Harris v. Eagle Fire Co.

5 Johns. 368

• Court: New York Supreme Court
• Decided: February 15, 1810
• Status: Published

Opinion

Thompson, J.

delivered the opinion of the court. The rule by which the loss is to be calculated, is the only question arising in this case. The loss was a total destruction of 157 kegs of manufactured tobacco; and the assured claims the price for which they would have sold at his manufactory to a bona fide purchaser ; being, as he contends, the valuation in the policy. The underwriters contend, that they ought only to pay the first cost of the tobacco, together with the cost of manufacturing the same, and a reasonable allowance for the use and risk of the capital of the manufacturer, and for his attention. Which of these rules ought to govern, must, It appears to me, depend upon the question, whether this is to be deemed an open or valued policy. We find in the books but few cases in which the subject of insurance against loss by fire, has come under consideration; and none which throw any light on the present question. The rules applicable to marine insurance, so far as the analogy between the two cases will hold, ought to govern us. And according to those rules, this must, I think, be considered a valued policy, so far as relates to the kegs of tobacco. The case states, that among the articles insured, there were 380 kegs manufactured tobacco, worth 9,600 dollars ; this was the rate at which the tobacco was estimated, in making up the 20,000 dollars, the amount of the insurance. The premium was paid according to this valuation ; and the 157 kegs which were lost, are expressly stated, to be of the same kind and quality, as the whole 380 kegs. We have, therefore, an infallible rule by which to estimate the several and distinct value of each keg of tobacco. But it was said on the argument, that admitting this to be a. valued policy, it would make no difference, for it was only in case of a total loss, that there was any distinction between an open and a valued policy; that in case of a partial loss, the like inquiry into the true amount of such loss is to be made, whether the policy be of the one sort or the other. This is undoubtedly true, when ascertaining the extent of damage which the particular subject has sustained, and when there was not an absolute destruction of the subject. But where there is an actual total loss of any article, distinctly valued in the policy, that valuation, I apprehend, must govern in all cases. The valuation in a policy, is in the nature of liquidated damages,to save the necessity of proving them. In case of a total loss of the subject, by allowing the value to be inserted in the policy, the underwriter agrees that it shall be taken as there stated. This valuation is always considered as the fair amount of the prime cost, or at least that which the parties have agreed to adopt as such. (1 Marsh, 199.j If in the valuation of an article manufactored by the assured, he has chosen to estimate his labour and supposed profits, and to pay a premium therefor, I see no objection against it. It furnishes no evidence of a fraudulent intention to overvalue.

In France, where almost all policies are valued, if the goods be of the growth or manufacture of the assured, the current price is always adopted as the value. (2 Marsh. 533.) The effect of a valuation is only fixing conclusively the prime cost; if it be an open policy, the ptrime cost must be proved j if a valued policy, it is agreed. (2 Burr. 1171.)

In the case of Lewis v. Rucker, (2 Burr. 1167.) Lord Mansfield, throughout, speaks of the prime cost and valuation, as meaning the same thing. In speaking of the general nature of the contract of insurance, he says, “ The insurer engages, so far as the prime cost or value in the policy, that the thing shall come safe. If the goods be totally lost, he must pay the prime cost, that is, the value of the thing he insured at the outset. If part of the cargo, capable of a several and distinct valuation, at the outset, be totally lost, as if there be one hundred hogsheads of sugar, and ten happen to be lost, the insurer must pay the prime cost for valuation) of those ten hogsheads. But where an entire individual, as one hogshead, happens to be spoiled, no measure can be taken from the prime cost, to ascertain the quantity of such damage.”

To apply those rules to the case before us. The parties have agreed, in order to save the necessity of particular proof in case of loss, that the valuation in the policy, shall be considered the prime cost of the tobacco. That is, that the prime cost of 380 kegs of tobacco, shall be estimated at 9,600 dollars ; each keg is, therefore, capable of a several and distinct valuation. There has beep a total loss of 157 kegs of this tobacco, and • according to Lord Mansfield"1 s doctrine, the underwriters must pay the prime cost, or valuation, of the 157 kegs. Had the 380 kegs been totally destroyed, would there have been any doubt, but that the defendants must have paid the 9,600 dollars ? I see no reason why a different rule should prevail where there has been a total loss of any number of the kegs, each one being of equal weight and quality. There is much greater certainty and simplicity in this mode of calculation, than to go Into an inquiry as to the value of the raw material, and the expense of manufacturing it. There is no pretence that there has been any fraud, or over valuation.

We are, therefore, of opinion, that the plaintiff is entitled to judgment for the amount of the verdict.

Judgment for the plaintiff.