surance company, having paid a fire loss, occasioned by sparks negligently communicated to the insured property from a railroad company's locomotive, was subrogated to the insured's right of recovery against the railroad. The principle was again applied by Chief Justice GIBSON, in Gales v. Hailman (1849), 11 Pa. 515, to the case of goods lost while in the custody of a common carrier. In both of these cases it was held that the action must be in the name of the shipper, who, to the extent of the indemnity received by him from his insurance, sues as trustee for the insurer. The carrier cannot set up the payment made by the insurer, as satisfaction, in whole or in part, of the claim, nor can he call upon the insurer for contribution. These decisions were followed by the Supreme Court of the United States in the case of goods destroyed by accidental fire, while in course of transportation by a common carrier:, Hall v. Nashville &C. R. R. Co., 13 Wall. (80 U.S.) 367, where the right of the insurer to subrogation, admitted on the argument to prevail in cases of marine insurance, was held to apply equally to cases of fire insurance upon land. The general principle was again recognized in The Potomac (1881), 105 U. S. 630, and in Liverpool & G. W. Steam Co. v. Phenix Ins. Co. (1889), 129 Id. 397.

In England the early decisions have been consistently followed: White v. Dobinson (1844), 14 Sim. 273; Dickenson v. Jardine (1868), L. R. 3 C. P. 639; Simpson v. Thomson (1877), L. R. 3 App. Cas. 279; Quebec Fire Assr. Co. v. St. Louis (1851), 7 Moo. P. C. 286; Darrell v. Tibbitts (1880), L. R. 5 Q. B. D. 560. The two cases last cited arose out of contracts of fire insurance.

Other cases in which the doctrine of subrogation has been recognized as applying to rights of action against wrongdoers, for damages done to propertv which is the subject of insurance re:

Rockingham Mut. Fire Ins. Co. v. Bosher (1855), 39 Me. 253; Bean v. Atlantic & St. L. R. R. Co. (1870), 58 Id. 82; Connecticut Mut. Life Ins. Co. v. New York & N. H. R. R. Co. (1856), 25 Conn. 265; Peoria M. & F. Ins. Co. v. Frost (1865), 37 Ill. 333; Monmouth County Mut. Fire Ins. Co. v. Hutchinson (1870), 21 N. J. Eq. 107; Connec ticut Fire Ins. Co. v. Erie Ry.Co. (1878), 73 N. Y. 399; Platt v. Richmond, Y. R. & C. R. R. Co. (1888), 108 Id. 358; Swarthout v. Chicago & N.W. Ry. Co. (1880), 49 Wis. 625; Hustisford Farmers' Mut. Ins. Co. v. Chicago, M. & St. P. Ry. Co. (1886), 66 Id. 58. The only case which denies subrogation to the insurer is Carroll v. New Orleans, J. & G. N. R. R. Co. (1874), 26 La. An. 447, which was the decision of a divided Court, and has not been reaffirmed. The facts of that case were very similar to those of the principal case, the action being against a common carrier for the value of cotton destroyed by fire while in transit. In his dissenting opinion, TALIAFERRO, J., says: "I am clearly of the opinion the insurance company stands subrogated by law to all the rights of the owners against the carriers, as they certainly are upon general principles of equity." In the case of Hartford Ins. Co. v. Pennell (1878), 2 Bradw. (III.) 609, the Court went so far as to restrain the insured, at the suit of the insurers, who had paid him the loss, from making a settlement of his claim against the alleged wrong-doer.

When the insurer, by reason of the payment of the loss, has become subrogated to the rights of the insured, he may recover, in a suit against the carrier, brought in the name of the insured, the full amount of the loss or damage, without regard to the amount of the policy of insurance: Mobile & M. R. R. Co. v. Jurey (1883), 111 U.S. 584. And in such a suit the carrier cannot defend on the ground that the

insurer has failed to interpose a defense, which might have been successfully made to the claim upon the policy: Sun Mut. Ins. Co. v. M ́ssissippi Valley Transp. Co. (U. S. C. Ct., E. D. Mo., 1883), 17 Fed. Repr. 919.

