2 Wash. C. C. 468 | U.S. Circuit Court for the District of Pennsylvania | 1811
It being admitted that there is no direct authority or custom in relation to a case precisely like the present it must be decided upon an attentive consideration of the nature of the contract of insurance. What is it? An agreement by the insurer, in consideration of a certain reward, to stand in the shoes of the insured, and to indemnify him for any loss which may happen to the thing insured, from certain perils enumerated in the policy. This is effected by paying him. in money, the value of the property at risk, with the expenses incurred in putting it on board, duties, Ac. Suppose the property to be destroyed -within an hour after the risk has commenced — and the time makes no difference in the principle — what does the owner lose? Precisely as much as it was worth, or Yvould have commanded in market at the time and place it was shipped, including expenses, and no more. If the property cost him less than it was worth when shipped, he loses as well the first cost as the increased value, for which he is entitled to claim an indemnity from the insurer. If it cost him more, he loses the difference between the first cost and the diminished value when the property was shipped; but for this difference, he can have no claim for indemnity under, the contract, because the loss did not result from any of the perils against which an indemnity was stipulated, but from an unprofitable speculation, anterior to, and unconnected with the contract. Those who have contended for the value at the first port of discharge, have had much more reason on their side than the law of insurance. as understood in most countries, has sanctioned; for they have fairly argued, that the owner has lost, by a peril insured against all that would have been gained by a successful termination of the Y'oyage beyond the value of the property at the port where it was shipped. But this test of value is rejected, and perhaps rightly so, for the reasons assigned in the books. But it is impossible that the first cost can ever furnish a just rule of indemnity, where it exceeds or falls short, of the actual value of the property when it is put at risk.
The invoice price, which was contended for on behalf of the plaintiffs, is liable to all the objections which exist against the prime cost — and to an additional one, which in the opinion of the court, cannot be surmounted. It furnishes no rule of indemnity, in any case whore it exceeds, or is less than the market value of the article; if the former, the insured is more than indemnified, by receiving more than it was worth; if the latter, which it is presumed will seldom, if ever happen, his indemnity would be in part only. But. the strong ground of objection to this rule for appreciating tin* value of the property at risk, is, that it substantially destroys all distinction between valued and open policies, and this too in the face of one of the best established rules of evidence. It makes a private document, created by one party to the contract evidence against the other, ns to a fact which it is essential for the former to prove in the ordinary way. In the case of a valued policy, the insured is relieved from the necessity of proving the amount, of his loss, because-both parties have agreed that the property at risk was worth so much. But, to bind the insurer by the arbitrary value fixed in the invoice, is to subject him to ex parte evidence, furnished by his opponent in the cause, without his agreement, and even without his knowledge of its contents when the contract was entered into. And as it rarely happens, if ever, that an invoice docs not
Upon the whole, it is the decided opinion of the court, that judgment in this case must be rendered according to the market price of the property insured, at the time and place of exportation.