the insured has no interest.25 To take the case out of the objection of being a wager policy, all that it is necessary to show is that the insured has some interest in the cestui que vie; that his temporal affairs, his just hopes and wellgrounded expectations of support, of patronage, and advantage in life will be impaired." No principle of law is better settled than that a policy taken out by a person upon the life of another, in which he has no insurable interest, is illegal and void, as repugnant to public policy."

The law as to persons having an insurable interest in life insurance is thus summarized: (1) Where the person insuring-the beneficiary - is the holder of an enforceable personal right against the person insured, such right existing at the time of taking out the insurance; (2) where the beneficiary is subject to a self-imposed liability in the discharge of which he has made expenditures for the benefit of the person insured, or has incurred an existing liability to third persons in respect to the person insured; (3) where the beneficiary occupies by reason of consanguinity, or in virtue of affection evidenced by numerous benefactions from the person insured, such a position that a presumption of prejudice to the party insuring will be implied from the death of the party insured.

7. Property Insurance. The contract of fire insurance being one of indemnity, the insured must have such an interest in or relation to the insured property that he will sustain a loss from the peril insured against; otherwise, the policy would be a wager which the law condemns. The interest must exist when the policy is issued and at the time of the loss." Thus, where one insures his buildings against fire and parts with his entire interest therein, the underwriter or insurer is not obligated to pay any one." To constitute an insurable interest, a party should show either a legal or equitable title in the property insured;" but the extent of his interest may be no greater than a liability for

25 94 U. S. 457 (1877).

266 Gray (Mass.) 399 (1856).

27 76 Ala. 251 (1884).

28 71 Ill. 620 (1874); 75 Ind. 535 (1881).

29 132 N. Y. 135 (1892); 3 Metc. (Mass.) 66

(1841).

30 12 Iowa 291 (1861).

its care and preservation." to maintain a house for the use of a person during his life, the executor has an insurable interest in the house." A sheriff, or marshal, who seizes goods under process of law and holds them pending controversy over the ownership, acquires a special property which gives him an insurable interest in the goods;" also, a receiver has an insurable interest in the property in his custody so far as by leave of court to enter into a contract of insurance;" likewise an agent, having his principal's property in his possession, and being responsible for it, may obtain insurance thereon in his own name, and in case of loss recover its full value, holding all beyond his own interest in trust for his principal." Α cestui que trust has such an interest in the trust property that he may insure it against loss in his own name." A creditor who has a lien upon his debtor's property has an insurable interest therein." As to judgment creditors, there is some conflict of authority. The federal and New York courts hold that such persons have an insurable interest;" but, in Pennsylvania, it is held that a judgment, being a general and not a specific lien, gives the creditor no insurable interBesides the parties mentioned, those who have an insurable interest are innkeepers in the property of their guests in their custody; warehousemen and wharfingers, in the property in their custody; and all persons who come within the general rule, before stated, who have such an interest in, or relation to the property insured that loss will result to them if it be destroyed by fire. Even a judgment debtor, whose property has been seized on execution, has an insurable interest therein, although such property is in possession of the officers of the law. A consignee to whom goods are consigned for sale has an insurable interest in his expectant commissions and in the goods which are in transit,

Where a will directs an executor

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although he has made no advance thereon. Where he has made advances he secures an insurable interest for the amount advanced."

8. In marine insurance, the general rule is that every person who is interested in a marine adventure has an insurable interest; more specifically, any person who stands in some relation, legal or equitable, to the adventure, by which he profits financially by the safe arrival of the property, or will sustain financial injury by its loss, damage, or detention, has an insurable interest." An owner or part owner of insurable property has an insurable interest; also, one who has purchased and has secured title to the property, or is liable to pay for it whether it arrive or not, or has an election to accept it or reject it, or the property is appropriated to him. It is well settled that the owner of a ship may mortgage it to secure a debt, and still have an insurable interest. The mortgagee likewise has an insurable interest in the mortgaged vessel. If the latter insure the ship to the full amount of his debt and the ship be lost, the underwriters, if they pay the loss to the mortgagee, will be entitled to be substituted in favor of the mortgagee's claim against the mortgagor. Besides the persons specified, the list of those who have an insurable interest includes masters, seamen, charterers, consignees, agents, factors, and borrowers and lenders on bottomry and respondentia.