2. Insurable interest of the carrier.— A common carrier has an insurable interest in the goods carried for hire by him: Bucky.Ch:sapeake Ins. Co.(1828), 1 Pet. (26 U.S.) 151; Crowley v. Cohen (1832), 3. B. & Ad. 478; London & N.W. Ry. Co. v. Glyn (1859), 1 E. & E. 652; Van Nalta v. Mut. Security Ins. Co. (1849), 2 Sandf. (N. Y.) 490; Chase v. Washington Mut. Ins. Co. (1852), 12 Barb. (N. Y.) 595; Savage v. Corn Exchange Fire & I. N. Ins. Co. (1858), I Bosw. (N. Y.) 1; Eastern R. R. Co. v. Relief Fire Ins. Co. (1868), 98 Mass. 420; Commonwealth v. Hide and Leather Ins. Co. (1873), 112 Id. 136; Jackson Co. v. Boylston Mut. Ins. Co. (1885), 139 Id. 508. "It is well settled that an insurable interest, in mercantile language, does not necessarily import an absolute right of property in the thing insured. A special or qualified interest is equally the subject of insurance; and it has often been determined that each distinct interest in the same subject may be protected by a separate policy on the subject, for the party interested in it. and mortgagee may both insure; so may the trustee and the cestui que trust; and so may every party who has any special interest to protect, or who represents the property as the qualified owner of it:" De Forest v. Fulton Fire Ins. Co. (1828), I Hall (N. Y.) 84. This case, in which the principles involved were most elaborately considered and which has always been recognized as a leading authority, determined the right of a commission merchant to insure goods consigned to him for sale. Eut its reasoning is equally applicable to the case of a carrier. Indeed, the carrier's interest

The mortgagor

is greater than that of a commission merchant, for the carrier has not only a lien upon the goods for his transportation charges, but he is absolutely liable, as an insurer, to the owner for their safe delivery, unless destroyed by the act of God or the enemy of the country: Chase v. Washington Mut. Ins. Co., supra. If the carrier should recover from the insurer an amount larger than his interest in the goods, he would hold the excess as trustee for the owner: De Forest v. Fulton Fire Ins. Co., supra; Wood on Fire Insurance, & 514.

ance.

3. Effect of stipulation that the carrier shall have the benefit of the owner's insurance.-The first case in which the effect of such a stipulation in a bill of lading was considered, was Mercantile Mut. Ins. Co. v. Calebs (1859), 20 N. Y. 173, which is cited in the principal case. This was a case of inland marine insurThe underwriters brought suit against the carriers for the value of goods insured by the latter and lost while in course of transportation, and the carriers set up in defence to the action a stipulation in the bill of lading giving them "the benefit of any insurance by or for account of" the owners and insured. The Court (ALLEN, J.) used the following language: "If there had been no special agreement between the insured and the defendants, under the facts as found, the plaintiffs would undoubtedly have been entitled to recover, if the defendants were liable for the loss of the goods. *** The question then arises, was the special contract between the insured and the defendants a valid one? and if so, what is its effect upon the plaintiffs' right to recover? It has been frequently decided that a common carrier may, by special contract, limit, restrict, or modify, his common law liability as an insurer of the transportation of goods. In the case of Gould v. Hill (1842), 2 Hill (N. Y.) 623, a majority of the Court held otherwise,

but this Court, in Dorr v. New Jersey Steam Nav. Co. (1854), 11 N. Y. 485, held the contrary, and overruled the case of Gould v. Hill; and it had previously been repudiated in Parsons v. Monteath (1851), 13 Barb. (N. Y.) 353, and in Moore v. Evans (1852), 14 Id. 524 (see also New Jersey Steam Nav. Co. v. Merchants' Bank (1848), 6 How. (47 U.S.) 344). The Court in all these cases say that they see no reason why parties may not contract as they please in reference to the transportation of goods; that such an agreement neither changes nor interferes with any rule of law, and does not affect public morals or conflict with public interests. If the owner chooses to take upon himself part of the risk of transportation, and thereby induces the carrier to convey for a less rate of compensation, who has any right to complain? It is a matter entirely between themselves, unless it is the result of a scheme to defraud third persons. It has long been determined, both in England and in this country, that such an agreement is valid and binding, and in the absence of fraud can at all times be enforced."

The general rule here stated so broadly, although still followed in New York, has not been recognized to its full extent by other jurisdictions: New York Cent. R.R.Co.v. Lockwood (1873), 17 Wall. (84 U. S.) 357; Ogdensburg & L. C. R. R. Co. v. Pratt (1874), 22 Id. (89 U. S.) 123; Bank of Kentucky v. Adams Express Co. (1876), 93 U. S. 174; Grand Trunk Ry. of Canada v. Stevens (1877), 95 Id. 655; Liverpool & G. W. Steam Co. v. Phenix Ins. Co. (1889), 129 Id. 397; Forepaugh v. Delaware, L. &W. R. R. Co. (1889), 24 W. N. C. (Pa.) 385. But the correctness of the ruling which sustained contracts similar to that now under consideration, has never been disputed. In Rintoul v. New York Cent. & H. R. R. R. Co. (U. S. C. Ct., S. D. N. Y.,

1883), 17 Fed. Repr. 905; s. C., 21 Blatchf. 439, the same view of the law was taken. This case was reported in full in 23 AMER. LAW REG. 294, with a valuable annotation, in which the validity of such stipulations was discussed at length. The annotator, in concluding, expresses some doubt as to whether the rule there followed by Judge SHIPMAN was sound in principle or not. But subsequent decisions have removed all uncertainty from the question, and it must now be regarded as accepted law.

