Valuation fixed by company.

SEC. 45. When the company fixes the valuation of the property insured, in the absence of fraud, concealment, or misrepresentation, on the part of the assured, it is treated as a valuation by mutual agreement, and the best evidence of the real value of the property.'

In a Massachusetts case, the defendant company was authorized, by its charter, to insure only for three-fourths the value of the property, but the court held that, where the officers of the company deliberately placed a valuation upon property, they were thereby estopped from setting up that the property was insured for more than three-fourths its value. But the rule would, of course, be different, if there was any fraud, collusion, misrepresentation, or fraud on the part of the assured. In such cases, the valuation fixed by the company is taken as the best evidence of the value of the property.'

SHAW, C.J., in a leading case upon this point,' in commenting upon the effect of a valuation of the property, said: "In determining what amount shall be insured, the company necessarily determine the value of the building, or rather they fix a valuation over which it shall not be rated, for the purpose of insurance. Being limited to insure not exceeding three-fourths of the value, in determining the sum to be insured they, by necessary consequence, fix a valuation at such a sum, that the sum insured shall not exceed three-fourths of it. The result is, that as the valuation is thus proposed on the one side, and after the proposition is considered and modified, it is acceded to on the other, and the amount insured, and the rate of premium, assessments and

'In Farmers' Mut. Ins. Co., Ins. L. J., Nov. 1873, a policy was issued to G. B. Forney, upon his dwelling-house. The company intended to adopt the principle that every member insured should stand his own insurer to the extent of onefourth of any loss which should occur. The by-laws prohibited more than threefourths of the actual cash value of any building being insured, but in case of a partial loss the insured might claim the whole amount, provided it did not exceed the sum insured. To remedy this the directors passed a resolution that only three-fourths of any actual loss should be paid. Held, that in the agreement that "in case any loss should occur to our respective properties by fire, we will only claim and receive three-fourths of the amount of the actual loss, provided three-fourths of the amount as aforesaid does not amount to more than threefourths of the sum insured," the insertion of the proviso was unwarranted by the resolutions, and is not limited in case of a total loss to three-fourths of the amount insured. The agreement was not to apply when three-fourths of the actual loss should exceed three-fourths of the sum insured, and in case of a total loss the insured is entitled to receive the whole amount of his insurance, which is threefourths of the actual cash value, and is not limited to three-fourths of the amount of the policy.

*Fuller v. Boston Mut. Ins. Co., 4 Met. (Mass.) 206.

'Borden v. Hingham Mut. Fire Ins. Co., 18 Pick. (Mass.) 523. 'Fuller. Boston, etc., Co., ante.

liability established on the same basis, it is, in the highest sense, a valuation by mutual agreement."

"No rule of law," says GRAY, J., "is better settled by authority, than that by which, when the assured has some interest at risk, and there is no fraud, a valuation of the subject insured in the policy is held conclusive upon the parties at law and in equity.' And none is better founded in reason."

Shifting risk-Floating Policies.

SEC. 46. As all insurers are presumed to be familiar with the usages and incidents of a risk, the contract is always construed with reference thereto. Therefore, when the stock of a manufacturer is insured, although nothing is said in the policy in reference thereto, yet, it being understood that the stock insured is to be manufactured and sold, and replaced by other stock, the policy covers the stock on hand at the time of loss, although no part of it was on hand when the policy was made. It is not the identical stock on hand when the insurance was made, but stock similar in kind, and pertaining to the business that may be on hand when a loss occurs, that is covered by the policy." A policy covering merchandise, in a store, does not cover any special or particular property, but property comprising such a stock as may be on hand when a loss occurs, although nothing is said in the policy con

'See also, Phillips v. Merrimack, etc., Ins. Co., 10 Cush. (Mass.) 350. 2 Phenix Ins. Co. v. McLean, 100 Mass. 476.

'Hodgson v. Marine Ins. Co., 5 Cr. (U. S.) 100; Alsop v. Commercial Ins. Co., 1 Sum. (U.S.) 451; Irving v. Manning, 6 B. & C. 391; Barker v. Janson, L. R. 3 C. P. 303; Coolidge v. Gloucester Ins. Co., 15 Mass. 341; Robinson v. Manuf. Ins. Co., 1 Met. (Mass.) 147; Fuller v. Boston Ins. Co., 4 id. 206.

4 Livingston v. Maryland Ins. Co., 7 Cr. (U. S.) 506; Citizens' Ins. Co. v. McLaughlin, 53 Penn. St. 485; De Forest v. Fulton F. Ins. Co., 1 Hall (N. Y.) 84; Hancox v. Fishing Ins. Co.. 3 Sum. (U. S.) 132; Macy v. Whaling Ins. Co., 9 Met. (Mass.) 354; Fulton F. Ins. Co. v. Milner, 23 Ala. 420; Glendale Woolen Co. v. Protection Ins. Co., 21 Conn. 19.

