the bills of lading. In default of a charter-party and bills of lading, or if the goods belong to the owners of the ship, the amount of freight may be estimated by competent persons.

25°. The valuation of things insured, the commencement and termination of the risk, and the rights and obligations of the underwriter and the assured are governed by the lex loci contractus.

With regard to insurance on freight, Arnould's work on Marine Insurance contains the following remarks. "According to the general law of shipping, freight, as between the ship-owner and shipper, is, strictly speaking, the price to be paid by the latter to the former for the carriage of goods by ship, and is not earned or payable till the arrival and delivery of the goods at their of destination."

port

"In the law of Marine Insurance it has a far wider signification, comprising all that is implied in the benefit derived by the ship-owner from the employment of his ship.

"In this sense, therefore, it includes not only freight properly so-called as above defined, but likewise that which is often called freight, being the chartered hire of the ship or part of her, and

also, thirdly, the benefit accruing to the shipowner from the carriage of his goods by his own ship, in the shape of their increased value to him at the port of delivery. As Lord Tenterden observes,—If the term freight, as used in policies of insurance, imports the benefit derived from the employment of the ship, it is the same thing to the ship-owner whether he receives that benefit of the use of his ship, (1st) by a money payment from one person, who charters the whole ship; or (2nd) from various persons who put specific quantities of goods on board; or (3rd) from persons who pay him the value of his own goods at the port of delivery, increased by their carriage in his own ship."

"In whichever of these three senses the word is used, it is a clearly established principle in this country, that expected freight is a lawful subject of Marine Insurance. 'It would, indeed, be extraordinary,' says Chamber, J. (in the case of Lucena v. Craufurd), if freight could not be made the subject of protection by an instrument, which had its origin in commerce, and was introduced for the very purpose of giving security to mercantile transactions; it is a solid substantial interest ascertained by contract, and arising out of labour and capital employed for the purposes of commerce.'

"The assured on freight must have an inchoate right to it, in order to entitle him so to insure; in other words, he must be in such a position with regard to the expected freight, that nothing could prevent him from ultimately having a perfect right to it but the intervention of the perils insured against."

"When freight is the price to be paid for the hire of the ship under a charter-party, the ship

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