In the year 1885 two cases were decided, one in Texas and one in Massachusetts, in each of which the validity of the stipulation under discussion was affirmed. In the former case, British & F. M. Ins. Co. v. Gulf, C. & S. F. Ry. Co. (1885), 63 Tex. 475, it was said: "The right to insert such a stipulation as the present is universally admitted, or denied, if at all, only on the ground of the supposed effect it has of restricting the common law liability of a carrier. This, in our view, is not the effect of the reservation. * * * The right of the insurance company to recover against the railroad company, if it existed at all, was the result of an equitable subrogation to the remedy of the owner of the cotton against the carrier, and of the assignment made subsequent to its loss. But the assignment was worthless, as it was made in privity and subordination to the previous stipulation placed in the bill of lading; and the subrogation was of no avail, as no one can become subrogated to a right which the party originally possessing that right had previously contracted should not be enforced." In the other case, Jackson Co. v. Boylston Mut. Ins. Co. (1885), 139 Mass. 508, the Massachusetts Court places its decision upon the following grounds: “As the insurance company obtains its remedy against the carrier, not by virtue of any contract of its own with him, but through the contract of the owner of the

goods, such owner may make the contract of carriage so as to suit his own interest, provided there is no fraudulent concealment from the insurer; and the right which the insurer obtains is subject to the agreement with the carrier.. Carriers have an insurable interest in the goods they transport, and may therefore effect insurance upon them for their own benefit. There is no reason why they may not insure them jointly with the owner, and, if so, why they may not contract for the benefit of insurance effected by the owner, in the absence of fraud or any contract to the contrary with the insurer. The owner is under no obligation to contract so that he shall have a remedy against the carrier under every circumstance in which the carrier has been held liable by the common law. If he may accept a receipt excusing the carrier from liability from fire, and still hold the insurer, he may also make a contract that the insurance shall be for the benefit of the carrier."

In the case just cited it was also held that the insured's contract to give the carrier the benefit of the insurance was not in violation of a condition of his policy, prohibiting the sale, assignment, transfer or pledge of such policy, or the interest insured thereby, without the written consent of the insurer. "The policy and interest in it are still retained by the owner; it is neither transferred nor pledged. There is a collateral agreement only, that the carrier, having incurred a lial ility, shall have the benefit of the insurance that may have been effected:" Jackson Co. v. Boylston Mut. Ins. Co., supra.

As stated in the principal case, the validity of contracts such as the one in question was recognized in Tate v. Hyslop (1885), L. R. 15 Q. B. D. 368, which was a case of marine insurance. The insurer was accustomed to charge a higher rate of premium upon shipments under contracts giving no recourse

against the carrier, except for negligence. This practice was known to the insured, who failed, however, to inform the insurer that he had entered into such a contract. His concealment of this fact was held to have been fraudulent and to have vitiated his policy.

The Supreme Court of the United States in the case, already cited, of Phoenix Ins. Co. v. Erie Transportation Co. (1886), 117 U. S. 312; S. C., 25 AMER. LAW REG. 330, have adopted and followed the rule stated in the foregoing decisions. The reasons for so doing are thus clearly given in the opinion of GRAY, J.: “The insurer stands in no relation of contract or of privity with such persons (ie., the carriers). His title arises out of the contract of insurance, and is derived from. the assured alone, and can only be enforced in the right of the latter. In a court of common law, it can only be asserted in his own name, and, even in a court of equity or of admiralty, it can only be asserted in his right. In any form of remedy, the insurer can take nothing by subrogation but the rights of the assured ***. The right of action against another person, the equitable interest in which passes to the insurer, being only that which the assured had, it follows that, if the assured has no such right of action, none passes to the insurer; and that, if the assured's right of action is limited or restricted by lawful contract between him and the person sought to be made responsible for the loss, a suit by the insurer, in the right of the assured, is subject to like limitations or restrictions." The doctrine of this case was recognized very recently in Liverpool & G. W. Steam Co. v. Phoenix Ins. Co. (1889), 129 U. S. 397.

The latest consideration of the question, with the exception of the principal case, was by the Court of Appeals of New York in Platt v. Richmond, Y.