'In New York Gas-Light Co. v. Mechanics' Fire Ins. Co., 2 Hall (N. Y.) 108, the policy covered fixtures and gas meters belonging to and rented by the assured, placed or to be placed in the buildings, stores, or dwellings of subscribers, for seven years. It was held that the liability of the insurer was not limited to the property in the buildings at the time when the insurance was made, but to all such property placed and remaining in the places covered by the policy at the time of the loss. Wood v. Rutland, etc., Ins. Co., 31 Vt. Insurance against fire for a term of five years was effected on farm buildings, including a granary, and grain therein, or in stack." In the application for the policy, the land on which the buildings stood was particularly described. Held, that grain sown and stacked on land afterwards bought by the assured was covered by the policy. Sawyer v. Dodge Co. Mut. Ins. Co., 37 Wis. 504. In Whitwell v. Putnam Fire Ins. Co., 6 Lans. (N. Y.) 166, the policy covered "merchandise, liquors, etc.," held by the assured for sale, and it was held that the policy attached to all goods of that class subsequently purchased, in lieu of that on hand when the insurance was made.

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cerning the matter. This is implied from the nature of the risk, and the usages of the business covered by the policy.'

In a New York case,' the property insured consisted of a stock of goods in a "retail store," and it was held that the policy covered any goods, a part of such stock, whether on hand at the time when the policy was issued, or subsequently purchased, PRATT, J., said: "It was manifestly the intention of the parties to the policy, in this case, that it should cover to the amount of the insurance any goods of the character and description specified in the policy, which, from time to time during its continuance, might be in the store. A policy for a long period upon

'In Peoria, etc. Ins. Co. v. Anapaw, 51 Ill. 283, the policy covered a stock of tobacco and cigars on storage. Subsequently the assured procured an insurance upon his own goods of the same kind, in the same building, and while that policy was in force he purchased the stock on storage and took an assignment of the policy, duly assented to by the insurer. The policy upon his own stock prohibited other insurance, and the point was raised, that the policy assigned amounted to other insurance. The court held that a policy upon a stock of goods, which is being constantly sold and replenished, covers as well the new purchase as the stock on hand at the date of the policy. But that in order that goods subsequently purchased shall become a part of the stock in trade so as to be covered by the insurance thereon, it is not enough that other goods are purchased, but it must appear they became a part of the stock, from which sales were to be made as from the general stock; of which it may be claimed the new purchases became a part. PARRIS, J., in Lane v. Maine, etc., Ins. Co., 12 Me. 44; 1 Bennett's F. I. C. 482, discussed this question. He said, "as to the goods" (being a stock of a merchant), "we are clear that the policy was intended to cover whatever goods the plaintiff might have in his store at any time during the continuance of the risk, not exceeding the amount actually insured. A construction limiting the policy to the goods actually in the store, at the time the insurance was effected, would defeat the very object of the insured, and so it must have been understood by the insurer. The plaintiff's business was trade, the vending of goods from his store. According to the construction put upon this policy by the company, the plaintiff has no security except upon the goods actually in the store when the policy was issued, and when those were disposed of, their liability was at an end. We cannot listen for a moment to such a suggestion. A policy of insurance being a contract of indemnity, must receive such a construction of the words employed in it as will make the protection it affords coextensive, if possible, with the risks of the assured. Dow v. The Hope Ins. Co., 1 Hall, 166. The risk of the assured was to continue six years, and the assurers assumed that risk to the amount of $200, on the goods in the store. Both parties must have understood this to mean on goods which may be in the store at any time during the continuance of the policy. If the assured had goods to an amount exceeding $200, the undertaking of the company was limited to that amount. If, by sale, the quantity was reduced below that sum in value, the insurers were so far benefited as their risk was diminished below that paid for by the premiums, and if the whole were sold, the insurers were benefited to a still greater degree by a suspension of the risk. And it was a mere suspension, for upon filling up again the risk revived; and we see no difference in principle between the case where the quantity is diminished by a partial sale, and then replenished, and where the whole is sold and an entire new stock purchased. In either case there is a risk, limited in amount by the contract, which has been assumed by the insurer, and for which the insured has paid the stipulated premium. We are clear that it is a continuing risk, to the amount specified, upon such goods as the insured may have in the store, within the term covered by the policy, and not confined to such as were there at the time of assuming the risk."

2

* Draper v. Hudson River F. Ins. Co., 17 N. Y. 424; 4 Bennett's F. I. C. 266.

goods in a retail shop, applies to the goods successively in the store from time to time. Any other construction of a policy upon a stock in trade, continually changing, would render it worthless as an indemnity. It is a primary principle in the construction of the contract, to give it the effect, as an indemnity, which the parties to it designed."