FORM OF CONTRACT

9. Necessary Requisites. - Contracts of insurance are, as a general rule, governed by the ordinary rules that govern all contracts. As to the matter of form, some peculiar features call for special mention. It is common for writers on the subject of insurance to say that a contract of insurance requires no formality-that it is usually lax and informal. While this statement is in the main true, and has the sanction of judicial observation, it is to be qualified to some extent.

40 Am. & Eng. Encyc. Law (2d Ed.), Vol. 13, p. 155, and the cases there cited.

41 See subtitle Marine Insurance.

42

Both in England and the United States, the courts have attested to the informality of insurance contracts, or the parts thereof as represented by what are known as insurance policies. In an English case, it is said that courts of law have always considered a policy of insurance as an absurd and incoherent instrument; and, in the United States, it is declared that policies of insurance are generally the most informal instruments which are brought into courts of justice." Yet, this exact informality - if the expression may be used-has by usage become somewhat of a real formality, both as to the preliminary agreement made between the parties and the policy. For it has come to be recognized, that "length of time and a multitude of judicial decisions, embracing almost every important word in the ancient, though inaccurate, form have at length so settled the force and meaning of its different parts, that any serious attempt to alter or reconstruct with reference to greater certainty or symmetry would doubtless lead to new doubts and new litigation and should be admitted only after the most careful consideration."

When it is said that no formality is essential to an insurance contract, either preliminarily or finally, it is not meant that the usual written contract made between insurer and insured is a matter of no moment; in fact, it is of the greatest importance. No one would sleep soundly and feel safely indemnified with a mere oral promise from an insurance company that, in case of fire, he would be compensated for the loss of his home and fireside. Yet, where there is no statute law to the contrary, a contract merely oral is sufficient to bind the parties." Commercial usage, however, based on the imprudence of leaving the terms of a contract to the uncertainty of even the most active and retentive memory, and the force of established practice, from time immemorial, of executing important contracts in black and white, and, also, because the charters of insurance companies

424 T. R. (Eng.) 206 (1791), by Mr. Justice Buller.

435 Cranch (U. S.) 335 (1809).

44 May Ins. (4th Ed.), Vol. 1, p. 45. 45 165 Mass. 565 (1896).

require policies to be in writing, has created formality as to insurance contracts so far, at least, as to require them to be in writing. But, there is no requirement that these contracts shall be under seal; though, even in the present time, both in England and the United States, incorporated underwriters issue policies under the corporate seals, as anciently required by the law.

10. Policies. - Contracts of insurance usually consist of two parts: (1) The preliminary agreement for a contract, a memorandum or arrangement between the insurer or agent specifying the terms or data upon which the contract proper is based, called by some writers the contract itself; and (2) the policy, the instrument whereby insurance is made, the printed form to which the contract has been reduced, and which evidences the agreement or contract between the parties, and which may be either a specialty or a simple contract." Both of these parts are papers, partly written and partly printed, so common as not to require special description here; but the various kinds of policies call for particular explanation at this point.

Policies, as to property insurance, are of two kinds - open and valued. An open policy is one on which the value is not fixed, but is left to be determined in case of loss."" In the United States, an open policy sometimes means one in which the aggregate amount is expressed in the body of the policy, and the specific amounts and subjects are to be indorsed from time to time; it may also mean one kept open for new subscriptions, or one on a cargo kept open for new subjects of insurance." A valued policy is one on which the value is placed on the property insured and inserted in the policy in the nature of liquidated damages. In such a policy, the value of the subject-matter is expressly agreed upon."

Other terms designating particular policies are: Mixed policy, one which is open as to certain property, and valued

46 Joyce Ins., Sec. 145.

47 Phill. Ins., Secs. 4-7; 101 N. Y. 458 (1886); 2 Tex. Civ. App. Cas. (1893).

48 Bouv. Law Dict., citing 12 La. Ann. 259 (1857); 19 N. Y. 305 (1859); 6 Gray (Mass.) 214 (1856).

49 38 Ohio St. 128 (1882); 106 Pa. 20 (1884).