A policy which insures property of a certain description, "manufactured and in process of manufacture," and which provides that the company shall not be liable for "loss for property owned by any other party, unless the interest of such party is stated on this policy," does not cover any other than the property of the insured, and does not extend to the goods of others, being manufactured by him, even though he is, by contract, liable to them for their loss or destruction.' But, under a policy insuring the property of the assured generally, with no restriction as to interest, a recovery can be had when an insurable interest exists in the property destroyed, although the assured has not the legal title therein.

It is not essential that the article covered should be in esse, at the time when the policy is made, if the policy covers a special or general class of property, in order to render it operative; it is simply necessary that goods of the class insured belonging to the assured, or held by him in trust, should have been included in the loss, within the provisions of the policy. Thus, a policy issued to a railway company upon its rolling stock, wherever situated, covers not merely rolling stock on hand at the time when the policy was made, but all rolling stock owned by it at the time of the loss, although it was manufactured after the policy was issued, and if the policy covers all rolling stock in use by said company, at the time of the loss, it covers all rolling stock, its own or the property of other companies destroyed upon its line, which is there for the purposes of the assured.' So policies may be issued, and

'Lane v. Maine, ete., Ins. Co., ante; Sawyer v. Dodge Co., etc., Ins. Co., 47 Wis. 503; Peoria, etc., Ins. Co. v. Anapaw, 51 Ill. 283. In British American Ins. Co. v. Joseph, 9 L. C. Rep. 448; Mem. in 4 Bennett's F. I. C. 161, a policy upon a certain quantity of coal was held to cover coal afterwards deposited on the premises as well as that there at the time when the insurance was made. In Mills v. Farmers' Ins. Co., 37 Iowa, 400, the policy covered live stock, and it was held that the fact that the horse killed was purchased after the insurance was made, was of no account. That where property was insured as a class, the policy covered property of that class, whether on hand at the time when the policy issued or not. That it is only when property is specifically insured that the policy is restricted to particular articles. Hooper v. H. R. Ins. Co., 17 N. Y. 424; Worthington v. Bearse, 12 Allen (Mass.) 382.

2

Getchell v. Etna Ins. Co., 14 Allen (Mass.) 325; Waters v. Monarch Ins. Co., 5 El. & Bl. 870; London, etc., R. R. Co. v. Gye, 1 El. & El. 652.

Where a policy to a railroad company covered freight cars owned or used by the assured, the freight cars of other railroad companies, in use by it at the time

often are, to indemnify the assured against possible loss to the property of another, by reason of the use of the property of the assured for certain purposes, for which injury the assured would be liable to such third person; and in such cases it is only necessary to show an injury to, or the destruction of the property of third persons by the use of the property of the assured, for which the assured is liable, and the loss to the assured thereby.' Whether there can be a recovery upon such a policy before the loss has been paid by the assured, or whether the assured would be at liberty to settle for the loss without notice to the insurer, or whether he must submit to an action in favor of the person whose property was injured, and cite the insurer in to defend the action, are questions the solution of which must largely depend upon the terms of the policy itself. If the policy is silent upon these questions, prudence would suggest immediate notice to the insurer of the loss, and an inquiry as to the course which the insurer desires the assured to pursue in settling the losses. In all cases where the policy, either expressly or by implication, shows that the risk is shifting, and applies to no particular articles of property, but to a class of property, it attaches, if at the time of an alleged loss, articles of that class belonging to the assured are included therein. To illustrate the distinction between a shifting and a fixed risk: A policy issued to a railroad company "upon its rolling stock, to wit: ten locomotive engines, numbered respectively, 1, 2, 3, etc., and named respectively, No. 1, ‘Abra- . ham Lincoln,' etc.; forty passenger cars, numbered respectively, 1, 2, 3, etc.," is a fixed risk, and only attaches to the specific property named in the policy, and does not apply to other rolling stock used in place of that named. But a policy issued to a railroad company, "upon its rolling stock of every kind and description, used by it upon its railway, wherever situate upon said railway, etc.," is a shifting risk, and does not apply to specific articles of rolling stock, but covers all rolling stock owned by the assured, and injured by the casualties insured against, anywhere upon its line, whether the same was owned by it at the time when the insurance was made or not. So a policy issued to a merchant" upon his stock of groceries and general merchandise," attaches to no particular stock, but to all goods of that class which the assured may have on hand at the time of loss, and this, although the policy

of the fire, are covered by the policy. Com. v. Hide and Leather Ins. Co., 112 Mass. 141; Vt. and Mass. R. R. Co. v. Fitchburgh R. R. Co., 14 Allen (Mass.) 462; Eastern R. R. Co. v. Relief F. Ins. Co., 98 Mass. 420.

'Eastern R. R. Co. v. Relief F. Ins. Co., Mass.